The price of oil plummeted by nearly 5 percent on Thursday after Energy Secretary Steven Chu announced the U.S. will release 30 million barrels of oil from the Strategic Petroleum Reserve.
But Republicans in Congress lined up to slam the move, linking it to the need for more drilling in the U.S.
Rep. Marsha Blackburn, who sits on the Energy and Commerce Committee, said, “I am appalled but not surprised that the president views his falling poll numbers as a national crisis.”
And committee chairman, Rep. Fred Upton said, “It’s hard to believe that the Administration would rather tap into our emergency supply than support legislation to produce and develop North American supplies, which will create American jobs.
“Releasing our reserves to calm the market is emblematic of an Administration whose energy policy is irrational and counter-productive.”
Upton said 30 million barrels is exactly what could be produced in a month from Alaska’s Outer Continental Shelf.
The move is part of a worldwide effort aimed at stabilizing prices. The rest of the world will release another 30 million barrels over the next 30 days.
The Obama administration hopes that the move will bring prices down at the pump as the summer vacation season gets into full swing. The immediate effect was to bring the price of a barrel of West Texas intermediate crude down by $4.71 a barrel to $90.89.
The concerted move by 28 countries in the International Energy Agency (IEA) has been prompted by an interruption in the world supply caused by Middle East turmoil, Chu added.
“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 recover. As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary.”
The Energy Department said fighting in Libya alone has led to a loss of 1.5 million barrels of oil per day from global markets. Most of that is light, sweet crude.
“As the United States enters the months of July and August, when demand is typically highest, prices remain significantly higher than they were prior to the start of the unrest in Libya,” the department said in a statement.
But GOP members said the answer to high gas prices lies in more drilling, not releasing oil from the reserve. Louisiana Sen. David Vitter said, “We need long-term, expansive domestic energy measures.”
And House whip, Kevin McCarthy called the move “pathetic” saying the reserve should be used for national emergencies “not as a political tool when a President is feeling heat over high gas prices.”
“Simply releasing 36 hours-worth of oil does not constitute an energy plan,” McCarthy added.
Even the Democratic Chairman of the Senate’s Energy and Natural Resources Committee criticized the move. Sen. Jeff Bingaman said the plan would have been “more timely” if it had been put into action when Libyan supplies were first cut off.
Commodity strategist John Licata told Newsmax.TV that the oil release was premature as it is too early to say whether Gulf oil production will be hit by hurricanes this year and because the situation in Libya has not justified such a move.
It is the third time that oil has been released from the Reserve since it was set up in the mid-1970s to give presidents an emergency response to disruptions in supply. George H.W. Bush’s administration released 17 million barrels at the outbreak of the first Persian Gulf War in 1991 and George W. Bush released 21 million barrels after Hurricane Katrina in 2005.
The IEA said the oil loss has become “more pronounced” as fighting has continued. Executive director Nobuo Tanaka said, “I expect this action will contribute to well-supplied markets and to ensuring a soft landing for the world economy.”
The New York Times said talks on the current release have been going on behind closed doors for weeks. The move comes three weeks after Sen. Dick Durbin, D-Ill., urged the president to make such a move.
“Most presidents don’t want to, and this president doesn’t want to. They want to save it for a true national emergency – like, God forbid, a Middle East war, or whatever it happens to be,” Durbin said at the time. “But I’m worried.”
Prices at the pump had already started to drop before the move. By Wednesday they were down to a nationwide average of $3.61 said the AAA, down 9.75 percent from its $4 mid-May high
The Obama administration said it would consult other countries – both oil consumers and producers – to decide whether more oil should be released later in the year.
The Reserve currently is the world’s largest stockpile of government-owned oil, with a record 727 million barrels stored in caverns along the Gulf of Mexico coast.