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Is There Really A Shortage Of Oil?

As gas prices hit $4 per gallon, White House spokesman Jay Carney assured Americans on Monday that the administration is well aware of the toll high fuel costs are taking on American families. So what’s President Obama’s solution to America’s pain? According to White House chief of staff Bill Daley, the administration may tap into the nation’s oil safety net – the Strategic Petroleum Reserve (SPR) – in order to bring down the cost of fuel. Big mistake. While most folks want to pay less at the pump, dipping into our oil reserves is a short-sighted political ploy that papers-over a much bigger, long-term problem: the Obama administration’s continuing refusal to grant America access to its domestic oil resources.

The United States’ oil reserves were created after the 1973 Arab oil embargo to be used in cases of national crisis where there’s a significant shortage of oil — today it holds about 700 million barrels of petroleum. Presidents have used it sparingly — during the 1991 Gulf War and natural disasters such as Hurricanes Ivan and Katrina, for example. Yet, six Democratic senators called for the sale of the reserve oil to go toward advancing electric cars and reducing the deficit. The reserves are not intended to spur sales of electric cars (which also require gasoline).

Rep. Ed Markey (D-MA), called on the president to use the SPR, saying it’s “the only tool we possess which can counter supply disruptions and combat crippling price spikes in the short term.” Of course this isn’t true, and the SPR is not a “tool.” The Markey/Obama energy agenda is absolutely creating major economic problems, but not the national security emergency the SPR is intended to help alleviate.

Yesterday, CEOs from the world’s biggest oil companies said that there is not, in fact, a shortage of oil, that OPEC producers like Saudi Arabia “have the capacity to fill the gap” in oil supply brought on by the crisis in Libya, and that the United States should not tap its reserves. What’s more, given the continuing unrest in the Middle East, there may come a time when the United States truly needs its energy safety net. For example, an Iranian blockade of the Strait of Hormuz could create a significant disruption of global commerce. To empty the reserves in order to provide political cover to a disastrous energy agenda would be irresponsible and reckless.

The debate over emptying the reserves also misses the point that they would need to be refilled. The Energy Policy Act of 2005 directs the Department of Energy to refill the reserves as expeditiously as possible. There is no end in sight to high oil prices, and the United States is already losing billions of dollars in oil royalties from President Obama’s unilateral decision to decrease offshore drilling. We cannot debate emptying the reserves without also discussing how they will be refilled.

There is something the White House should do, though — restore and expand America’s oil supply. Time after time, the Obama administration has thrown up roadblocks that restrict U.S. domestic oil supply, thereby increasing world oil prices and the amount of oil we import. President Obama has rescinded drilling permits, excluded the Gulf of Mexico and the Atlantic and Pacific coasts from its oil and gas leasing program, all while federal leasing of oil and gas exploration in the western United States has dropped significantly. Instead of pursuing domestic energy sources, the White House has invested in biofuels, alternative energy and electric vehicles — all of which are bad policy. There’s a better way. Heritage’s James Carafano and Nicolas Loris write:

As the only country in the world that places a majority of its territorial waters off-limits to oil and gas exploration, the U.S. should at the very least be drilling in the areas where it does have access. Removing the de facto moratorium on drilling would immediately increase supply and obviate the need to tap the SPR. A market-based energy policy that opens supply and prudently balances economics with environmental benefit would lower prices, create jobs, and reduce the need for foreign imports.

The Strategic Petroleum Reserve was intended, first and foremost, to be a national security instrument in times of crisis. It is not a political tool to help hide bad energy policy. Now is not the time to tap it. Now is the time for the Obama administration to allow the United States to reach its domestic energy supply while lowering prices, creating jobs and reducing the need for foreign imports.

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