Situation in the Middle East Increasing Speculation; SPR Deployment Can Drive Down Gas Prices Again
 
WASHINGTON (February 22, 2012) – Citing Wall Street speculators’ use of Iranian posturing to drive gas prices higher than ever for this time of year, three top House Democrats today wrote President Barack Obama to encourage him to devise an “aggressive strategy” to use the nation’s Strategic Petroleum Reserve to protect the American economic recovery. Last year, at the urging of Reps. Ed Markey (D-Mass.), Rosa DeLauro (D-Ct.) and Peter Welch (D-Vt.) and others, President Obama used the reserve during the Libyan uprising to tamp down prices by 8 percent.
 
The letter, sent by Rep. Markey along with Reps. DeLauro and Welch, is available HERE.
 
“It is essential that the United States have an aggressive strategy for releasing oil from the Strategic Petroleum Reserve to combat the speculators capitalizing on the fear in oil markets and to send a message to Iran that we are ready, willing, and able to deploy our oil reserves,” write the House Democrats. “Signaling that the United States will continue to employ an aggressive SPR policy in the near term would send a strong signal to oil markets responding to the unrest in the Middle East.”
 
While Iran has said they will cut off supplies to Britain and France, those two European countries import little crude from the rogue nation. However, that fact has not stopped speculators from driving up prices of crude oil by several dollars over the last few days. Many economists believe that higher oil and gasoline prices would crimp the current economic recovery in the United States.
 
Releasing oil from the SPR has driven down prices in the past. When President George H. W. Bush deployed oil from the SPR in 1991, oil prices immediately dropped by more than 33 percent. When President Clinton exchanged oil from the SPR in 2000, it again drove prices down by nearly 19 percent. When President George W. Bush released oil from the reserve in 2005 following Hurricane Katrina, oil prices fell by more than 9 percent. And last year, when President Obama directed the release of 30 million barrels of oil from the SPR -- less than 5 percent of the reserve -- in conjunction with the release of an additional 30 million barrels from international partners, prices declined by 8 percent.
 
Currently, America’s Strategic Petroleum Reserve holds approximately 696 million barrels and is filled to more than 95 percent of its capacity.
 
Meanwhile, Republicans in Congress have introduced legislation that would prevent the president from deploying the reserves unless he approves the Keystone XL pipeline extension. That pipeline would transport Canadian oil to a tax-free zone in Texas for export to China, Latin America and other foreign markets. It is also projected to raise gas prices in the Midwest by 10 to 20 cents per gallon. Republicans have voted to oppose efforts by Rep. Markey to keep the oil from the Keystone XL pipeline, should it be built, here in the United States.
 
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