Obama Taps Petroleum Reserve In a surprise move, the Obama administration said it would tap the strategic petroleum reserve to offset the crude supply lost to the civil war in Libya. The coordinated plan with the International Energy Agency will release 60 million barrels from emergency supplies around the world. Oil prices plummeted on the news, and shares of energy company stocks tumbled as well.
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Obama Taps Petroleum Reserve

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Obama Taps Petroleum Reserve

Obama Taps Petroleum Reserve

Obama Taps Petroleum Reserve

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In a surprise move, the Obama administration said it would tap the strategic petroleum reserve to offset the crude supply lost to the civil war in Libya. The coordinated plan with the International Energy Agency will release 60 million barrels from emergency supplies around the world. Oil prices plummeted on the news, and shares of energy company stocks tumbled as well.

ROBERT SIEGEL, Host:

From NPR News, it's ALL THINGS CONSIDERED. I'm Robert Siegel.

MICHELE NORRIS, Host:

NPR's Jeff Brady says this is good news for those planning a summer driving trip.

JEFF BRADY: Gasoline prices across the U.S. will almost certainly head down in coming weeks because of this announcement. Patrick DeHaan is a petroleum analyst with GasBuddy.com.

PATRICK DEHAAN: You know, better late than never. But I think this would have helped a bit more had it been in May, it would have helped the overall energy markets.

BRADY: At the U.S. chamber's Energy Institute, President and CEO Karen Harbert blasted today's announcement, saying the Strategic Petroleum Reserve was intended for emergencies.

KAREN HARBERT: The closing of a canal, Hurricane Katrina, which shut down the Gulf of Mexico - something of that proportion. It was never intended to be a short-term price fixer.

BRADY: As you might expect, the oil industry was not pleased to hear the administration is tapping the Strategic Petroleum Reserve.

JOHN FELMY: This is a move based on the failed energy policy.

BRADY: John Felmy is the chief economist at the American Petroleum Institute. His industry has been saying for a long time that the U.S. government should open up the country's shores and wild lands to more drilling. Felmy says over the long-term, more domestic supply would help calm erratic oil markets.

FELMY: We can produce a lot of supply in this country that would be far in excess of what they're talking about with this release. And it would generate jobs, revenue for the federal government, and improve our energy security.

BRADY: The administration's concern over oil supply is due to the trouble in Libya. Fighting there took about one and a half million barrels of oil a day off the world market. Saudi Arabia has tried to make up for that, but there's a problem.

PHILIP VERLEGER: The extra oil the Saudi's produce is a heavier oil that has a high sulfur content.

BRADY: Philip Verleger, at the University of Calgary, says it's difficult for a lot of European and U.S. refineries to produce gasoline and diesel from Saudi oil.

VERLEGER: All crudes are not the same. They're, you know, they are like red jellybeans and black jellybeans. The Saudis have lots of black jellybeans, but what we need are the red jellybeans and that's what Libya produces.

BRADY: Jeff Brady, NPR News.

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