US Senate budget blueprint calls on DOE to suspend SPR fill

March 16, 2004
The US Senate late Mar. 11 approved a nonbinding budget blueprint that includes an amendment sponsored by Sens. Carl Levin (D-Mich.) and Susan Collins (R-Me.), which calls on the US Department of Energy to temporarily suspend royalty oil transfers to the Strategic Petroleum Reserve.

By OGJ editors
WASHINGTON, DC, Mar. 16 -- The US Senate late Mar. 11 approved a nonbinding budget blueprint that includes an amendment sponsored by Sens. Carl Levin (D-Mich.) and Susan Collins (R-Me.), which calls on the US Department of Energy to temporarily suspend royalty oil transfers to the Strategic Petroleum Reserve.

Lawmakers voted 52-43 on the measure. It directs DOE to cancel delivery into the SPR of 53 million bbl of royalty in-kind crude oil from Outer Continental Shelf leases. Amendment sponsors contend that by selling that oil on the open market, the federal government would get $1.7 billion in additional revenue.

The Levin-Collins amendment would earmark a portion of the additional revenue for deficit reduction and place the remainder in a homeland security fund for state governments.

"This amendment is a win-win for the American people," said Levin. "Low supplies of oil in private inventories are a main reason for high prices. With more oil on the open market, prices for gasoline, heating oil, jet fuel, and diesel fuel will decline and consumers will benefit. At the same time, our cities and states will gain from additional funds for homeland security."

Collins said, "At a time when oil prices are at near-record highs and the Strategic Petroleum Reserve is already 93% at capacity, it makes good public policy sense to temporarily suspend SPR purchases and use these dollars for homeland security. This will also have the positive effect of decreasing gasoline prices to relieve American families from extremely high prices."

But the sponsor of a pending energy bill before the chamber strongly objected to the SPR amendment.
"This is the wrong time to reduce our commitment to SPR," said Senate Energy and Natural Resources (SENR) Chairman Pete Domenici (R-NM). The US Energy Information Administration's latest forecast predicts that by 2025 we will be 70% dependent on imported oil. . .This amendment will make us more vulnerable to future price shocks should there by a concerted effort to reduce oil supplies by [the Organization of Petroleum Exporting Countries] or other countries. This amendment puts our economy at risk and should be defeated."

Meanwhile most oil analysts argued that the amount of oil in question would only have a brief dampening effect on escalating crude prices.

Soon after the vote, the Senate went on a weeklong break; the House and Senate still need to finalize the proposal when both chambers are in session later this month. The document does not need White House approval.

Other blueprint measures
Other parts of the Senate spending plan could have an impact on the pending comprehensive energy bill.

The Senate approved by a 51-48 vote an amendment sponsored by Sen. Russell Feingold (D-Wis.) that tightens budget spending. It specifically reinstates the "pay-as-you-go" practice the Senate used to follow for managing the federal budget. That rule meant any senator could object to a budget item in any legislation that had mandatory spending not offset by reduced spending or revenue increases elsewhere.

According to a spokesperson for the majority side of the SENR Committee, the Senate's budget resolution includes a $16.6 billion energy bill reserve to cover the anticipated cost of the legislation, S. 2095—the so-called "energy-lite" energy bill. The reserve assumed a cost of $15.1 billion over 5 years for the tax provisions and nearly $1.5 billion over 5 years in direct spending from the authorizing committee.

But congressional staff said if the conference agreement on the budget resolution retains the pay-as-you-go provision, the energy bill could face a budget point of order that would require 60 votes to defeat.

Another amendment approved by voice vote (no recorded roll call) reinstated the federal government's authority for about $300 million in spending authority for a US energy efficiency program called Energy Savings Performance Contracts.

An unusual bipartisan coalition supported the measure, including Sens. Jeff Bingaman (D-NM) and Jim Inhofe (R-Okla.). But Domenici objected to the plan; he said that the amendment wording would make it difficult for budget-makers to figure out the true cost of the program.