White House won't use oil reserve, Congress to act

WASHINGTON Mon May 12, 2008 10:31pm BST

WASHINGTON (Reuters) - The White House said on Monday it won't sell crude oil from the U.S. Strategic Petroleum Reserve to help boost available oil supplies and lower prices, while Congress is ready to take on the Bush administration and will try to suspend oil deliveries to the stockpile.

"The president, as the person responsible for the safety and security of the American people, would resist any calls to start selling off Strategic Petroleum Reserve oil and we don't think it would have that big of an impact on prices," White House press secretary Dana Perino told reporters.

"It's like the fire extinguisher in case of an emergency," said Perino about the oil reserve.

She said attempts in the past to influence energy prices by using the oil stockpile have not been successful.

Perino also rejected new calls from Congress for the administration to stop adding oil to the reserve and divert those deliveries to the market, a move many lawmakers say would ease oil prices that hit a record $126.40 per barrel on Monday at the New York Mercantile Exchange.

"The president believes that we need an even larger Strategic Petroleum Reserve in order to protect ourselves against oil shocks," she said.

As a result, the Energy Department will go forward with its plan to accept bids this week from oil companies to supply millions of barrels of additional crude to the stockpile, which now holds about 703 million barrels of emergency oil at four underground storage sites in Texas and Louisiana. The stockpile can hold up to 727 million barrels of crude.

However, both the Senate and House of Representatives are expected to vote Tuesday on putting the brakes on future oil shipments to the reserve.

A Senate Democratic proposal, which has the support of many Republicans, would suspend oil deliveries to the stockpile until the price of crude fell to below $75 a barrel.

"The president doesn't support this idea because he doesn't think it will have a meaningful impact on prices and it would have a negative consequence on our ability to respond to a severe supply disruption," said White House spokesman Scott Stanzel.

Sen. Byron Dorgan, a North Dakota Democrat and sponsor of the proposal, said the administration's insistence on continuing to fill the oil reserve was "dumb on its face."

House Speaker Nancy Pelosi said Democrats and Republicans in the House have agreed to approve a similar proposal, which she said could reduce gasoline prices by 5 to 24 cents a gallon.

The national retail price for gasoline reached a record $3.72 a gallon on Monday, after soaring 10.9 cents over the last week, the Energy Department said.

Sen. Jeff Bingaman, the New Mexico Democrat who chairs the Senate's energy committee, said suspending reserve shipments "will have a modest impact on the price of oil perhaps."

He likened it to the "chicken soup remedy," saying it could help and it couldn't hurt.

Bingaman added that stopping deliveries to the oil stockpile "is not going to put our national security in jeopardy" with 97 percent of the reserve already filled.

(Reporting by Tom Doggett; Additional reporting by Richard Cowan; Editing by Marguerita Choy)

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