President Obama caused a stir last month when he announced he was tapping the Strategic Petroleum Reserve not for reason of national defense or natural disaster, but economic relief.
In a surprise announcement on June 23, the Energy Department said it would release 30 million barrels of oil over the coming 30 days to offset oil supply disruptions in the Middle East.
In a coordinated response, the European and Asian countries in the International Energy Agency also announced they would release an additional 30 million barrels. The administration reserved the right to take additional steps as it deemed necessary.
“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,’’ Energy Secretary Steven Chu said in a statement at the time. “As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary.’’
A civil war in Libya kept about 1.5 million barrels of oil per day from reaching the market. While most of that would be used in Europe, its absence from the marketplace contributed to an increase in crude oil prices.
It its statement last month, the Energy Department highlighted how US gasoline demand usually peaks in July and August, the height of American vacation season.
Nonetheless, with some energy analysts questioned the wisdom of firing such a sacred bullet, the administration was careful not to comment about whether its move to affect the supply of crude oil would affect the price of gasoline at the pump.
That proved prescient.
When the reserve was tapped, AAA reported that the average price for a gallon of regular gasoline was $3.61.
Today, AAA reported the same price was not down, but up to $3.69 per gallon.
Prior to the decision, the Strategic Petroleum Reserve – an oil reservoir in salt dome near the Gulf Coast – had last been tapped in 2005 in the aftermath of Hurricane Katrina.
“It is clear that the IEA release was an important step to ensuring adequate supply given the disruption of 1.5 million barrels a day from the Middle East,’’ said White House spokesman Matt Vogel. “As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary.’’
While oil had begun to flow out of the Reserve, one official said, the majority of it has yet to reach the market.