Gas prices were already on a steady climb as a result of ongoing unrest in North Africa and the Middle East when last week’s Japanese quake and ensuing tsunami caused further spikes in prices at the pump. One news source is quoting $3.50 per gallon as the new high. Try $4.09 per gallon if you’re living in cities like Los Angeles, New York or Washington, D.C.
The steady climb has precipitated a flood of calls into the Beltway requesting Obama tap America’s 727-million barrel Strategic Petroleum Reserve.
In a press conference last Friday President Obama addressed the growing concern:
The global community can manage supply disruptions like this. Other oil-producing nations have committed to filling any gaps – and we will continue to coordinate closely with our international partners to keep all options on the table when it comes to any supply disruptions.
Many see it as wisdom to hold off on the oil reserves just to ease a price hike at this time. The reserves are meant for times of crisis and the Administration and others feel we’re not quite there.
For those feeling it at the pump, Obama did state he stands prepared to tap into the reserves at some point, but he refused to identify at which specific point gas prices might spike high enough to take that drastic measure.
While many Republican lawmakers agree the reserves should not be tapped yet, they are using this situation as a golden opportunity to voice their concern over what they feel is a lack of Obama support for domestic oil. They maintain Obama has done little to promote domestic oil production. Specifically, Republican members of Congress have accused the Interior Department of dragging its feet in approving new permits for drilling in the Gulf of Mexico. They feel if the administration had supported more domestic production of oil, the country would not be where it is now.
Obama has said he’s increased the nation’s output since 2005 and that he will work to encourage the industry to develop oil production on inactive leases, both offshore and on land, and has directed his administration to explore new frontiers of production. However, he also adds,
And even if we tap every single reserve available to us, we can’t escape the fact that we only control 2% of the world’s oil but we consume over a quarter of the world’s oil.
Whether Americans find $3.50 or $4.09 too much for their wallets to take, economists say things will get worse before they get better; and some even speculate tapping the reserves will be interpreted by traders as U.S. fear things will worsen in the Middle East, North Africa and Japan. In that case prices might go higher before moving down.