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Obama prepared to tap petroleum reserve if needed

Obama prepared to tap petroleum reserve if needed
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Friday, March 11, 2011 - 4:42pm

WASHINGTON – President Barack Obama said Friday he's prepared to tap the country's emergency oil reserve if necessary. But as gas prices climbed toward $4 a gallon, the president said the U.S. must adopt a long-term strategy of conservation and domestic production to wean itself off foreign oil.

"We've been having this conversation for nearly four decades now. Every few years gas prices go up, politicians pull out the same political playbook, and then nothing changes," Obama said at a White House news conference. "And when prices go back down, we slip back into a trance."

"I don't want to leave this to the next president," he said. "And none of us should want to leave it for our kids."

Some in Congress have been calling on Obama to tap the Strategic Petroleum Reserve with unrest in the Middle East pushing up oil and gas prices. And the president made clear that that was an option, although not one he's yet ready to exercise. He declined to specify the conditions that would trigger the step, but said it was teed up and could happen quickly if he chooses to call for it.

The government is cautious about going to the petroleum reserve, typically holding off except in very extreme cases, such as hurricanes, that affect oil supplies. The reserves — 727 million barrels stored in salt caverns along the Texas and Louisiana coasts — were created in response to the Arab oil embargo in the 1970s and last tapped in 2008 after hurricanes Gustav and Ike hit.

"If we see significant disruptions or shifts in the market that are so disconcerting to people that we think a Strategic Petroleum Reserve release might be appropriate, we'll take that step," Obama said.

"Right now, what we're seeing is not a shortage of supply; refineries are actually operating at fairly full capacity at the moment. The problem is, is a great deal of uncertainty in the oil markets."

Gas prices in the U.S. now average $3.54 per gallon. Obama said he'd asked administration officials to look out for signs of price-gouging.

Oil prices have surged 24 percent since the middle of February as unrest in the Middle East rattled world markets, although prices slid Friday on the possibility of reduced demand because of the devastating tsunami that hit Japan.

Republicans have sought to blame Obama's policies for the high gas prices, pointing to the slow pace of permitting for new offshore oil wells in the wake of the massive Gulf spill and an Obama-imposed moratorium on new deepwater exploration, though experts say more domestic production wouldn't immediately impact prices. Obama rejected that criticism Friday.

Obama said domestic oil production rose to a seven-year high last year. "Any notion that my administration has shut down oil production might make for a good political sound bite, but it doesn't match up with reality," said the president.

Republicans, who've announced they will be advancing a series of energy bills in the House this year aimed at bringing down gas prices, rejected Obama's arguments. "While the Obama administration claims to be committed to American energy production, the facts and its own actions say otherwise," House Speaker John Boehner, R-Ohio, said in a statement. The American Petroleum Institute also criticized Obama's remarks and accused the Obama administration of putting up regulatory roadblocks to domestic production.

Obama said that to boost production more, he's directed the Interior Department to assess how many onshore and offshore oil leases already held by industry are going undeveloped so that companies can be encouraged to produce from those lease. He also said the administration was looking at the potential for new production in Alaska and elsewhere. He said these steps and others could increase domestic production in the short- to medium term, but were not a long-term solution, considering the U.S. has 2 percent of the world's oil reserves but accounts for over a quarter of worldwide consumption.

"The hard truth is, is that as long as our economy depends on foreign oil, we'll always be subject to price spikes. So we've got to get moving on a comprehensive energy strategy that pursues both more energy production and more energy conservation," the president said. He called for greater investments in clean energy sources like wind turbines and solar panels, and for strategies like more fuel-efficient cars.

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