The Obama administration said its Thursday decision to release 30 million barrels of oil from U.S. emergency stockpiles is designed to bolster the economy and soothe consumers’ concerns amid political unrest in Libya and the Middle East.
The move coincided with a similar 30 million-barrel release by other International Energy Agency member countries and sent oil prices to a four-month low in trading Thursday. Light, sweet crude for August delivery settled down $4.39, or 4.6 percent, to $91.02 a barrel on the New York Mercantile Exchange.
However, analysts warned that it was unlikely to cause big changes in the price motorists pay for gasoline.
The oil being released from U.S. stockpiles represents less than two days’ worth of the nation’s total oil and petroleum consumption — roughly 19 million barrels daily in 2010, according to the Energy Information Administration.
Republicans decried it as a purely political decision by the Obama administration, given that gasoline prices already are down from a $4-per-gallon high this past spring and that the price of U.S. benchmark West Texas Intermediate oil had already fallen from its peak in May.
The Obama administration insisted the move to sell oil from the Strategic Petroleum Reserve was essential to restoring stability to the market and offsetting the loss of roughly 1.5 million barrels of high- quality light, sweet crude oil daily from Libya as Americans enter the heavy summer driving season.
“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” said Energy Secretary Steven Chu.
The U.S. action was coordinated with the International Energy Agency, whose 28 member countries pledged to release a total of 60 million barrels of oil in coming months. With the U.S. contributing half, 30 percent of the remaining oil will come from European sources and 20 percent from Asia.
The agency’s executive director, Nobuo Tanaka, said the decision — only the third like it in the agency’s nearly four-decade history — would help ensure “a soft landing for the world economy.”
Energy experts and financial analysts said the sell-off was designed to be a soothing balm for the ailing U.S. economy.
Daniel Weiss, a senior fellow at the Center for American Progress, a liberal think tank, said that if the stockpiled oil sales can lower gasoline prices, it “will act like a tax cut for American families.”
Weiss estimated that the sale of U.S. stockpiles should generate at least $2.5 billion for the federal treasury, while lowering gasoline prices 25 cents per gallon, based on previous reserve releases.
