Planet Gore

Heritage Comments on Obama’s Release of the SPR

As you might imagine, they’re against it:

Open Areas to Drilling, Don’t Open the Strategic Petroleum Reserve

The 28 member countries of the International Energy Agency (IEA) agreed to release 60 million barrels of oil reserves—2 million barrels per day over 30 days—to offset the supply disruption as a result of the political unrest in Libya. The Obama Administration announced that 30 million of those barrels will be met by releasing supplies from our domestic Strategic Petroleum Reserve (SPR).

The problem is that releasing reserves from SPR does not pass legal, rational, or economic muster. A much more prudent move for the Administration would be to open access onshore and offshore for drilling and exploration. Doing so would minimize the impact of foreign supply reductions and help stabilize future energy prices.

The President’s authority to release reserves from the SPR, which holds about 727 million barrels, is limited by law. The Energy Policy and Conservation Act requires a presidential finding that there is a “severe energy supply interruption.” Three conditions must be met:

1.  “An emergency situation exists and there is a significant reduction in supply which is of significant scope and duration;“

2.  A severe increase in the price of petroleum products has resulted from such emergency situation; and

3.  “Such price increase is likely to cause a major adverse impact on the national economy.”

Libyan production of oil has been offline for quite some time (almost three months), but Libya produces 2 percent of the world’s oil (about 1.5 million barrels per day) with most of its oil going to Europe. Does this constitute a significant reduction in supply? Or a severe increase in price? No. Rising demand for the better part of a year has steadily increased oil prices, and prices have since leveled off.

The rest here.

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