Business | Oil & Gas
US reserves not for price manipulation
America's emergency energy stockpiles should be used to address supply disruptions, not to manipulate fuel prices, the head of the federal Energy Information Administration said.
- Reuters
- Published: 23:39 August 27, 2008
- The US says releasing supplies from either the Strategic Petroleum Reserve or the Northeast Heating Oil Reserve would lower fuel prices only in the short term.
- Image Credit: AP
Washington: America's emergency energy stockpiles should be used to address supply disruptions, not to manipulate fuel prices, the head of the federal Energy Information Administration said.
Guy Caruso said releasing supplies from either the Strategic Petroleum Reserve (SPR) or the US Northeast Heating Oil Reserve would lower fuel prices only in the short term.
"If you start using it as a price manipulation fund... it's never really worked that well," Caruso said.
In a global market, Caruso said Opec could easily cut production to offset any effect that releasing oil from the SPR would have on fuel prices.
In addition, any price decline from tapping the two million-barrel heating oil reserve would last only a few weeks before prices would begin climb again.
"It would still be most valuable to keep it for real emergencies, as opposed to getting a very temporary price impact," Caruso said.
Democrats, such as presidential candidate Barack Obama, have pushed legislation that would release about 70 million barrels of oil from the nation's petroleum reserve to provide Americans some relief from high gasoline prices.
Last winter, concerns about the surging prices prompted some US heating oil distributors to ask the government to release emergency heating oil supplies.
Although the steep decline in crude oil prices has pushed heating oil prices lower in recent weeks, the EIA said in July there could be spot shortages of heating oil this winter if people wait to buy fuel.
Caruso reiterated his agency's position that opening restricted areas along the US coasts to oil exploration would do little lower to prices at the gas pump. Offshore drilling is a long-term process that will take at least five to seven years to begin producing new supply, he said.
"Small increments over a long period of time don't have a big impact on price," Caruso said.
Caruso also dismissed claims from Democrats that their pending anti-speculation legislation has helped significantly lower oil prices from record levels and claims from Republicans that lifting the executive ban on offshore drilling is responsible for the recent drop.
He said the increase in production from Saudi Arabia and the decline in oil demand have had a bigger impact on bringing crude oil prices down from record levels above $147 in July.
Share this article
Popular in Business
-
General
Precious jump
Gold prices at new high as India's central bank buys $6.7b worth of gold
Business Editor's choice
-
UAE companies in full force at WTM
Seventy-eight participants are from Dubai and 50 from Abu Dhabi
-
DIFC committed to high standards
Ensures an efficient process to serve the business community
-
Sweet life in the Middle East
A sweet look at the confectionary industry in the UAE and Middle East
