Obama Reverses Decision to Release Oil Reserves

The Obama administration on Friday quickly reversed an order to let foreign vessels handle the oil being released from strategic reserves, a political miscue that had angered maritime unions and already beleaguered companies in the Gulf of Mexico oil industry.

The decision yesterday to release 30 million barrels form the Strategic Petroleum Reserve was met with intense opposition from leaders in the oil and shipping industry, who complained to Newsweek and the Daily Beast that they weren’t consulted in the decision, and that the federal exemption of the Jones Act that would have allowed foreign vessels to move the oil was an affront to American workers.

“Just as you wouldn’t have an Air France jet ferry passengers from Atlanta to Columbus, you shouldn’t employ foreign vessels who don’t pay taxes and who don’t share our environmental or national security concerns to move our oil,” said Jim Adams, director of the Offshore Marine Services Association.

Administration officials said the exemption for overseas companies to participate was initially included to increase the pace at which the oil could be released from the four caverns where it is held along the Gulf.

In the wake of the blowback, the Department of Energy quietly amended the terms of the sale on Friday morning, granting U.S. shipping companies sole rights under the maritime law to transport the reserve crude.A spokesperson for the department did not return an immediate request for comment, but industry analysts say the Obama Administration had miscalculated the capacity of domestic companies to fulfill the demand, and that officials had not anticipated the immense pressure from the region and members of Congress.Some opponents, like Louisiana Rep. Jeff Landry opposed the release entirely, calling it “a political stunt” designed to impact gas prices. He said that issuing new drilling permits in the Gulf of Mexico or Alaska would have a more immediate effect.Bowing to the pressure of drilling and maritime unions could have political motivations for Obama as well. Worker unions generally back Democratic candidates, but the president of one of the most high profile groups, the AFL-CIO, Richard Trumka, has said repeatedly over the past two months that labor is becoming increasingly dispirited with Obama.