White House: Oil price a factor for tapping reserves

Reuters News
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Posted: Mar 21, 2011 3:02 PM

By Jeff Mason

WASHINGTON (Reuters) - The White House said on Monday the price of oil was one factor -- but not the only factor -- that would be used when determining whether the United States will tap its strategic oil reserves.

"The price of oil is one of a number of factors that is looked at ... in making that determination, but not the sole factor," White House spokesman Jay Carney told a briefing.

"I wouldn't look to a price threshold. The issue here is disruption -- is there a major disruption in the ... flow of oil. That's obviously a factor."

While longstanding U.S. policy is to release reserves only in the event of a significant and immediate supply shortage, some analysts say the Obama administration may feel compelled to try to tamp down high prices being fueled both by outages in Libya and concern unrest could spread in the Middle East.

President Barack Obama declined to comment about the issue when asked about it by a reporter during his meeting with Australian Prime Minister Julia Gillard in the Oval Office on Monday.

White House Chief of Staff William Daley said on Sunday that tapping the reserves was one option the administration was looking at.

Those comments, by Obama's top aide, added weight to the impression that the move was being considered seriously.

Carney said he was not playing down Daley's comments, while emphasizing that they did not signal a policy shift.

"The chief of staff made clear that this is an option on the table and it is an option that we're considering," Carney said. "It's an option we are considering, but there are a number of factors that go into it, and it is not price-based alone."

Higher oil prices could undermine the fragile U.S. economic recovery and damage Obama politically as he moves toward a 2012 re-election bid.

The U.S. Strategic Petroleum Reserve holds 727 million barrels of oil, or about 38 days of consumption, and has only been tapped a handful of times since it was created in the mid-1970s after the Arab oil embargo.

It was last used in 2005 following Hurricane Katrina.

(Editing by Eric Beech)