Is It Time To Tap U.S. Oil Reserves?

(CBS/AP)  With gas hitting a new high almost daily, some members of Congress pleaded with the energy secretary to release the nation's 700 million barrel emergency stockpile, reports CBS News correspondent Nancy Cordes.

His response - that's not what it's for.

"The strategic petroleum reserve is meant to be there as a protection for the American people," said Energy Secretary Samuel Bodman.

"The American people right now are being tipped upside down at the pumps and having money taken out of their pockets," responded Rep. Edward Markey, D-Mass.

Bodman also told a House of Representatives hearing that he does not believe that rampant market speculation is causing record high oil prices that reached a record $135 a barrel. He said it is a matter of supply and demand that can be traced to essentially flat global production over the last three years.

Markey said he did not understand why President Bush is not releasing oil from the Strategic Petroleum Reserve to force down prices. "We have 700 million barrels ... that are ready to be deployed," said Markey.

Mr. Bush recently stopped putting oil into the reserve after Congress passed legislation to halt deliveries.

The stockpile, now 701 million barrels, "is meant to deal with ... the physical interruption of the flow of oil to our country. We don't have that issue today," he told the House Committee on Global Warming.

Markey said the release of government oil is justified because "we're in an economic crisis" as high oil costs are driving gasoline to $4 a gallon and increasing other costs.

Oil from the Strategic Petroleum Reserve, three underground salt domes in the states of Texas and Louisiana, has been used twice to respond to supply disruptions or the threat of such interruptions: Just before and during the first Gulf War in the early 1990s and in response to the loss of Gulf of Mexico oil after Hurricane Katrina in 2005. President Bill Clinton in 2000 made emergency oil available to relieve prices and Markey said prices then dropped 18 percent.

A series of dire reports about the world supply of oil are driving investors to buy, buy, buy. Just today, the Wall Street Journal reported that the international energy agency is set to predict a massive supply crunch if producers don't significantly boost their capacity within five years.

"There'd be a rapid sell off if at some point somebody believes that the assumptions underlying this speculative investment are wrong," Edward Morse of Lehman Brothers told Cordes.

Until then, Americans are left holding the bill.

"A barrel of oil has more impact on our everyday lives than any other product in America," said Jack Gillis of the Consumer Federation of America. "Almost everything we buy is going to be dependent on the price of oil in some way."

One example: After American Airlines announced a $15 fee for passengers to check their first bag, United Airlines said it might follow suit. While Southwest Airlines says - no way.

"This is just going to irritate your customers," Peter Goelz, an airline industry analyst told Cordes. "And I think with the airlines satisfaction at almost its lowest level there are some airlines that are going to think twice about this."

But with big airline fees and gas reaching $4 a gallon, a lot of travelers might think twice about leaving home.

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