Business group slams Obama over oil release

@CNNMoney June 23, 2011: 3:49 PM ET
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President Obama walks one way; Chamber of Commerce President Tom Donohue walks the other.

NEW YORK (CNNMoney) -- Washington's most powerful business lobby panned the Obama administration's decision to tap the nation's strategic oil reserve Thursday, calling the move "ill-advised."

"Our reserve is intended to address true emergencies, not politically inconvenient high prices," Karen Harbert, CEO of the U.S. Chamber of Commerce Energy Institute, said in a statement.

The U.S. Department of Energy said it would release 30 million barrels of oil from the Strategic Petroleum Reserve to alleviate Libyan supply disruptions. Other nations will contribute an additional 30 million barrels.

The U.S. Chamber of Commerce is the voice of big business in Washington's hallways of power, and the group hasn't always been on friendly terms with the administration.

Energy policy has been a particularly sticky point. The Chamber favors an increase in domestic energy production, including off-shore drilling, and has asked the Obama administration to expedite drilling permits and leases.

Harbert called tapping the reserve "dabbling around the edges" of energy policy, and said the move was "not the signal the markets need."

"Unrest in the Middle East is likely to continue for quite some time, so a temporary increase in supply is not a substitute for a long-term fix," she said.

The American Petroleum Institute, another industry group that has clashed with the Obama administration over energy policy, labeled the decision "reactionary" and called for a long-term solution.

Asked during a conference call with reporters about the timing and political implications of the decision to tap the reserve, senior White House officials demurred, allowing only that the move is a response to an oil supply shortage.

"We're not making predictions about market prices, which go up and down .... The prices will be what they are," said a senior administration official who refused to be identified.

The Strategic Petroleum Reserve explained

The administration has long maintained it was willing to tap the 727 million barrel strategic reserve if specific conditions were met, and officials said they had been working for months with International Energy Agency member nations on the issue.

Officials on Thursday pointed to the drawn out nature of the Libyan disruption as the driving force behind tapping the reserve. The IEA estimated that the unrest in Libya removed 132 million barrels of light, sweet crude oil from the market by the end of May.

But the total amount that will be released to ease supply troubles -- 60 million barrels -- is less than one day's worldwide oil consumption.

In March, Obama said his administration was not tapping the reserve because there was no supply shock and other countries would fill the production gap.

"Right now, what we're seeing is not a shortage of supply," Obama said, before adding that, "even if Libyan oil production was suspended for a significant period of time because of the unrest there, we'd be able to fill that gap."

Many analysts were expecting OPEC to increase production earlier this month in response to the Libyan shortfall, but a decision to do so could not be reached.  To top of page

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