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Would tapping oil reserve help in wake of Libya?

Unrest in the Middle East has gasoline prices here soaring. In just two weeks, prices at the pump have jumped 33 cents, the second biggest increase in that amount of time - ever, reports CBS News business and economics correspondent Rebecca Jarvis.

U.S. drivers are currently paying an average price of $3.51 per gallon.

Oil prices rose above $106 a barrel Monday in Asia as intense fighting between Libyan government forces and rebels raised the prospect of a prolonged cut in crude exports from the OPEC nation.

In London, Brent crude for April delivery was up $1.11 to $117.08 a barrel on the ICE Futures exchange.

If the crisis escalates, some analysts see $4-per-gallon gas right around the corner, and that concern has the Obama administration considering whether to take the drastic step of tapping the nation's oil reserves.

"The issue of the reserves is one we're considering," White House Chief of Staff William Daley said Sunday on "Meet the Press." "I think there is no one who doubts that the uncertainty in the Middle East right now has caused this tremendous increase in the last number of weeks."

The U.S.-held emergency oil supply - called the Strategic Petroleum Reserve - contains 727,000,000 barrels of oil ... enough to supply the nation for several months.

Proponents say releasing oil from the reserves would calm spiking gas prices and limit the threat to the U.S. economic recovery. Critics say the oil reserves should be saved for a true emergency.

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

After Hurricane Katrina hit in 2005 and oil prices rose, 20.8 million barrels were released from the reserve, and the price of oil per barrel dropped 3 percent in one day. Much less oil was drawn down in 2008 in the wake of Hurricane Ike - 5.4 million barrels.

The ABCs of crude supply disruptions (Dept. Of Energy)

Economist and former U.S. Labor Secretary Robert Reich (who is author of "Aftershock: The Next Economy and America's Future"), said this morning on CBS' "The Early Show" that it might make sense to at least suggest tapping into the reserve because of the rise in oil futures.

"Americans are still trying to get out of the gravitational pull of the great recession," Reich said, "and so, the higher gas prices at the pump are undoubtedly going to be a blow. It's not going to dramatically slow down the recovery. But it could definitely slow it down."

Libya is the 18th largest oil producer, but its output has fallen by at least 1 million barrels per day (from 1.6 million) since the uprising began last month. And while it supplies approximately 2 percent of the world's oil, the U.S. imports very little - Libya accounts for less than 1 percent of American imports, according to the Department of Energy.

Reich was asked if the American public is right to feel scammed by the current spike in pump prices, given that Libya is not a major source of U.S. oil.

"A lot of this is supply and demand," Reich told anchor Erica Hill. "The country can feel a certain sense of [being] taken advantage of. But some of this is the demand that's coming from China.

"You have developing nations all over the world who are coming out of the recession much faster than the United States and Europe, and their oil needs are very high. And so they are also putting pressure on oil prices - it's not just the Middle East."

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