Oil Prices Gain After Defeat of U.S. Reserve Bill

Oil prices reversed course and moved higher Thursday in U.S. trading after a move in Congress to tap into the U.S. Strategic Petroleum Reserve was defeated.

The House of Representatives defeated a Democrat bill to release about 70 million barrels of oil from the national oil stockpile. The release would have amounted to approximately a three-day supply.

The affirmative vote of 268-157 was along party lines and was not enough for the supermajority needed for approval.

The bill was seen as part of a move by House Democrats to prevent passage of Republican measures to allow offshore drilling in the Arctic National Wildlife Refuge.

The White House had threatened a veto of the Strategic Reserve bill had it cleared the House and Senate. White House spokeswoman Dana Perino said the Reserve was established as ''the nation's energy insurance policy. We don't think it should be weighted for purposes to try to manipulate price. It hasn't worked.''

At a press conference before the vote, House Speaker Nancy Pelosi, D-CA, pointed out that previous releases from the oil reserve had knocked down prices, sometimes significantly: 33 percent in 1991, 19 percent in 2000 and nine percent in 2005.

"Congressional action forcing the President to stop filling the reserve has already helped to reduce oil prices. If President Bush will not act to help consumers by releasing oil to cut the price at the pump, the New Direction Congress will," Pelosi said.

Rep. Joe Barton, R-TX, called the bill a "gimmick" that would provide only short-term relief for Americans from high energy costs, if any.

"If it has a temporary price decrease, that's a positive," Barton said. "But it's temporary because you're not changing the fundamental supply/demand equation on the world oil market."

Meanwhile, oil prices rebounded modestly on Thursday after two days of steep losses. New York's main contract, light sweet crude for September delivery, rose 1.05 dollars to close at 125.49 dollars a barrel. In London, Brent North Sea crude for September delivery climbed 1.15 dollars to 126.44 dollars. Oil prices continued to rise modestly in Asian trading.

U.S. crude oil futures reached as high as $147.27 per barrel on July 11.

 7/24/2008 10:08 PM ET

(SOURCE: http://www.rttnews.com/Content/TopStories.aspx?Node=B1&Id=664428&Category=Top%20Stories)