Bush wants to keep filling the underground petroleum reserve, but legislators take the near-unanimous action in reaction to record gas prices. The House is expected to concur. The Senate, jittery about a political backlash over the rising price of gasoline, voted by a veto-proof majority today to halt deliveries to the Strategic Petroleum Reserve over President Bush’s objections.
The House is expected to follow suit later today.
The action, supported by the Democratic and Republican presidential candidates, comes as high fuel costs have contributed to the nation’s economic woes and become a hot issue on the campaign trail. It could be the only legislation that Congress passes this year in response to public angst at the fuel pump because of the parties’ differences over energy issues.
The Senate measure passed 97 to 1, with Sens. Barack Obama of Illinois and Hillary Rodham Clinton of New York breaking off from their campaigns to return to the Capitol to vote for the measure. Sen. John McCain of Arizona, the presumptive GOP presidential nominee, supported the measure but was absent for the vote, continuing his campaigning in the Pacific Northwest.
“Why on earth should we be putting oil underground at a time of record high prices?” Sen. Byron Dorgan (D-N.D.), the measure’s chief sponsor, argued.
Bush has resisted calls to suspend the delivery of about 70,000 barrels a day to the emergency stockpile, contending that it would have little impact on prices in a nation that uses about 21 million barrels a day and would weaken weakening the nation’s energy security. The reserve was established after the 1973 Arab oil embargo to protect against supply cutoffs and now holds about 702 million barrels in underground caverns on the Gulf Coast.
Bush has assailed Congress for not doing enough to spur more domestic production.
But members of Congress, who, unlike Bush, face reelection, are anxious to show they are doing something to respond to the high prices, even though there is little they can do in the short term to provide relief. Suspending deliveries to the reserve is a modest step that some supporters say could save motorists 2 to 5 cents a gallon, perhaps more.
Sen. Pete Domenici (R-N.M.), who is retiring from the Senate and has previously resisted suspending shipments to the reserve, was among those supporting the measure. “I have changed my mind,” he said, “and it’s simply because the price of oil is now up to $125 a barrel.”
The measure’s approval came as the national average price for a gallon of regular unleaded gasoline hit a record of more than $3.73, up from $3.07 a year ago, according to the American Automobile Assn.
Earlier today, the Senate rejected a Republican-sponsored measure that called for increasing production by opening the Arctic National Wildlife Refuge to energy exploration and relaxing a long-standing ban on new drilling off the Atlantic and Pacific coasts.
A Democratic proposal to impose a windfall profits tax on oil companies and roll back tax breaks for the industry and new protections against price-gouging is expected to face a Republican-led filibuster when it reaches the Senate floor, perhaps next week. – lat
How much a suspension of strategic reserve purchases would sway price is a matter of dispute. Though the Strategic Petroleum Reserve purchases account for 0.3 percent of demand for that grade of petroleum, Verleger testified that it could add 10 percent to the price of light sweet crude oil on the New York Mercantile Exchange. Today House Speaker Nancy Pelosi put out a press release noting that Bush did in fact halt additions to the SPR in 2006 to blunt the rise in prices. But Bush now says that the oil bought by the reserve amounts to less than 0.1 percent of world oil demand.
If the purchases seem like a drop in the bucket of world demand, they also represent a drop in the bucket of the Strategic Petroleum Reserve, which currently has 701.3 million barrels, equal to 52 days of all U.S. petroleum imports. On Jan. 23, 2007, Bush announced plans to expand the reserve to 1.5 billion barrels.
Sen. Byron L. Dorgan (D-N.D.) has been rallying lawmakers’ support since March. “All of us feel very strongly that it makes no sense at all for the administration to be taking action to put upward pressure on prices when the SPRO is 90 percent filled,” Dorgan told me. – newswk
The Strategic Petroleum Reserve (SPR) is the world’s largest supply of emergency crude oil. The federally-owned oil stocks are stored in huge underground salt caverns along the coastline of the Gulf of Mexico.Decisions to withdraw crude oil from the SPR are made by the President under the authorities of the Energy Policy and Conservation Act. In the event of an energy emergency, SPR oil would be distributed by competitive sale. The SPR has been used under these circumstances only twice (during Operation Desert Storm in 1991 and after Hurricane Katrina in 2005). Its formidable size (700-plus million barrels) makes it a significant deterrent to oil import cutoffs and a key tool of foreign policy. – doe
The Strategic Petroleum Reserve (SPR) is an emergency petroleum store maintained by the United States Department of Energy. The US SPR is the largest emergency supply in the world with the current capacity to hold up to 727 million barrels (115,600,000 m³) of crude oil. The second largest emergency supply of petroleum is Japan’s with a 2003 reported capacity of 579 million barrels (92,100,000 m³).
The current inventory is displayed on the SPR’s website. As of May 07, 2008, the current inventory was 702.0 million barrels (111,610,000 m³). At current market prices ($125 a barrel) the SPR holds over $88 billion worth of petroleum. – wiki