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Special Energy Report / INSIDERS POLL

Insiders: Obama Will Tap Oil Reserve

(Charles Dharapak/AP)

photo of Olga Belogolova
February 28, 2012

In a press briefing last week, White House spokesman Josh Earnest argued that there is no magical solution for rising gas prices.

“If somebody is going to promise that they can wave a magic wand or sprinkle the pixie dust or plant the beans in the right place so that we can get out of this problem, they’re just not being straight with you, and they’re not being straight with the American people,” Earnest told reporters, staying mum on whether President Obama will dip into the nation’s Strategic Petroleum Reserve in response to high and rising fuel prices.

But nearly half of National Journal’s Energy and Environment Insiders think Obama will do just that. 

 

The ongoing gas-price fight between Republicans and the Obama administration will only escalate as the summer months near and the presidential election approaches. Gas prices haven’t reached their zenith, but the blows are already being exchanged daily. First Republicans slam Obama on gas prices, then he returns the favor.

Last week, Obama chided Republicans for using the high prices as a campaign tool and argued, much like his spokesman, that “there are no quick fixes to this problem.” Still, GOP lawmakers and candidates blamed Obama for allowing prices to double during his time in office and offered up more domestic production and the Keystone XL pipeline as potential solutions, while Democrats urged Obama to once again tap the strategic reserve.

Forty-six percent of Insiders say Obama will dip into the emergency reserve, arguing that he needs to do something “just to show he cares.”

“It is the only thing the president can actually do that looks like he is doing something,” said one Insider.

Obama already tapped the Strategic Petroleum Reserve last June, in coordination with the International Energy Agency, to offset the disruption in the oil supply caused by unrest in the Middle East.

It was only the third time the United States has tapped the emergency oil reserve since its creation in 1975. The first President Bush authorized an emergency release during the first Gulf War in 1991, and the second President Bush released 11 million barrels in 2005 after Hurricane Katrina.

While most Insiders predicted that this will be Obama’s reaction to rising gas prices, many cautioned that it still isn’t a good idea.

“The word ‘strategic’ in the Strategic Petroleum Reserve was not supposed to denote electoral strategy,” warned one Insider.

Some Insiders looked to other potential administrative actions—12 percent said Obama would crack down on Wall Street speculators and another 12 percent said the president would open up more domestic oil production, while 6 percent said he would do nothing. 

Meanwhile, 24 percent of Insiders suggested other actions may come from the Obama administration in reaction to the high prices. Among those, Insiders suggested Obama would continue to place the emphasis on tax breaks for the oil and gas industry, continue talking about how there is not much the U.S. can do to reduce prices, or push forward with alternative energy solutions.

A majority of Insiders agreed that unrest in the Middle East is the biggest factor affecting gas prices; about one in five cited growing worldwide demand.

"The continued threat from Iran to shut down oil exports of its own or other nations in the Persian Gulf, or the outbreak of war between Iran and Israel, will drive oil prices higher," one Insider said. 

"It's about the perceived tightness in the global market," said another Insider. "In the near term, political instability and global demand are what is shaping the short-term price. Domestic production, increased fuel economy, and alternative fuels don't impact the immediate price fluctuations, but they can suppress future price shocks and insulate against energy insecurity."

Other factors cited by Insiders as affecting oil prices included Wall Street speculation and uncertainty about European economies. 

 

What will Obama do in reaction to high gas prices?

(50 votes)

  • Tap into the Strategic Petroleum Reserve  46%
  • Crack down on Wall Street speculators  12%
  • Open up more domestic oil production  12%
  • Nothing  6%
  • Other (please specify)  24%

 

Tap into the Strategic Petroleum Reserve

“The predictable, popular, totally ineffective, and conventional Democratic response is to tap the SPR—and that is exactly what the president will do.”

“I believe the president will tap the SPR, and his move will be exposed as crass politics ignoring important security issues. The word ‘strategic’ in the Strategic Petroleum Reserve was not supposed to denote electoral strategy.”

“It is a stupid idea, but it is the only thing the president can actually do that looks like he is doing something. It is a bad idea, though.”

“Obama knows it will do nothing to lower the price of gasoline, but it’s the only thing he can actually do without help from Congress and the only ‘solution’ that won’t upset his friends at the Center for American Progress.”

“He will need to do something just to show he cares, and he has already shown himself willing to tap into the SPR. In addition, he will probably rail against Wall Street speculators, but I don’t think he has any legal means of ‘cracking down’ on them.”

“The SPR was never intended as a price control, too, but Democrats can’t resist tapping it.”

“He may call for an investigation into trading and speculation, but the key component of his short-term plan will be an SPR release.”

Crack down on Wall Street speculators

“The president will brag about the production increases that are attributable to the prior administration’s policies while blaming the increased prices on ‘speculators,’ the favorite Democratic bogeyman.”

“He and other Democrats will talk about cracking down—whatever that means—until prices dip. If history shows anything, it shows that.”

“Most likely he’ll crack down on speculators, because it plays into the Main Street vs. Wall Street frame, and the SPR is tough to touch with Iran so volatile.”

Open up more domestic oil production

“Campaign arguments that greater domestic oil production will work to keep prices low are false. Domestic production has been up over the last two years, and yet 2012 started with the highest gas prices to date, and some are predicting this year could be the most expensive to date for consumers. Prices are set on the global market!”

“President Obama will continue to point out that oil and gas production from domestic sources is at an all-time high, but he will also want to demonstrate that he is taking action to relieve the pain at the pump.”

Nothing

“Given his recent speech in Miami about [how] drilling isn’t the solution, he won’t do anything.”

“He just said he had no plans to do anything.”

Other

“The best way for the president to reduce the impact of high gas prices on the U.S. economy is to keep moving us away from being reliant on oil. Critics may scoff that this won’t have an immediate impact on oil prices, but neither would any of the stale proposals dragged out by the GOP.”

“Go after oil and gas tax expenditures (again).”

“Blame Republicans.”

“I believe the man said ‘All of the above.’ We should expect that.”

“Talk about the fact that there’s not very much that the U.S. government can do to make a difference in gasoline prices.”

“There are a lot of bad, short-term prescriptions that are pulled out of the policy medicine cabinet when prices rise. These are all poor-performing elixirs. We need to continue to heed the doctor’s advice by continuing to expand domestic production over time, improve fuel economy standards, and increase viable alternative vehicles and fuels.”

“He’ll complain about the greed of Big Oil and try to bully them into doing something to lower prices.”

What are the biggest factors that will drive gas prices?

(50 votes)

  • Domestic Production  0%
  • Unrest in the Middle East  53.1%
  • Wall Street speculators  10.2%
  • Growing demand worldwide  20.4%
  • Uncertainty about European economies  2.0%
  • Other (please specify)  14.3%

Unrest in the Middle East

"Geopolitical risk is the accelerator; Europe is the brakes."

"In the short term, unrest. In the long term, growing demand worldwide will keep pressure on prices."

"It's about the perceived tightness in the global market. In the near term, political instability and global demand are what is shaping the short-term price. Domestic production, increased fuel economy, and alternative fuels don't impact the immediate price fluctuations, but they can suppress future price shocks and insulate against energy insecurity."

"Since Obama is ratcheting up global economic sanctions on Iran to keep it from developing a nuclear weapon, and those sanctions are at the root of upward pressure on oil prices, does that mean that the candidates running against Obama on the gasoline price issue would rather see a nuclear Iran?"

Wall Street speculators

"Supply is up and demand is low. Yet Americans are getting mugged at the pump anyway. Wall Street greed is insatiable."

"Do we wish we had taxed gasoline three years ago and fairly shared its proceeds amongst all Americans? We still pay less for gas than almost every other country in the world. The only question is who profits from this recent hike. Today it is Goldman Sachs, i.e. Geithner's buddies. "

Growing demand worldwide

"Economic recovery will exacerbate the normal seasonal price rise while instability in the Middle East and tension over Iran's nuclear intentions may create some historic highs."

"Anyone who answers 'speculators' should be dropped from the list for being unacceptably stupid."

"A costly lesson in supply and demand."

"Frankly, as the global economy slowly recovers, demand for petroleum is beginning to ramp up which means demand exceeds replenishable supply. I do laugh at those with simplistic solutions saying drilling in the U.S. will ramp down prices--it may have a few dollars per barrel impact, but that has very small impact on price per gallon in the USA."

"Increasing gas prices are attributable to several factors, including increased demand from China and India, instability in the Middle East, and lack of domestic production. The only thing the president has direct control over is domestic production, which is what he should be focused on increasing."

Other (please specify)

"Continued lack of refining capacity (particularly with growing demand worldwide). The recent closure of some East Coast refineries is already impacting prices in the D.C. area."

"Weak dollar compared to other currencies in a commodity with an international price generally traded in dollars."

 


National Journal’s Energy and Environment Insiders Poll is a periodic survey of energy policy experts. They include:

Jeff Anderson, Paul Bailey, Kenneth Berlin, Andrew J. Black, Denise Bode, Kevin Book, Pat Bousliman, David Brown, Neil Brown, Stephen Brown, Kateri Callahan, McKie Campbell, Guy Caruso, Paul Cicio, Douglas Clapp, Eileen Claussen, Steve Cochran, Phyllis Cuttino, Kyle Danish, Lee Dehihns, Robbie Diamond, David Di Martino, Bob Dinneen, Sean Donahue, Jeff Duncan, John Felmy, Mike Ference, David Foster, Josh Freed, Don Furman, Paul Gilman, Richard Glick, Kate Gordon, Chuck Gray, Jason Grumet, Christopher Guith, Lewis Hay, Fritz Hirst, Jeff Holmstead, David Holt, Skip Horvath, Bob Irvin, Bill Johnson, Gene Karpinski, Joseph T. Kelliher, Brian Kennedy, Kevin Knobloch, David Kreutzer, Fred Krupp, Tom Kuhn, Con Lass, Mindy Lubber, Frank Maisano, Drew Maloney, Roger Martella, John McArther, Mike McKenna, Bill McKibben, Kristina Moore, Richard Myers, Aric Newhouse, Frank O'Donnell, Mike Olson, T. Boone Pickens, Thomas Pyle, Hal Quinn, Rhone Resch, Barry Russell, Joseph Schultz, Bob Simon, Scott Sklar, Bill Snape, Jeff Sterba, Christine Tezak, Susan Tierney, Andrew Wheeler, Brian Wolff, Franz Wuerfmannsdobler and Todd Young.

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