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Total CEO: Tapping oil reserve may drive up prices

By Steve Hargreaves, senior writer

HOUSTON (CNNMoney) -- The chief executive of French oil company Total said tapping the U.S. Strategic Petroleum Reserve is unnecessary, would signal fear and ultimately could drive energy prices higher.

Tapping the reserve "will send a message we are scared, and it could mean an increase in prices, not a decrease," Christophe de Margerie, said at IHS CERA's oil industry conference Tuesday. Total is the world's fifth-largest publicly-held oil company by revenue.

"It's to be left for a time when we are really confronted with a shortage of oil, which is not the case," said de Margerie.

He said Saudi Arabia and other countries can pump more than enough oil to make up for Libya's production of 1.6 million barrels a day, much of which is thought to be offline amid the country's ever-intensifying civil war.

The Saudis have indicated they will redirect oil to make up for lost Libyan production, but no formal OPEC production increase has been announced.

Many prominent lawmakers have called on President Obama to tap the strategic Petroleum Reserve in the hopes that it may bring down surging oil prices. U.S. crude prices have jumped 10% in the last month.

Part of that increase is due to the unrest in Libya, but much of it is due to the fear that the unrest could spread to other parts of the Middle East, particularly Saudi Arabia.

Gasoline prices have surged 15 cents a gallon over the last two weeks. Many economists say gasoline prices are reaching a level where they threaten the country's fragile economic recovery.

The Obama administration has not said whether it will tap the reserve which holds 727 million barrels of oil in underground salt domes in Texas and Louisiana.

That's enough to cover U.S. oil imports for about 90 days. To top of page

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