Obama considering tapping oil reserves

Higher gas prices are posted at a Chevron gas station in San Francisco, Friday, March 4, 2011.
AP Photo/Paul Sakuma

If you've purchased gasoline in the past few days you know the story: the price has gone up, and it keeps going up while showing no signs of stopping.

Since the turmoil in Libya broke out in mid-February, the price of crude oil has jumped roughly 20 per cent to more than 104 dollars a barrel, pushing up prices at the pump as well.

CBS News correspondent Sharyl Attkisson reports that the White House said Sunday it may step in to help.

"The issue of the reserves is one we're considering," said William Daley, White House chief of staff. "I think there is no one who doubts the uncertainty in the Middle East right now has caused this tremendous increase in the last couple of weeks."

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It's the strongest suggestion yet that unrest in the Middle East might lead the Obama administration to tap the nation's oil reserves.

Gas prices average $3.51 per gallon nationwide, up 15 cents in the past week, and 78 cents from a year ago. This can affect American workers of all kinds.

"I drive for a living so it definitely affects my job," said Michael Agnew. "So I'm currently looking for another job just because of this."

The U.S. stored supply of oil, called the "Strategic Petroleum Reserve," contains 727 million barrels. That's enough to keep the nation powered for a couple of months.

Those who want oil released from the reserves now say it would calm spiking gas prices so an economic recovery isn't threatened.

After Hurricane Katrina in 2005, 30 million barrels were released. Oil prices dropped 3.7 percent. During the first Gulf War in 1991, 34 million barrels were released and in one day prices dropped 33.4 percent.

However, some economists say the oil reserves should be saved for a true emergency and this isn't it.

"I think it is premature to open up the Strategic Petroleum Reserve," said Mark Zandi of Moody's Analytics. "I don't think it is going to make a big difference with respect to prices, and I think at this point we can digest these prices."

Right now, the average price of gas is still 61 cents below the record set in July, 2008, of $4.11 per gallon, but it doesn't go down easy with many paying the higher prices.

CBS News correspondent Seth Doane reports that the pain at the pump is having a huge effect on businesses, especially small ones. Oz Moving and Storage had been moving in the right direction after the recent economic meltdown, but is now dealing with a bump in the road.

The company hung on through two years in a housing slump when few people were moving. Now, with the economy showing signs of life, general manager Nancy Zifrani is crossing her fingers.

"My confidence meter is up," Zifrani said. "Things are back on track or getting back on track."

Now rising gasoline prices are a threat.

Gas is highest in California, where the average is $3.88 per gallon. In NewYyork it's $3.69 per gallon. Oz Moving operates in both states.

"Our business runs on gas," Zifrani said. "Every mile counts."

For Oz, with its 50 trucks, price shocks have immediate impact. Every dollar increase in the price of gas adds 20 percent to its operating costs

They're already squeezed by higher prices - from heating oil, up 36 percent since October, to paper used in cardboard boxes, up 15% since last year.

Like many small companies passing those rising costs on to customers - isn't an option. Competition is just too fierce at this point. So that means a shrinking bottom line.

"If we're not profitable, we're not able expand or hire new employees," Zifrani said.

Small businesses, like Oz, have created 70 percent of all new jobs in the last decade. But, here, every day that the price of gasoline goes up, the likelihood of new hiring goes down. It's easy math, but its effect is hard to calculate.

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    Sharyl Attkisson is a CBS News investigative correspondent based in Washington.