Washington, D.C. -- In a letter to President George W. Bush, U.S. Representative Neil Abercrombie has called for a release of crude oil from the Strategic Petroleum Reserve— which currently holds more than 700-million barrels — to help bring down the price of jet fuel and other fuels for industries essential to the U.S. economy.

“Right now — today — our nation is reeling from the impact of an energy crisis on a U.S. economy already in or on the verge of recession,” wrote Abercrombie.  “Add to this the highest fuel prices in history, now more than $110 a barrel for crude oil and an average price at the pump of more than $3.30 a gallon for regular gas, and the impact on a petroleum-fueled economy is devastating.  We are, quite clearly, in the midst of an energy emergency.”   

Abercrombie noted that, after 61 years of service to Hawaii, Honolulu-based Aloha Airlines halted passenger service today and laid off 1,900 employees.  Aloha had been attempting to fight off unregulated predatory pricing for two years, and a $71 million increase in the cost of jet fuel pushed them over the edge.  Other airlines are being forced to raise ticket prices or add as much as a $50 surcharge for fuel.  According to the Air Transport Association (ATA), every penny increase in the price of jet fuel means $190 million in annual fuel costs for U.S. airlines — 20 to 30% of their total operating expense.  ATA today called on Secretary of Energy Samuel Bodman to authorize releases from the nation’s home heating oil reserves to help increase the supply of jet fuel.

“The emergency, however, extends far beyond the airline industry.  The effects of soaring fuel costs are rippling out through the economy,” he wrote.  “Oil and refined fuels power almost 97% of our nation’s transportation: automobiles, trucks, trains, and ships, as well as aircraft.  This is how the U.S. moves people and goods.”

Fuel cost represents as much as 25% of the total operating expenses for the nation’s motor carriers. Transport companies and independent truckers across the country are facing the prospect of parking their trucks because they simply cannot afford to buy diesel fuel, and the effect is already being felt in food and retail prices.

Organizations like the United States Postal Service and private sector delivery companies have no choice but to keep buying fuel for their delivery vehicles, no matter the cost. And that cost will be passed along to businesses, and ultimately, to consumers.  Oil and natural gas are raw materials for more than 95% of manufacturing: plastics, medicines, machinery and all kinds of consumer goods.  Energy is the third-largest manufacturing cost for the forest and paper industry. 

“The instability of oil prices will continue to ripple through our economy,” said Abercrombie.  “We are, quite clearly, in the midst of an energy and economic emergency.”  

The Hawaii Democrat requested a temporary release of crude oil from the Strategic Petroleum Reserve.  The average cost of crude in the reserve is approximately $27 per barrel.  The hope is that if a quantity of this oil is released to the market and refined at lower cost than the current market-priced crude, it could generate a temporary supply of lower priced gasoline, diesel fuel and jet fuel for those industries that are totally dependent on fuel, and on which the U.S. economy is totally dependent.

Under the Energy Policy and Conservation Act of 1975, draw-downs from the Reserve are authorized if the President determines that there is a “severe energy supply interruption;” if that interruption has caused a severe increase in the price of petroleum products; and if such prices are likely to cause a major adverse impact on the national economy.”

“But,” Abercrombie cautioned, “this step offers the prospect of temporary relief, and should not be seen by anyone as a long-term solution to the national energy emergency.  However, it may serve as an alarm to the American public that substantial and serious measures must be taken immediately to prevent further, even permanent, damage to the U.S. economy.  It should also be the first substantive action by the Government of the United States to address the energy crisis.”

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