Obama said that in the short term, he has ordered authorities to be alert for possible price gouging at the pumps, and monitor potential manipulations in the markets. He added that if necessary, he would authorize tapping into the country’s 724 million barrel Strategic Petroleum Reserve.
“If we see significant disruptions or shifts in the market that are so disconcerting to people that we think a Strategic Petroleum Reserve release might be appropriate, then we’ll take that step,” he said.
This means the current surge in gas prices to over $3.50 a gallon has not yet warranted such actions.
Obama said that increasing global demand from developing countries like China is among the biggest causes of rising gas prices. He played down the uncertainty caused by turmoil in North Africa and the Middle East, and lost oil production in Libya.
“The global community can manage supply disruptions like this. Other oil-producing nations have committed to filling any gaps—and we will continue to coordinate closely with our international partners to keep all options on the table when it comes to any supply disruptions,” he said.
Of course, high gas prices take a toll on all Americans, the president acknowledged. He offered the payroll tax cut savings, brokered by bipartisan agreement last December, as a way for them to manage the extra expense.
“In the wake of rising gas prices, it should also help act as a cushion for working families,” said President Obama.
The tax cut will produce a savings of about $1,000 dollars per working family. According to an Energy Department analysis just out, the average household could pay an additional $700 in fuel costs this year, meaning the tax break would be nearly entirely consumed by the gas spike if it continues.
The reality, or the “hard truth,” as the president put it, is that as long as our economy remains dependent on foreign oil, we will always be subject to price spikes.
The best solution, he advocates, is energy conservation, which reduces our reliance on oil. He pointed out that automakers are manufacturing more fuel-efficient cars, part of the reason why the nation already uses 7 percent less oil than in 2005.
In the medium-term, the president acknowledged that increased domestic production is needed, but he emphasized “common-sense standards” must first be developed and implemented.
He denied claims by Republicans that his administration has “shut down oil production … it doesn’t match up with reality.”
Last Thursday, House Speaker John Boehner (R-Ohio) and other top Republicans responsible for energy portfolios, claimed billions of known oil and gas reserves are there for the taking, and the administration is doing nothing to expedite development.
They unveiled an initiative tasked with pushing the administration to approve more offshore oil leases, stopping EPA regulation of greenhouse gases, advancing nuclear energy plans, and blocking any future cap and trade legislation.
“The America Energy Initiative will be a sustained ongoing effort by House Republicans in the weeks and months ahead,” said Boehner.
Republicans say a de facto moratorium on offshore drilling and a current slowdown of new lease approvals will lead to large reductions in domestic oil and gas production in the coming years.
Before the BP oil spill put a damper on drilling in the Gulf of Mexico, American oil production had reached its highest level in seven years. Since then, major changes in regulatory policy and oversight structure meant to prevent future disasters, have slowed progress.
On Friday, the president announced that the U.S. Department of the Interior has now approved more than 35 new offshore drilling permits that meet the new safety and environmental standards.
The administration has also set its sights on increasing production on current, non-producing leases held by energy companies. As part of the president’s 2012 budget request, energy companies would pay a fee for holding these leases.
At the same time, the president is asking for continued financial support for clean energy development from renewables like wind, solar, advanced batteries, and biofuels.
“Right now, all across America, our farmers are producing homegrown fuels, our scientists are looking for the next breakthroughs, and our workers are back in once-shuttered factories, manufacturing wind turbines and solar panels and advanced batteries that will help our cars get hundreds of miles to the gallon,” he said.
“We’ve been having this conversation for nearly four decades now. 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. I think the American people are tired of that. I think they’re tired of talk. 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,” said Obama.
