White House seeks greater power over emergency oil stocks

Reuters News
Posted: Apr 22, 2015 11:33 AM

By Timothy Gardner

WASHINGTON (Reuters) - The Obama administration wants greater authority from Congress to tap the emergency oil reserve to control spikes in global petroleum prices, seeking a more aggressive role for the 40-year-old stockpile.

Authorized by Congress in 1975 after the Arab oil embargo, the Strategic Petroleum Reserve (SPR) has long been a defensive weapon to protect the U.S. economy from interruptions in crude imports from petroleum-producing countries that are not always friendly to Washington.

The administration on Tuesday urged Congress to expand the president's powers to tap the SPR in times of global supply emergencies and oil price spikes even if imports are not cut off. The request came in the administration's first Quadrennial Energy Review, a wish list of steps to modernize U.S. energy policy.

"The law is definitely obsolete and is a hindrance to proper use of the SPR," said John Shages, who oversaw the reserves during the administrations of Presidents Bill Clinton and George W. Bush.

The push comes as a U.S. drilling boom reduced U.S. dependence on foreign oil in 2014 to about 27 percent of overall use, the lowest level since 1985.

The review also said the ability of the SPR to move oil to refineries needs to be modernized and improved, work that could cost up to $2 billion.

The review said Congress should also approve new triggers so the president can tap the SPR if the administration believes price rises for gasoline and other fuels will likely result from a global supply emergency, not simply if prices have risen from such situations.

The request for greater authority to use the SPR brought criticism that it could become more politicized.

"For a politician, an 'emergency' may have less to do with an interruption in supply and more to do with voter anger about rising gasoline prices," said Bob McNally, an adviser on energy to former President George W. Bush who is now president of the Rapidan Group oil consultancy.

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Prominent Democrats, such as Sen. Edward Markey, have called for more liberal use of the reserve to protect the economy in times of high oil prices. But some congressional Republicans worry that the administration is trying to change the definition of the SPR, said an aide to a lawmaker who did not want to be identified because his boss had not commented on the administration's review.

Senator Lisa Murkowski, chairman of the Senate Energy Committee, will hold hearings on the administration's review beginning next week.

(Editing by Jonathan Oatis)