	Introduction

Recent unrest in the Middle East and North Africa (MENA) region has affected international energy markets and put upward pressure on oil prices. The unrest has contributed to higher prices by causing some supply reductions and giving rise to worries that unrest may spread to the region's larger energy producers. If any such unrest somehow disrupts Saudi oil production, it is difficult to predict how high oil prices may rise. Economically, higher oil prices have a negative impact on household budgets and national economic growth for countries that are major importers. The drag on economic growth via the trade deficit would be muted in such a scenario. As a result, there are limited short-term policy options, which Congress recognized in its justification for establishing the Strategic Petroleum Reserve (SPR). However, debates have continued concerning the appropriateness of using the SPR and what qualifies as "severe." There are proposals to encourage more natural gas use in the transportation sector, but these proposals are long-term in nature. 94-163 , EPCA), establishing the SPR, authorizes a drawdown upon a finding by the President that there is a "severe energy supply interruption"—an energy supply shortage that is likely to be of significant scope and duration and may cause major adverse impact on national safety or the national economy which results from an interruption in the supply of imported or domestic petroleum. Other Policy Options

The SPR was established at least in part because there are few other short-term options to mitigate the effect of severe oil market disruptions. Apart from the SPR, much of the policy debate stemming from the unrest in MENA and its impacts on oil markets has focused on options that take a long time to implement. Some Members of Congress and others cite the current unrest in MENA and the resulting increase in oil costs in backing proposals ranging from increasing support for domestic oil and gas production, and renewable energy, or mandating greater efficiency. For more information on political unrest in MENA, see the CRS Issue in Focus page on the Middle East and its associated reports. Israel
Oil Exports: Israel is not an exporter of oil. Besides being the largest exporter of oil, Saudi Arabia is the holder of most of the world's spare production capacity.
Political unrest in the Middle East and North Africa (MENA) has contributed to higher oil prices and added instability to energy markets. Supply disruptions and fears about the possible spread of unrest to major exporters have pushed prices higher. Even if the crisis abates, some risk premium may persist to the degree that market participants fear such an event could occur again.
Higher oil prices can negatively impact the economies of oil importing countries. The cost of oil is the primary determinant of gasoline prices and prices of other petroleum products; increased costs can be a burden on households and many businesses. Rising import costs for oil, natural gas and petroleum-based products can be a drag on economic growth by negatively affecting the trade balance. This may slow the current economic recovery, though it is not expected to derail it.
Many energy policy options to address vulnerability to disruptions and higher prices, such as what is taking place in MENA, are long-term in nature. It takes a long time for the energy sector to make material shifts, be they through renewables, efficiency, or increased domestic oil and gas production. Short-term energy policy options (as opposed to the broader national security and diplomatic issues) are limited. Oil exporters with spare production capacity, particularly Saudi Arabia, may make short-term decisions to try to moderate prices by adjusting production levels, but their ability and willingness to do so are often based on internal decisions. For more information on the political unrest in MENA, see the CRS Issue in Focus page on the Middle East and its associated reports.
Part of the U.S. energy policy debate around recent unrest has focused on whether it is appropriate to release oil from the Strategic Petroleum Reserve (SPR). The government holds the SPR to mitigate the impacts of a "severe energy supply interruption." Proponents of using the SPR point out that there is a disruption to oil production in Libya and the resulting price increase negatively impacts the U.S. economic recovery. Critics question whether this is the appropriate time to release oil from the SPR or whether it should be saved to guard against larger future disruptions, and emphasize that the SPR has not traditionally been viewed as a device to manipulate prices.