The announcement led to a debate in Congress about the appropriate use of the strategic reserve. Some analysts noted that the drawdown would amount to less than what the world consumes in a single day and that its effect would be fleeting.
If successful, though, the release could lower oil prices over the summer and signal that governments stand ready to intervene and limit petroleum price increases. The announcement drove down the cost of the benchmark West Texas Intermediate-grade crude oil by nearly 5 percent, to $91.02 a barrel, a four-month low. The share prices of oil companies also tumbled.
The Obama administration, which secretly dispatched senior economic officials to the Middle East last month to coordinate with three oil exporting countries, said the stockpile release was designed to offset the loss of oil exports created by unrest in Libya and the Middle East. The release comes just as the summer driving season begins, traditionally the period of highest petroleum consumption.
President Obama’s decision — a reversal of his earlier position — also comes amid partisan sniping about the administration’s energy policies. Moreover, a new poll from the Associated Press finds that 63 percent of the public disapproves of the job Obama is doing handling gas prices, while only 34 percent approve. His ratings for handling gas prices have been below 40 percent all year and are among the lowest of any of his job measures in the new survey.
Earlier, Obama had rejected calls to tap the 727 million-barrel Strategic Petroleum Reserve, which is kept in salt caverns in Louisiana and Texas. At a March news conference, he said that the reserve exists for “a severe disruption in supply.”
He suggested that high oil prices were being driven by “uncertainty in the oil markets” and demand in recovering economies and fast-growing emerging markets, such as China, India and Brazil.
But high prices have been taking a steady toll on consumer confidence and spending. In a note to clients, Eurasia Group analyst Greg Priddy called the stockpile release “ ‘stimulus’ by other means.” With a key Federal Reserve program that bolsters the economy coming to an end, he said, “it seems policymakers in the executive branch, in the U.S. and elsewhere, have decided to pull another arrow from their quiver.”
The president’s decision surprised many energy analysts and provoked a sharply partisan response on Capitol Hill, where most Democrats applauded the prospect of lower gasoline prices and most Republicans condemned what they called a politically motivated move that would compromise national security.