Levin Statement Regarding DOE Policy on Strategic Petroleum Reserve and High Gasoline Prices

Oil industry links SPR to higher gas prices

WASHINGTON – Sen. Carl Levin, D-Mich., senior Democrat on the U.S. Senate Permanent Subcommittee on Investigations (PSI), released a minority staff report this week entitled, U.S. Strategic Petroleum Reserve: Recent Policy Has Increased Cost to Consumers But Not Overall U.S. Energy Security. The report found that the U.S. Department of Energy's (DOE) recent program to fill the U.S. Strategic Petroleum Reserve (SPR) has increased crude oil prices and hurt U.S. consumers and taxpayers, without actually increasing overall U.S. oil supplies.

In an interview aired on National Public Radio's Morning Edition this morning, a leading oil industry expert, Philip Verleger, estimated that 25 to 35 cents of the price of gasoline today is attributable to DOE's new policy to fill the SPR without regard to the price of oil:

Bob Edwards, NPR: "Is Venezuela the chief reason why oil supplies are so low, or is there something else going on?"

Verleger: "Venezuela is one reason, but as the U.S. Senate committee pointed out Wednesday, the U.S. government was filling the Strategic Petroleum Reserve last year as prices were rising and, by my estimate, had the U.S. government not filled the U.S. Strategic Petroleum Reserve or returned the 20 million barrels they put in back to the market, prices right now would be around $28 a barrel instead of $38 a barrel and gasoline prices might be 25 to 35 cents lower." [Emphasis added.]

Levin has called on DOE to postpone deliveries to the SPR until crude oil prices fall and oil supplies increase.

For a copy of the report, click here [PDF].