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Obama vows to stabilize fuel prices, calls for reform

Reuters/Jason Reed

President Barack Obama holds a news conference in the South Court Auditorium of the Eisenhower Executive Office Building near the White House in Washington, March 11, 2011.

WASHINGTON
Petroleumworld.com, Mar 12, 2011

The United States cannot drill its way out of its energy problems and must begin reforms now to reduce oil dependence, President Barack Obama said on Friday, pledging to do all he could to stabilize fuel prices.

Obama, whose prospects for re-election in 2012 may hinge partly on gasoline prices and their effect on the economy, said the world could manage oil supply disruptions stemming from unrest in Libya and across the Middle East and North Africa.

In a White House news conference aimed at calming U.S. consumers' fears of high gas prices, Obama stressed that he could tap U.S. strategic oil reserves quickly if necessary. But he declined to say what price threshold would trigger such intervention.

Republicans, many of whom rallied around the call "drill, baby, drill" in the 2008 presidential election, accuse the administration of neglecting domestic oil production -- a theme that is likely to resurface in next year's election, too.

The average American household will spend about $700 more for gasoline in 2011 than it spent last year, the Energy Department said this week.

Obama, a Democrat, acknowledged that consumer pain and said more had to be done to secure U.S. energy needs long-term.

"Even if we tap every single reserve available to us, we can't escape the fact that we only control 2 percent of the world's oil, but we consume over a quarter of the world's oil," Obama told a news conference.

"T. Boone Pickens, who made his fortune in the oil business -- and I don't think anybody would consider him unfriendly to drilling -- was right when he said that 'this is one emergency we can't drill our way out of.'"

Pickens is a billionaire oil tycoon.

Republicans point to a 16 percent drop in domestic oil production compared to projected levels under Obama's watch. The White House counters that domestic production has increased since 2008 while imports of foreign oil have gone down.

Republican U.S. House of Representatives Speaker John Boehner said the Obama administration was to blame for not doing enough to bolster domestic production.

"While the Obama administration claims to be committed to American energy production, the facts and its own actions say otherwise," he said in a statement.

A Reuters/Ipsos poll this week showed the proportion of people who believe the United States is on the wrong track rose 7 percentage points to 64 percent from February.

Ipsos pollster Cliff Young said the rating was a result of the higher fuel prices. "Gas prices specifically are things that affect people's pocketbooks and have an immediate impact," he said.

TAPPING STRATEGIC RESERVES, REDUCING DEMAND

When Obama came into office he promised a broad overhaul of U.S. energy and climate policy, but legislative efforts stalled in the U.S. Senate. Then Republican gains in last year's congressional elections forced the White House to scale back its energy proposals dramatically.

Obama signaled, however, that rising fuel prices could be an impetus for tackling changes again.

"Every few years, gas prices go up, politicians pull out the same old political playbook and then nothing changes. And when prices go back down, we slip back into a trance, and then when prices go up, suddenly we're shocked," he said.

"We've got to work together, Democrats, Republicans and everybody in between, to finally secure America's energy future. I don't want to leave this for the next president and none of us should want to leave it for our kids."

Americans had to conserve more and reduce their demand for energy going forward, Obama said. In the short term, Obama said he was prepared to tap the Strategic Petroleum Reserve if there were significant disruptions or shifts in the market.

"We have it teed up, so this isn't a situation where it would take a big bureaucracy and several weeks for us to implement. This is something that would take several days."

He said the government would "go after" any evidence of price gouging.

He emphasized, however, that uncertainty in the market -- not a severe supply disruption -- was driving prices higher.

"We're going to try to do everything we can ... to stabilize the market," Obama said.

"We're going to do what we need to do, in consultation with both other producer nations as well as in consultation with our allies who also have reserves, to make sure that oil supplies remain stable and that economic growth is going to continue."


Story by Jeff Mason from Reuters. Additional reporting by Steve Holland , Tabassum Zakaria , and Timothy Gardner ; editing by John Whitesides and Eric Beech

Reuters / Fri Mar 11, 2011 5:15pm EST

 

 

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