Gas prices spur debate on US policy
In the face of rising gasoline prices, US Representative Edward J. Markey and two other lawmakers today called on the Obama administration to help drive down the fuel’s costs by releasing crude oil -- used to make gas -- from the nation’s strategic petroleum reserve.
Gas prices have spiked most recently as tensions with Iran have escalated over fears that the dispute over Iran’s nuclear programs will disrupt global oil supplies. Crude was trading at close to $106 a barrel today in New York.
“It is essential the the United States have an aggressive strategy,” said Markey, a Malden Democrat, in a letter to President Obama. “to combat the speculators capitalizing on the fear in the oil markets and to send a message to Iran that we are ready willing and able to deploy our oil reserves.”
This week, a gallon of regular gas is averaging just over $3.60 a gallon in Massachusetts, according to the US Department of Energy. That’s about a cent higher than the national average, and more than 40 cents higher here than a year ago. Crude oil, meanwhile, has climbed almost $9.50, or 10 percent, from earlier this month.
Markey said he believes releasing some of the US oil reserve -- which currently holds about 700 million barrels -- would help oil prices drop, as such draw downs have done in the past. After Hurricane Katrina in 2005, for example, a release of the reserves helped oil prices fall more than 9 percent, Markey said.
And when turmoil in Libya threatened oil supplies last year, the administration released 30 million barrels of its reserve that -- coupled with oil releases from partner nations -- helped drop oil prices by 8 percent.
Some, however, questioned whether the strategy touted by Markey would work help lower gasoline prices, given that US has been producing record supplies of oil and would likely end up exporting the crude elsewhere.
“Releasing oil from the reserves is not going to bring down oil prices,” said Phil Flynn, an analyst with PFGBest in Chicago. “That would be nothing but a political move, and it would be ill-advised because right now there’s a possibility that we could be in a war with Iran and that would be the time to release oil.”