Markey-led Letter to President: Stop Filling Our Oil Reserves. . .Again!
FOR IMMEDIATE RELEASE
Contact: Select Committee, 202-225-4081
Markey-led Letter to President: Stop Filling Our Oil Reserves. . .Again!
Chairman Markey, Democratic Leadership and Nearly 100 Reps. Ask President to Help Consumers by Exercising Existing Authority
WASHINGTON (May 7, 2008) – Rep. Edward J. Markey (D-Mass.), Speaker Nancy Pelosi, Majority Leader Steny Hoyer, and 91 other members of Congress sent a letter to the president today asking him to stop buying oil in the open market to fill the Strategic Petroleum Reserve, noting that he has done so twice before during his tenure. The call for action on the SPR is an immediate, pro-consumer step that the president can take without any legislative directive, and has historical examples of bringing down oil prices, the letter says.
“Congress gave the president authority to quit buying oil if it would save taxpayer dollars and help consumers. Twice before, President Bush has stopped buying oil in the market to fill our nation’s oil reserves, but now that Big Oil is raking in record profits, he’s conveniently gun-shy,” said Rep. Markey, Chairman of the House Select Committee on Energy Independence and Global Warming. “The president once claimed that ‘every little bit helps’ when it comes to calming rising oil prices, but now that Big Oil is raking in the dough, he won’t help American families, not even a little bit.”
Download a Copy of the Letter Below:
TEXT VERSION
PDF with SIGNATURES
The letter details the two previous times when the Bush administration has halted filling the SPR. From December 2002 to April 2003, the administration deferred payment on 18.6 million barrels of oil into the SPR, which brought prices down during that period when oil was hovering in the $20-30 range. From March 2006 to April 2007, as part of the president’s “four-part plan to confront high gas prices,” he deferred purchasing 1.7 million barrels of oil.
A larger-scale deferment of oil purchases, or a release of valuable oil from the reserve for lower grade oil, could provide immediate and significant relief by tamping down speculation in the market. The letter gives the following example from the end of President Bill Clinton’s term, as told to the Select Committee at a SPR hearing in April: “In September 2000, the Clinton Administration exchanged 30 million barrels of oil in response to low home heating oil inventories in New England. According to testimony delivered to Congress on April 24, 2008 by a former Department of Energy official and MIT expert, ‘the results [of the exchange] were immediate, in spite of the fact that oil had not yet moved into the market, demonstrating the psychological impacts on the market when the U.S. signals its intention to act…By the end of the year, actual oil prices had dropped from $30.94 to $20.38 per barrel, a 34% decrease.’”
According to DOE projections, ending the fill of the SPR could reduce prices by about $2 per barrel of oil and 5 cents per gallon of gasoline. And many analysts, and even oil companies like ExxonMobil, agree that simple supply-and-demand principles cannot explain the current rise in oil and gas prices.
“The only supply-and-demand at work here is the president not supplying solutions he has at his disposal, solutions which everyone demands of him,” said Rep. Markey. “This is like a doctor who refuses to administer pain medication for a broken arm with the needle sitting right there in his coat pocket.”
The administration is currently filling the SPR at the rate of 70,000 barrels a day, and DOE recently announced plans to increase the rate to 76,000 barrels a day before the end of the summer, when prices are predicted to only increase.
Rep. Markey is a lead co-sponsor of a bill sponsored by Rep. Peter Welch (D-Vt.) that would direct the president to stop deposits of oil into the SPR.
Rep. Markey also suggested today, as he has before, that the administration could swap out light sweet crude oil, which can be refined more easily into gasoline, for cheaper, more versatile heavy crude oil. That would reduce costs on the release of oil from the SPR, while still keeping supplies within the SPR. The SPR is currently at 97 percent capacity, and is 13 million gallons greater than the last time the president stopped the fill of the SPR.
“By swapping out light crude for heavy crude, we can impact gas prices immediately without reducing our strategic supplies,” said Rep. Markey.
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Source: Committee on Natural Resources
House Democratic Leaders
Speaker Pelosi
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