The Obama administration has "teed up" a withdrawal of oil from the nation's Strategic Petroleum Reserves and is ready to move forward in a matter of days if need be, President Obama said at his press conference Friday.
"If we see significant disruptions, or shifts in the market that are so disconcerting to people that we think that a Strategic Petroleum Reserve release might be appropriate, then we'll take that step, and we're going to monitor very closely," Obama said. "Obviously, we have it teed up, so this isn't a situation where there's a big bureaucracy and it would take us several months to implement."
He also said Libyan oil isn't essential to the United States: "Libya does not account for a large portion of world oil production," the president said. "Even if Libyan oil production was suspended for a significant period of time because of the unrest there, we'd be able to fill that gap."
Releasing oil from the strategic reserves has been discussed as a possible measure to alleviate spiking gas prices. President Bush released oil from the reserves after Hurricanes Katrina disrupted oil production in the Gulf of Mexico.
Obama wouldn't disclose any price thresholds or other quantifiable metrics for when he would decide to release reserve oil, if indeed he does. But he did give a broad outline of the considerations at play:
The idea behind the Strategic Petroleum Reserve is if there was a severe disruption in supply, similar to what happened in the seventies, for example, when you had OPEC making the decision not to sell for a while ... [to] make sure we've got sufficient supplies for that. Another would be Hurricane Katrina, when you've got a bunch of refineries and the production of the Gulf has been impacted, that's another example where in the short term you can fill that hole. ...
Right now, what we're seeing is not a shortage of supply ... the problem is a great deal of uncertainty in the oil market. Part of it is prompted by the fact that the economy's growing faster in some places than others [internationally] ...
We already saw that trend in 2008, because the worldwide record oil prices went back down, but to some degree a lot of what's happened in prices is a consequence of economic growth, and countries and economies started to use more oil. Part of it, though, is uncertainty in terms of what's happening in the Middle East. One of the messages that I want to send today is we are confident about our ability to fill any gaps in supply.
Libya does not account for a large portion of world oil production ... [there's a] high premium on it, but basically even if Libyan oil production was suspended for a significant period of time because of the unrest there, we'd be able to fill that gap. ...
We're going to do what we need to do in consultation with other producer nations as well as in consultation with our allies, who also have reserves, to make sure that oil supply remains stable and that economic growth is going to continue.