White House rejects call to release emergency oil

WASHINGTON, July 8 (Reuters) - The White House on Tuesday rejected a call from House Speaker Nancy Pelosi to release oil supplies from the U.S. Strategic Petroleum Reserve to help bring down fuel prices.

In a letter on Tuesday, Pelosi asked President George W. Bush to order a drawdown of "a small portion of the oil" held in the emergency stockpile and put more supplies on the market to "reduce the record prices that are helping push the economy toward recession."

Pelosi pointed out that the Energy Department can get oil from the reserve to the market within 13 days after a presidential order to tap the stockpile.

Pelosi's request followed a new Energy Department forecast predicting U.S. gasoline prices will stay above $4 a gallon through the end of next year.

"Deploying a small portion of the resources in the SPR would provide much needed assistance to American consumers facing record prices and help our economy during a serious period of instability," Pelosi said.

In her letter, Pelosi did not specify how much oil should be released, or whether there should be one large release of oil or if a steady volume of oil should be taken out of the stockpile over several weeks or months.

The White House slammed Pelosi's proposal, saying the reserve is intended to provide the United States with oil during a severe supply disruption. "It has been ineffective when it has been used for price manipulation in the past," said White House spokesman Scott Stanzel.

"Releasing oil from the reserve would reduce the number of days of protection our nation would have in the event of a severe supply disruption. That is harmful to our national security and not in our country's best interests," he said.

The emergency reserve, created by Congress in the mid-1970s following the Arab oil embargo, now holds about 706 million barrels of crude at four underground storage sites in Texas and Louisiana. (Reporting by Tom Doggett; editing by Todd Eastham)