Obama Prepared to Tap Petroleum Reserve If Needed

By Erica Werner | March 11, 2011 | 3:10 PM EST

Washington (AP) - President Barack Obama said Friday he's prepared to tap the country's emergency oil reserve should the situation demand it. But as gas prices climbed toward $4 a gallon, the president said the U.S. must adopt a long-term strategy of conservation and domestic production to wean itself off foreign oil.

"We've been having this conversation for nearly four decades now. Every few years gas prices go up, politicians pull out the same political playbook, and then nothing changes," Obama said at a White House news conference. "And when prices go back down, we slip back into a trance."

"I don't want to leave this to the next president," he said. "And none of us should want to leave it for our kids."

Some in Congress have been calling on Obama to tap the Strategic Petroleum Reserve. And the president made clear Friday that that was an option, although he indicated he wasn't yet prepared to exercise it. He declined to specify the conditions that would trigger the step, but said it was teed up and could happen quickly if he chooses to call for it.

The government is cautious about going to the petroleum reserve, typically holding off except in very extreme cases such as hurricanes. The reserves - 727 million barrels stored in salt caverns along the Texas and Louisiana coasts - were created in response to the Arab oil embargo in the 1970s and last tapped in 2008 after hurricanes Gustav and Ike hit.

"If we see significant disruptions or shifts in the market that are so disconcerting to people that we think a Strategic Petroleum Reserve release might be appropriate, we'll take that step," Obama said. Gas prices in the U.S. now average $3.54 per gallon. Obama said he'd asked administration officials to look out for signs of price-gouging.

Oil prices have surged 24 percent since the middle of February as unrest in the Middle East rattled world markets, although prices slid Friday on the possibility of reduced demand because of the devastating tsunami that hit Japan.

Republicans have sought to blame Obama's policies for the high gas prices, saying he should be allowing more offshore drilling, though experts say more domestic production wouldn't immediately impact prices. Obama rejected that criticism Friday.

Obama said domestic oil production rose to a seven-year high last year. "Any notion that my administration has shut down oil production might make for a good political sound bite, but it doesn't match up with reality," said the president, noting that the country was still not far removed from the disastrous BP oil spill in the Gulf of Mexico that temporarily stopped much production in the Gulf.

Obama said that to boost production more, he's directed the Interior Department to assess how many onshore and offshore oil leases already held by industry are going undeveloped so that companies can be encouraged to produce from those lease. He also said the administration was looking at the potential for new production in Alaska and elsewhere. He said these steps and others could increase domestic production in the short- to medium term, but were not a long-term solution, considering the U.S. has 2 percent of the world's oil reserves but accounts for over a quarter of worldwide consumption.

"The hard truth is, is that as long as our economy depends on foreign oil, we'll always be subject to price spikes. So we've got to get moving on a comprehensive energy strategy that pursues both more energy production and more energy conservation," the president said. He called for greater investments in clean energy sources like wind turbines and solar panels, and for strategies like more fuel-efficient cars.