Strategic reserves of oil should be kept for true supply shocks seven top Republicans in the Senate told President Barack Obama on Monday, urging the White House to avoid tapping stockpiles unless there is a “severe” disruption.
The White House has said for months it was considering the merits of selling oil from the Strategic Petroleum Reserve, or SPR, as a tool for dealing with oil prices spooked higher by Middle East tensions and Western restrictions on Iranian oil sales.
Republican US Senate Leader Mitch McConnell and 6 other Senators told Obama in a letter that despite tensions, “we have not yet seen the discrete event that directly affects our Crude Oil supply and justifies tapping our reserves.
“The SPR is America’s rainy-day fund,” the Senators said.
“We ask you to preserve it for a truly rainy day with an unanticipated energy or severe supply disruption occurs,” said the letter, also signed by US Senators Jon Kyl, John Thune, John Cornyn, Roy Blunt, James Inhofe and John Barrasso.
Senator Cornyn said a release would be a “political raid” of the SPR ahead of the 6 November presidential election.
Current reserves are about 695-M bbls stored in salt caverns designed to hold a total of 727-M bbls. The government lent 1-M bbls last month to refiner Marathon Petroleum Corp (NYSE:MRO) due to shortages caused by Hurricane Isaac.
The Senators also asked the White House to provide a “detailed plan” explaining how the administration will refill the SPR after selling 30-M bbls last year, when a civil war in Libya cut the country’s Crude Oil exports.
That move lowered prices only for a few weeks. “Even if your administration flooded the market with the entire remaining SPR stock, it would cause barely a ripple in the price of Crude Oil and Gasoline,” the Senators said.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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