The United States strategic oil reserve is being eyed by some members of Congress as a remedy to rising gasoline and oil costs. Politicians are urging the Obama administration to open the spigot, despite a worldwide surplus of oil production capacity. United States supplies of oil and gasoline are also far above average seasonal levels. The administration’s position is that the modest rise in gasoline prices isn’t yet enough to warrant tapping into U.S. oil reserves, which could spook international oil markets into further price increases.
The plan Congress has with the oil reserve/span>
About 727 million barrels of oil are found in the United States strategic petroleum reserve. In the last 10 days, there has been a 28 cent increase in the average price of gas per gallon. Selling a part of the strategic oil reserve was suggested by Senator Bingaman, D-N.M., as the chairman of the Senate Energy and Natural Resources Committee. He said this would help keep oil prices stabilized. Reducing oil consumption in the U.S. could be more likely to occur with the sell also, giving tax breaks for hybrids and electric car. Also, it was suggested the deficit may be reduced with the sell along with getting gas prices back to normal.
U.S. not running low on oil/span>
The Obama administration objects to tapping the United States strategic petroleum reserve as a reaction to the current spike in gasoline and oil prices, even though its 2012 spending budget proposal calls for selling $500 million worth of oil from the reserve to fund certain programs. The administration contends that tapping the oil reserve would send a false panic signal to customers and markets when the U.S. isn’t running low on oil. A major oil storage facility in OK that supplies the interior U.S. has record inventories. From Canada, the United States is getting gasoline while North Dakota is starting to produce. There are 346.4 million barrels of United States crude oil inventories, states the U.S. Energy Information Administration. You will find 9.86 billion gallons of U.S. gasoline in the inventories. For this time of year, the amounts of the inventories are both higher than normal.
Oil increasing costs need a solution/span>
Oil industry analysts agree with the Obama administration that tapping into the strategic oil reserve now would have virtually no effect on oil and gas prices, and it would validate the fear that is driving up prices. The supply of oil isn't the problem, many suggest. They think a shortage of surplice production capacity is the problem everybody is facing. Speculators are betting that spreading Middle East unrest will reduce surplus oil production capacity. The oil price problem would become a severe problem if the surplus oil production capacity perished off. The oil markets can be better if the capacity to produce oil settles rather than attempting to temporarily stop the problem.
Information from/span>
New York Times
nytimes.com/2011/03/04/business/energy-environment/04oil.html?_r=1
Foreign Policy
oilandglory.foreignpolicy.com/posts/2011/03/04/the_weekly_wrap_march_4_2011
UPI
upi.com/Business_News/2011/03/03/Crude-oil-supplies-fall-slightly/UPI-22221299189942/
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