Reality Check: President tapping strategic petroleum reserve - Cincinnati News, FOX19-WXIX TV

Reality Check: President tapping strategic petroleum reserve

(FOX19) - U.S. Energy Secretary Steven Chu said the release of oil is a response to oil supply disruptions caused by turmoil in the Middle East and North Africa, including Libya.

So what is the Strategic Petroleum Reserve for? 

It is supposed to be there in the event of natural disasters, or major disruptions in oil supply.  It was created in 1973-74 after the Arab oil shock.

The SPR has sold oil reserves three times after Hurricane Katrina in 2005, after the Persian Gulf War in 1991 and as a deficit reduction measure in 1996-1997.

The White House points out that the 30 million barrels which they will release next month make up less than 5 percent of the total reserve which has 727 million barrels in storage.

Today, Republican lawmakers blasted the decision.  Texas Senator Kay Bailey Hutchison put out this statement  "If this administration wants to address rising energy prices, it should stop putting up roadblocks to domestic energy production."

The White House says the Department of Interior has made available significant acreage for resource development over the past two years, 

Also, there are tens of millions of acres that are currently under lease that remain idle. when it comes to onshore oil and gas development, nearly 57 percent of all leased acres are inactive.

So why is that?  It appears that while the administration is issuing the permits.  They are using the EPA to block usage.  For instance, there are an estimated 27 billion barrels of oil waiting to be tapped in the Arctic Ocean, off the coast of Alaska.  After spending five years and nearly $4 billion, Shell Oil Company has been forced to abandon its efforts to drill for oil in the region.

Why?  Because the EPA is withholding necessary air permits because of a one square mile village of 245 people, 70 miles from the off-shore drilling site. 

Also, Conoco Phillips, which has a permit to drill for the first time in the National Petroleum Reserve areas in northern Alaska can't access the land because the Army Corp of Engineers at the urging of the EPA has denied a permit for a bridge across the Colville river.

Here's what you need to know:

The President's release of the 30 million barrels of oil is just a temporary fix but may be very well timed.  The President knew this would have the maximum impact, hitting speculators on the chin, according to traders.  Stephen Weiss of Short Hills Capital says "the timing of the release is genius," because gas prices are already falling.

Which means when it comes to speculators we may see a significant drop in prices, albeit a very temporary one.  

And that is Reality Check 


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