Obama: tap nation's oil reserve to help gas prices

August 4, 2008 5:38:59 PM PDT
Democrat Barack Obama has laid out an ambitious energy plan that envisions ending U.S. dependence on foreign oil in 10 years - a bid to blunt apparent progress Republican opponent John McCain is making with American voters struggling with budget-wrecking fuel costs. During a speech Monday in Lansing, Michigan, Obama reversed course, calling for the release of 70 million barrels of crude oil held in federal stockpiles as a short-term means of lowering gasoline prices. The Illinois senator earlier opposed dipping into the Strategic Energy Reserve held in Texas and Louisiana salt caverns.

Late last week, Obama also reversed course - to a degree - on his opposition to ending a quarter-century ban on drilling for oil along America's coastline. On Friday, he said he could accept limited and environmentally sound offshore exploration as part of a larger energy compromise that was being formulated in congress.

The struggling American economy and skyrocketing energy costs are top voter concerns, and McCain has made headway in the White House contest by calling for an end to the drilling ban. Until changing his position, Obama had steadfastly opposed the measure, citing general agreement among energy experts that the new supplies would be years in reaching gasoline pumps.

McCain's campaign called Obama's switch a "flip-flop," despite the Republican candidate's own earlier opposition to lifting the ban.

As he rolled out his energy program, Obama also bought television time nationally for a new ad that suggests McCain would be "in the pocket of Big Oil," a continuation of the Democrat's push to link the veteran Arizona senator to President George W. Bush's administration and its perceived bias in favor of major energy companies.

The McCain campaign said Obama was twisting facts.

"It was Sen. Obama, not John McCain, who voted for the Bush-Cheney energy bill that was a sweetheart deal for oil companies," said McCain spokesman Tucker Bounds. "Also not mentioned is the $400,000 from big oil contributors that Barack Obama has already pocketed in this election."

Obama says McCain was given "more than one million dollars from big oil just last month" after he announced support for drilling on the U.S. continental shelf.

While Obama was taking on energy issues, McCain held a small business round table in Pennsylvania and restated the need for offshore drilling. "Anybody who says that we can achieve energy independence without using and increasing these existing energy resources either doesn't have the experience to understand the challenge that we face or isn't giving the American people some straight talk," he said.

The Republican candidate then flew to South Dakota to participate in a tribute to military veterans and active-duty troops at a motorcycle rally in Sturgis.

Obama, in his Michigan speech, also endorsed long-term work on hybrid cars and renewable energy sources.

"Breaking our oil addiction is one of the greatest challenges our generation will ever face," the Illinois Democrat said, calling the project a "single overarching goal" that he forecast would end U.S. reliance on oil from the Middle East and Venezuela over the next ten years. He put the cost to taxpayers at $150 billion.

"It will take nothing less than a complete transformation of our economy," he told a largely friendly audience in the state that is central to the struggling American auto industry.

Obama and McCain are emphasizing solutions to the country's energy woes as they seek an advantage in polling that shows the race competitive just weeks before their respective national nominating conventions and the final stretch of the campaign. The issue cuts across the diverse electorate, resonating with voters of all stripes, and it gives the candidates a way to talk both about domestic and foreign issues.

High fuel prices are causing food and transportation costs to surge, compounding voter disquiet in the weakened economy. The country's dependence on foreign oil has emerged as a pivotal national security concern.

Obama, who as recently as last month argued against tapping into the petroleum reserve located in caverns in Texas and Louisiana, proposed that the government sell 70 million barrels of oil from its stockpiles and said that releases from the reserve in the past have lowered gas prices within two weeks.

He called tapping the petroleum reserves a short-term solution to a long-term problem. The stockpile contains 707 million barrels and was last used shortly after Hurricane Katrina in 2005.

The petroleum reserve is capable of releasing about 4 million barrels a day. It's unclear what impact that would have on global oil prices, or the cost of gasoline. But energy experts say a clear signal by the United States of a willingness to use a significant portion of the reserve could put downward pressure on oil markets at least for a time.

Obama said that, under his plan, oil companies would bid to borrow easy to refine light sweet oil from the reserve, and replace it later with heavier oil.

Elgie Holstein, an Obama energy adviser, said that, while fewer refineries now are capable of refining the heavier stuff into gasoline, in the future that won't be the case.