Content area
Abstract
"The Strategic Petroleum Reserve was established as a safeguard against emergencies such as the cutoff of oil supplies from the Middle East like we saw back in 1973," notes Chris Faulkner, CEO of Dallas-based Breitling Oil & Gas. "Even when oil prices, and thus gasoline prices, have spiked, previous presidents have been wary of tapping our reserves."
"The U.S. government requires a minimum of 90 days worth of demand to be stored. If President [Obama] releases oil today he will have to replace it at market rates - now $97 a barrel or roughly three times what we have it currently stored at. Releasing oil from the SPR will not affect global oil prices or gasoline prices. This means a release from the SPR, should it occur, will not impact stock prices in a negative way for any meaningful amount of time. In fact, a release may actually drive oil prices higher in the weeks following like it did the last time Obama tapped our reserves (in 2011).
'The White House would say that their reasoning for dipping into oil reserves would be because the market is undersupplied with crude oil," says Andrew Holland, senior fellow for energy policy at the American Security Project. "I am afraid that the sole actual reason for tapping the reserve is because they see high gasoline prices as a potential weakness in the coming election."