Supply fears keeping oil prices high
The Senate has voted to prevent further stockpiling of crude in the Strategic Petroleum Reserve. But some experts in London doubt the action would lower oil prices, and might even keep them high. Stephen Beard finds out why.
Gas prices over $4 per gallon are displayed at a Shell station in San Mateo, Calif., on March 13, 2008. (Justin Sullivan/Getty Images)
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TEXT OF STORY
Renita Jablonski: flurry of activity in Congress over the rising price of oil. The Senate voted almost unanimously yesterday to prevent the White House from further stockpiling crude in the Strategic Petroleum Reserve. Marketplace's Stephen Beard reports some experts in London doubt this measure would cut the cost of fuel.
Stephen Beard: The U.S. government has been buying 80,000 barrels of oil a day to put into the Strategic Petroleum Reserve, or SPR. Critics in Congress say that is pure folly. It puts further upward pressure on the price. But analysts here say if you stop the U.S. government adding to the SPR, it won't bring down global oil prices. Carola Hoyos, energy correspondent of the Financial Times, thinks it could actually push them up. She says what the market is really worried about now is future supplies in case of a major disruption.
Carola Hoyos: The SPR is exactly there for that reason. If you stop filling it, the oil price might in fact rise because people worry there won't be enough oil in case of a shortage.
Yesterday's report by the International Energy Agency agreed that it's fear about threats to future supplies that is keeping oil prices high.
In London, this is Stephen Beard for Marketplace.
