WASHINGTON (Reuters) - A group of Democratic lawmakers in the House of Representatives is again urging President Barack Obama to aggressively use the threat of releasing oil from emergency reserves to rain on speculators driving up oil prices.
The three lawmakers are gathering signatures from others in Congress for a letter to Obama to press him to wield the 696 million barrels of oil that the government stores in salt caverns as a weapon against “rapid price escalations resulting from speculation in the oil markets.”
Reuters reported on Thursday that Britain is poised to cooperate with the United States on a release of strategic oil stocks that is expected within months, citing two British sources.
Brent crude oil prices immediately dropped $3 per barrel after the initial report, but rebounded after the White House said no deal had been reached on a release of reserves.
That showed how sensitive oil markets would be to a release of oil, Edward Markey, Rosa DeLauro and Peter Welch said in the letter, reiterating calls to Obama for an “aggressive strategy” for releasing oil from the strategic petroleum reserve.
Gasoline prices in the United States are unusually high for this time of year, hurting consumer confidence heading to the U.S. elections in November.
Consumer prices rose the most in 10 months in February as the cost of gasoline spiked, according to government data on Friday, but there was little sign that underlying inflation pressures were building up.
“As we approach the summer driving season, we believe that you must consider all immediate options in order to prevent a runaway increase in prices,” the lawmakers said, citing the SPR as the only short-term tool in the arsenal for combating high gasoline prices.
“Releasing even a small fraction of that oil could again have a significant impact on speculation in the marketplace and on prices. It would remind the markets that the United States is ready to employ an aggressive and effective SPR draw down policy if needed,” the lawmakers said.
They expect to deliver the letter to the president in the next few days.
Republicans and some Democrats have argued the SPR should be used only in cases of dire supply emergencies to prevent the kind of line-ups for gasoline seen during the oil crisis of the 1970s.
Republicans have used high gasoline prices as an opportunity to criticize Obama for his energy policies and to push for expanded domestic oil drilling and the Keystone XL oil pipeline from Canada.
Democrats have increasingly blamed speculation for artificially inflating oil prices and have pressed regulators to clamp down.
Editing by Russell Blinch and Bob Burgdorfer