As President Obama again considers tapping the Strategic Petroleum Reserve to ease gas prices and political pressure, the bad news of his last oil release and proposed budget cuts is settling in: the fund to replenish his fuel withdrawals could be as much as $1.5 billion short.
According to oil analysts and federal reports, the administration has yet to refill the reserve following last year’s draw down of 30 billion barrels from the 727 billion in storage. That June 2011 sale yielded an impressive $3.3 billion, but it would cost as much as $4 billion to replace that oil today, leaving a $700 million deficit. Plus, Congress slashed the replacement budget $500 million last year and Obama has proposed an additional cut of $291 million. Added together, that could result in a $1.5 billion shortfall in the fund.
Those figures and Obama’s bid to tap another 30 million barrels from the reserve due to high gas prices and concerns about Iran’s saber rattling has pushed the GOP to make the Strategic Petroleum Reserve a big issue this week. “It’s there for emergency situations,” argued Senate Minority Leader Mitch McConnell, R-Ky. Sen. John Barrasso, R-Wyo., who heads the Senate Republican Policy Committee, said that Obama is “crying wolf” and noted that the additional withdrawal will leave the oil reserve at 91 percent of capacity.
Last June, after Obama tapped the reserve, gas prices dropped but they’ve reached new highs, pushing Democrats to demand he tap more oil and leading opponents to urge development of new energy sources in Alaska and also to OK the Canada-to-Texas Keystone XL oil pipeline.
“Tapping the SPR again for political reasons would only increase the amount of oil we would need to buy back and could be expected to produce the same kind of fiscal shortfall, as the president sells low and buys high,” said Barrasso.
Democrats, however, said that a withdrawal is worth it on two fronts: It will likely cut prices at the pump again, improve the public’s psyche, and signal to Iran that the U.S. is ready to take measures if they try to cut off oil shipments.
