Obama prepared to tap oil reserves

By Ben Rooney, staff reporterMarch 11, 2011: 2:21 PM ET

NEW YORK (CNNMoney) -- President Obama said Friday that he is prepared to tap the nation's strategic oil reserves to deal with any supply disruptions as part of his effort to keep gas prices under control.

Obama attributed the recent run-up in oil and gas prices to increased global demand, combined with uncertainty in the oil market due to political turmoil in North Africa and the Middle East.

"Here at home, everybody should know that, should the situation demand it, we are prepared to tap the significant stockpile of oil that we have in the Strategic Petroleum Reserve," Obama said during a press conference in Washington.

Obama would not specify what price level would trigger a release form the strategic reserve. But, in a pointed message to the oil market, he said the United States and its allies will do what ever it takes "to make sure that oil supplies remain stable and that economic growth will continue."

Gas prices have risen nationwide for the last 17 days, with the national average price up 37 cents to $3.542 per gallon on Friday, according to motorist group AAA.

Gas prices: Up 37 cents and counting

The U.S. Energy Information Administration said Wednesday that it now expects the average price for a gallon of regular gas to average $3.56 this year. That is about 77 cents more than the average cost in 2010, and 40 cents more than the previous forecast.

Based on current market prices, the EIA said there is a 25% probability that retail gas prices will spike above $4 a gallon this summer. During peak driving season, from April through September, gas prices are expected to average $3.70 a gallon, the EIA said.

Obama acknowledged that the spike in gas prices is a major burden for American households and businesses alike. But he said gas price shocks are nothing new, underscoring the need to develop domestic oil sources and increase the use of alternative energy.

"The hard truth is, is that as long as our economy depends on foreign oil, we'll always be subject to price spikes," he said. "So we've got to get moving on a comprehensive energy strategy that pursues both more energy production and more energy conservation."

Oil prices surged above $100 a barrel last month as protesters in Egypt and Tunisia pushed out unpopular leaders. Prices rose even further as the unrest devolved into civil war in Libya, which has curtailed output in the Africa's third largest oil producer.But oil prices were down sharply Friday, following a massive earthquake and tsunami in Japan. Obama said he told Japanese prime minister Kan that the United States is prepared to help in the recovery efforts.

"Our hearts go out to our friends in Japan and across the region, and we're going to stand with them as they recover and rebuild from this tragedy," he said.

Meanwhile, Obama said the government is also on the lookout for potential manipulation of the oil market. He directed the U.S. Attorney General and state regulators "to monitor for price gouging to make sure Americans are not taken advantage of at the pump."