Urges President Bush to Temporarily Halt Purchases to the Reserve, Lowering Gas Prices by As Much As 25 Cents a Gallon
WASHINGTON, DC – Oil prices hit an all-time high on Monday at nearly $104 a barrel, surpassing the inflation-adjusted record of the 1980s, its effects spreading to gas stations, grocery stores, manufacturers, and middle-class homes in Wisconsin and across the country. In the face of this historic price, Rep. Kind again pointed to the Strategic Petroleum Reserve for relief, and called on President Bush to temporarily halt new purchases to the reserve to lower gas prices and save taxpayer dollars.
“As we have been seeing for months now, high oil prices trickle down into every aspect of our economy,” Rep. Kind said. “As the economy teeters on the verge of a recession, now is the time for President Bush to stop purchasing oil for the SPR to help American consumers and businesses. Doing so could lower gas prices by as much as $10 a barrel, or $.25 cents a gallon of gasoline. That’s real relief.”
The Strategic Petroleum Reserve (SPR) is the United States’ emergency oil stockpile, created in 1975 after oil supplies were cut off during the 1973-74 oil embargo. The SPR is currently 95 percent full. Despite record-high oil prices, the Bush Administration has continued to fill the SPR, diverting 70,000 gallons oil from the market every day, pushing up costs. Temporarily ceasing new purchases of crude oil for the SPR could drive down oil prices by as much as $6 per barrel, or $.25 per gallon of gas, according to a noted petroleum economist. Furthermore, selling the oil on the market instead of putting it in the SPR would raise $6 million a day for the federal government, or more than $1 billion over the next six months.
The Administration has taken this action in the past to relieve supply issues and lower gas prices, most recently in 2005 after Hurricanes Katrina and Rita disrupted refineries in the Gulf Coast. Following the hurricanes, oil prices surged to nearly $70 a barrel, not even close to the $104 a barrel seen yesterday.
“With the reserve 95 percent full, it makes no sense to continue to fill it with high priced oil – driving up costs and wasting taxpayer dollars,” Rep. Kind said. “This commonsense action could do a lot to stimulate our economy as the Congressional Budget Office estimates that for every $10 reduction in the price of oil, $50 billion is injected into the economy. I urge President Bush to take this action immediately.”
Rep. Kind recently joined his colleagues Rep. Rahm Emmanuel (D-IL) and Rep. Peter Welch (D-VT) in sending a letter to the President urging him to take this action. The full text of the letter is attached.