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SENATORS: HEAVY FILLING OF
STRATEGIC PETROLEUM RESERVE DRIVES UP GAS PRICES
Administration filling SPR faster even
as prices at the pump hit record highs
May 7, 2004
Washington, DC – U.S.
Senator Ron Wyden (D-Ore.) and twenty-nine colleagues in the U.S.
Senate today called on the Bush Administration to, at a minimum,
slow the filling of the Strategic Petroleum Reserve (SPR). The
Senators cited recent reports that filling the SPR at a very high
rate contributes to higher crude oil and gasoline prices. In a
letter to U.S. Energy Secretary Spencer Abraham, the senators
questioned why the administration has sped filling the SPR to
300,000 barrels per day, taking substantial supply off the oil
market when gasoline prices have increased more than 22 percent
nationally and nearly 32 percent on the West Coast.
According to a recent study,
filling the SPR has resulted in higher crude oil prices, lower
private sector inventories, increased cost to taxpayers and higher
prices for gasoline and other refined products, such as diesel,
jet fuel, and heating oil. The report cites estimates by Goldman
Sachs and others that filling the SPR is increasing the oil prices
by $4.25 to $10 per gallon. This study was conducted by the Minority
Staff of the U.S. Senate Committee’s Permanent Subcommittee
on Investigations.
The text of the Senators’
letter to Secretary Abraham follows.
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May 7, 2004
The Honorable Spencer Abraham,
Secretary
U.S. Department of Energy
1000 Independence Avenue, SW
Washington, DC 20585
Dear Secretary Abraham:
In light of a recent report
that the Administration’s current policy on filling the
Strategic Petroleum Reserve (SPR) is driving gasoline prices higher,
we urge you to reconsider the Administration’s position
on SPR fill and either halt filling the SPR or cut back the current
filling rate.
Last week, Oil Daily reported
that the Administration’s current policy of filling the
SPR at a rate of 300,000 barrels per day had contributed to record
high gasoline contract prices on the New York Mercantile Exchange.
The current SPR fill rate reported by Oil Daily also calls into
question your statement on February 2, 2004 that “We don’t
subscribe to the notion that some have raised that somehow this
tiny amount of oil going into the SPR is having a huge impact
on prices. I don’t think it is . . . “. Given the
fact that the current SPR fill rate is double the 150,000 barrel
per day rate when you made that statement and that market observers
are now finding that the current, much higher rate of fill is
in fact increasing gasoline prices, we urge you again to halt
filling or defer currently contracted deliveries to the SPR. If
the Administration is unwilling to halt filling or postpone deliveries
to help bring down prices for U.S. gasoline consumers, we urge
that, at a minimum, the Administration cut back on the current
rate of fill.
Since January, gasoline prices
have soared by more than 22 percent nationwide and nearly 32 percent
on the West Coast. This increase in gasoline costs mean that the
average American family is now paying almost $29 more per month
for gasoline. Families living on the West Coast are paying on
average $43 more per month.
Despite these higher costs to
our citizens and last week’s report that the Administration’s
SPR fill policy is driving gasoline prices higher, the Administration
appears to have increased the rate of fill for the SPR to double
the rate of fill in January. This policy of increasing the SPR
fill rate further limits oil supplies, leading to sustained high
gasoline prices.
Furthermore, in light of the
SPR’s current level of 94 percent of capacity, the Administration’s
actions do not properly balance America’s economic security
needs against the goal of filling the SPR. The SPR was established
to provide relief when oil and gasoline supply shortages cause
economic hardship. Now is such a time. U.S. oil inventories are
at historically low levels. Without prompt action to increase
the supply of oil available to the market, the price of gasoline
during the coming peak summer driving season may well exceed the
current record prices. Yet the Administration is currently pursuing
policies that take even more oil off the market than earlier this
year.
As you know, earlier this year,
we along with the majority of my colleagues in Senate voted for
a halt in filling of the SPR in order to help reduce high oil
and gasoline prices. We again urge you to take this action to
help U.S. gasoline consumers suffering record high prices at the
pump. However, if the Administration is not willing to do everything
it can to provide relief to U.S. gasoline consumers, we would
urge that the current rate of SPR fill be cut back in order to
lessen the impact of the Administration’s policy on the
price of gasoline our citizens must pay.
The summer driving season is
just around the corner. Sky-high gasoline prices threaten our
nation’s economic well-being and ability to maintain the
recovery that is underway. Our nation’s Strategic Petroleum
Reserve is filled to 94 percent of capacity. The remaining 6 percent
can be filled when it does not require our citizens to sacrifice
their hard earned income to purchase gasoline at record high prices.
Thank you for your consideration
of these actions to address this urgent concern for U.S. gasoline
consumers.
Sincerely,
RON WYDEN
CHARLES E. SCHUMER
TOM DASCHLE
JACK REED
BARBARA BOXER
HARRY REID
JOHN KERRY
PATRICK J. LEAHY
HILLARY RODHAM CLINTON
BARBARA A. MIKULSKI
DEBBIE STABENOW
JOHN EDWARDS
JEFF BINGAMAN
FRANK LAUTENBERG
EDWARD M. KENNEDY
JIM JEFFORDS
BYRON L. DORGAN
JON CORZINE
RUSSELL D. FEINGOLD
JOHN D. ROCKEFELLER IV
PATTY MURRAY
CHRISTOPHER J. DODD
RICHARD J. DURBIN
DANIEL K. AKAKA
PAUL S. SARBANES
TIM JOHNSON
JOSEPH I. LIEBERMAN
MARK DAYTON
DIANNE FEINSTEIN
TOM HARKIN
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