November 03, 2009

Obama: tap oil reserve to help gas prices

LANSING, Mich. - In a reversal, Barack Obama is proposing the government sell 70 million barrels of oil from its strategic petroleum stockpiles. The Illinois Democrat says releases from the reserve in the past have lowered gas prices within two weeks. THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP‘s earlier story is below. Obama supports releasing light oil from the emergency oil stockpile now and replacing it later with heavier crude more suited to the country‘s long-term needs, according to a campaign fact sheet. Light crude oil is easier to refine into gasoline than heavier oil. "After one president in the pocket of big oil we can‘t afford another," says the ad, referring to President Bush‘s previous work in the oil industry. In the past, Obama has not advocated tapping the oil reserve, but campaign spokeswoman Heather Zichal said he has reconsidered. "He recognizes that Americans are suffering," she said. Obama‘s call for using the government reserve mirrors a proposal that has been pushed by congressional Democrats, but opposed by Republican leaders and the White House. Both candidates have energy proposals to reduce U.S. dependence on oil. Obama‘s was first, and its centerpiece is a 10-year, $150 billion spending plan focusing on clean coal technology, further development of plug-in hybrid cars, commercialization of wind and solar power and other measures. The Strategic Petroleum Reserve is capable of releasing about 4 million barrels a day. It‘s unclear what impact such release might have on global oil prices, or costs of gasoline at the pump. But a clear signal by the United States to use its emergency reserve to a significant extent could put downward pressure on oil markets at least for a time, energy experts say. The new Obama ad trumpets his proposal to revive a windfall profits tax on energy companies and asserts that McCain favors tax breaks for the oil industry. "A windfall profits tax on big oil to give families a thousand-dollar rebate," an announcer in the ad says. Obama has pushed for such a tax to fund $1,000 emergency rebate checks for consumers besieged by high energy costs. Congress enacted a windfall profits tax in 1980, during an earlier era of high oil prices, but repealed it in 1988 amid concerns the tax was discouraging domestic oil development. Last year, the House approved $18 billion in new taxes on the largest oil companies, but they were blocked by Republicans in the Senate. The new ad opens with a driver pumping gas. The announcer says, "Every time you fill your tank, the oil companies fill their pockets." Republicans were quick to pounce. "Barack Obama‘s latest attack ads shows his celebrity is matched only by his hypocrisy," said McCain spokesman Tucker Bounds. "After all it was Senator Obama, not John McCain, who voted for the Bush-Cheney energy bill that was a sweetheart deal for oil companies. Also not mentioned is the $400,000 from big oil contributors that Barack Obama has already pocketed in this election." Obama said Friday that he would reluctantly consider accepting some new offshore oil drilling. Obama previously opposed any offshore drilling. He praised a plan unveiled by a group of Republican and Democratic senators to permit limited drilling off Southern states while supporting an effort to convert most vehicles to alternative fuels in 20 years. McCain‘s campaign accused the Democrat of flip-flopping. However, the Arizona Democrat only recently reversed his own former opposition to drilling on the Outer Continental Shelf. Separately, about 20 House Republicans cut short their August vacations Monday, gathering on the House floor to protest Democratic energy policy and demand that Pelosi call the House back into session so they can vote on an energy package, including GOP demands for more domestic drilling. It was a repeat of last Friday‘s protest when Republicans refused to leave the floor after the House officially adjourned for the summer break. ___ Associated Press Writer Jim Abrams in Washington contributed to this report.

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