By Corey Boles
Speculative trading and fears of a military conflict in Iran and not supply concerns are driving the upwards move in gasoline prices, a senior House Democrat said.
Rep. Steny Hoyer (D., Md.) said that he didn't believe the U.S. Strategic Petroleum Reserve should be opened in a bid to counter the rise in gasoline prices, saying he was "skeptical" that it would have much impact on prices given the increasingly global marketplace for petroleum products.
He said there weren't any problems with supply, and that even if there were, the increasing demands by China and India for gasoline mean the U.S. would have difficulty in using its reserves to drive down the price at the pumps. Mr. Hoyer said he didn't think there was much that Congress or the Obama administration could do in the short term to impact gasoline prices. He did acknowledge that political pressure would grow on the administration and Congress to tap federal reserves if prices continue to spike.
Gas prices have been rapidly escalating in recent weeks. According to the AAA auto club, the average price for a gallon of gas is $3.698, although in some parts of the country, prices are higher than $4 a gallon. Some analysts have forecast prices rising as high as $5 a gallon heading into the summer months, when U.S. drivers tend to drive more.
Mr. Hoyer said the reserve was established to counter the prospect of a emergency disruption in supply caused by a potential conflict in the Middle East. He said that the Obama administration should release gasoline reserves if there is a military conflict in Iran later in the year as many fear.
The Strategic Petroleum Reserve is the world's largest supply of emergency crude oil reserves with a capacity of more than 700 million barrels. It was established in 1975 in the aftermath of the energy crisis in the early 1970s.
It was last tapped in June 2011 when President Barack Obama directed that 30 million barrels be sold in the marketplace to counter a disruption in supply due to geopolitical events sweeping the Middle East.
-By Corey Boles, Dow Jones Newswires; 202-862-6601; [email protected]