President Donald Trump has repeatedly expressed concerns about energy costs.
Rising gas prices could create a political headache for Republicans ahead of the midterm election.
Some analysts think Trump could turn to an emergency US oil reserve.
“REDUCE PRICING NOW!”
That was President Donald Trump’s message to OPEC last week, adding that “gas prices are up & they are doing little to help.”
It was just the latest in a string of tweets taking aim at the oil cartel about energy costs. And ahead of the midterm election, where rising gas prices could hurt his party, the outbursts have raised questions about whether the president might turn to tapping a federal oil stockpile called the Strategic Petroleum Reserve.
“We think that WTI would not have to advance much further before the U.S. Strategic Petroleum Reserve (SPR) is brought into play,” Standard Chartered analysts wrote in a recent note.
The SPR, created following the 1970’s energy crisis, is mainly intended to be an emergency stockpile the US can turn to during war or natural disaster. But non-emergency releases can be authorized to respond to minor supply disruptions or to raise federal revenue, according to the US Energy Department.
Under the Energy Policy and Conservation Act, the president can decide whether an SPR release is justifiable by a potential energy supply shortage “of significant scope or duration.” While price level itself would likely not qualify under that standard, according to UBS analyst Jon Rigby, mounting supply outages could.
“With Venezuela and Iran already subject to sanctions and US onshore production and exports now limited by infrastructure, one of the US’s most significant remaining market levers is its Strategic Petroleum Reserve,” Rigby said.
Concerns over global supplies are clear and growing. Crude has rallied in recent months, with the US benchmark trading above $73 a barrel and prices …read more
Source:: Business Insider