As part of a continuing effort to help lower gas prices, Congressman Maurice Hinchey (D-NY) and 93 of his House colleagues, including Speaker of the House Nancy Pelosi and House Majority Leader Steny Hoyer, today urged President Bush to temporarily suspend purchases of oil for the Strategic Petroleum Reserve (SPR) in order to boost market supply, which in turn would help reduce the cost of gas. In a letter to Bush, the House members reminded Bush that he has halted SPR purchases before to help ease the cost of oil and that the time is right to do it again with gas prices moving toward $4 per gallon.
"Suspending purchases of oil for the Strategic Petroleum Reserve is by no means a long term solution to the energy crisis this country is confronting, but it is an honest, short-term way to boost market supply and help reduce prices at the pump for Americans," Hinchey said. "The cost of gas has become such an enormous financial burden for so many people across the country and President Bush has the responsibility to take whatever steps he can to help relieve that burden. Given that the Strategic Petroleum Reserve is nearly full, halting SPR purchases will not jeopardize national security in any way. At the same time we're looking to temporarily suspend SPR purchases, we must also be looking for permanent ways to advance renewable energy so that eventually we won't need to worry about the cost of oil again."
Despite the fact that gas prices have skyrocketed over the past seven years, the United States is currently taking 70,000 barrels of oil a day off the market to continue filling the nation’s SPR. Moreover, the DOE recently announced plans to increase this SPR fill rate to 76,000 barrels per day before the end of the summer. As of April 29, 2008, the current SPR inventory was at 96.5 percent full capacity with 701.3 million barrels of oil out of a capacity of 727 million barrels.
Energy experts and the DOE say that temporarily suspending the fill of the SPR would lower both oil and gas prices immediately. Even President Bush has suspended SPR purchases in order to lower fuel prices. In April 2006, President Bush said, "I've directed the Department of Energy to defer filling the reserve this summer. Our strategic reserve is sufficiently large enough to guard against any major supply disruption over the next few months. So by deferring deposits until the fall, we'll leave a little more oil on the market. Every little bit helps."
In their letter to Bush, Hinchey and his colleagues highlighted the past success that halting SPR purchases had in driving down oil prices. Their letter states, "Suspending the fill of the SPR could also have an immediate impact on speculators who are driving up oil and gas prices. 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 percent decrease.'"
The U.S. maintains the SPR for national security purposes in the event the foreign oil supply is cutoff.