WASHINGTON – The world can pump enough extra oil and has enough stashed in reserve to limit price shocks from sustained turmoil in the Middle East, Treasury Secretary Timothy Geithner said Thursday.
“There is considerable spare oil production capacity globally, and we and other major economies possess substantial strategic reserves of oil,” Geithner told Congress.
“If necessary, those reserves could be mobilized to help mitigate the effect of a severe, sustained supply disruption.”
Oil prices have surged in recent weeks as clashes between forces of the Libyan leader Moamer Kadhafi and the opposition have strangled supplies from the North African producer.
That has raised fears that higher prices — which are already being passed on to consumers — could threaten the nascent economic recovery.
“In the United States, rising gasoline prices have left consumers with less money to spend,” Geithner admitted.
According to the American Automobile Association gasoline, pump prices have increased by about 20 cents a gallon (3.8 liters) to an average $3.43 in the last week alone.
But Geithner said the US government would monitor developments in the Middle East closely for any potential supply disruption.
Commodity prices — including food — have risen in tandem with oil’s surge, putting pressure on low-income countries and sparking fears of inflation.
While Geithner insisted inflation remained subdued in the United States, he said the government would back measures to clamp down on speculation.
“We also support measures to limit the potential for commodity market abuse and price manipulation,” he said, citing the need for increased transparency and oversight of markets.