The White House is standing its ground amid complaints from Republicans that its surprise move yesterday to sell off 5 percent of the nation's crude oil stockpile was politically motivated.
President Obama yesterday approved a sale of 30 million barrels of crude oil from the nation's Strategic Petroleum Reserve (SPR) as part of a joint effort with the International Energy Agency to flood global markets with 60 million barrels of petroleum over the next month.
The decision comes after the administration has rebuffed months of calls from many members of Congress to open up the stockpile as a way to calm surging energy markets.
But Republicans immediately blasted the move, saying current economic conditions do not justify an emergency sale from the 727-million-barrel stockpile.
"What's the emergency? Poll numbers?" Sen. Lindsey Graham (R-S.C.) asked reporters in the Capitol yesterday. "It's just another example of trying to put political Band-Aids on substantive, structural problems."
Obama's approval ratings have suffered in recent weeks, and a new Associated Press-GfK poll out yesterday found for the first time this year that fewer than 50 percent of respondents thought he deserved to be re-elected next year.
"Call me suspicious," said Sen. Lisa Murkowski of Alaska, the ranking Republican on the Senate Energy and Natural Resources Committee. "The price at the pump has actually gone down from where we were six, eight weeks ago. What hasn't gone down are the unemployment numbers. What hasn't gone down are the shocks to the economy."
"I do happen to think that this is a political shortcut, if you will, by the administration to change the focus of the discussion right now," she added. "And I think that's unfortunate. It's short-sighted. We should not be using the SPR for political uses."
The United States has tapped the stockpile only a handful of times in its more than 30 years of existence, most recently after Hurricane Katrina shut down Gulf of Mexico oil production in 2005.
But the administration is defending the move, which it says has been in the works for months.
"This is a move by the IEA, which is a 28-member organization, in a coordinated way to address a sustained, significant disruption in our oil supply caused by the events in Libya -- more than 140 million barrels of oil," White House spokesman Jay Carney said yesterday. "And that's what it's aimed at. That disruption is as real today as it was several weeks ago."
The move also comes just weeks after the administration pressed the Organization of Petroleum Exporting Countries to increase its production quotes to assuage global markets and benefit the global economy. The cartel was unable to come to an agreement on a production increase.
"I think the president is responding to the continuing likelihood that the oil from Libya and Yemen will not be on the marketplace combined with the increase of driving season and the increasing demand for oil," Rep. Ed Markey of Massachusetts, the ranking Democrat on the House Natural Resources Committee, told reporters yesterday. "So I think to a certain extent this is a prophylactic action as well to prevent speculators from going back into the marketplace to drive the price up again over the summer."
But it remains uncertain what impact such a sale would have on energy prices or the global economy.
Indeed, previous sales quickly led to falling prices at the gasoline pump. Daniel Weiss, senior fellow and director of climate strategy at the Center for American Progress Action Fund, said past sales have reduced oil prices by 10 percent to 15 percent within a month. Such price drops would translate into savings of 25 cents to 35 cents per gallon at the gasoline pump.
But the relief could be short-lived, other experts warn.
John Felmy, chief economist at the American Petroleum Institute, said in an interview earlier this year that the nearly 20 percent price drop after a 2000 release was "effectively trumped" a few months later when OPEC cut output by 43 million barrels (E&E Daily, March 8).
Republicans in Congress and oil industry interest groups say the sale of 30 million barrels -- roughly the amount that U.S. consumers use in two days -- would do little to alleviate volatile prices long-term.
"Tapping the SPR will do nothing to bring down oil prices in the long term, but rather distort markets even further without bringing any significant new energy supplies to market," the Institute for Energy Research said in a release.
But the administration is stressing that it is not trying to bring about significant price decreases.
"We don't anticipate or predict prices," Carney said. "What we are addressing is an impact caused by supply disruption and at this time, it's necessary to do it because we're about to enter a season when demand is at its highest."
Reporters Jean Chemnick and Jeremy P. Jacobs contributed.