Nick Snow
Washington Editor
WASHINGTON, DC, Feb. 7 -- US Sen. Byron L. Dorgan (D-ND) has introduced legislation that would direct Secretary of Energy Samuel W. Bodman to temporarily suspend Strategic Petroleum Reserve purchases when oil prices are near record-high levels.
Under the bill, the federal government would stop its purchase of more than 50,000 b/d of crude for the remainder of 2008 or until the price fell to $50/bbl or less, Dorgan said Feb. 6 in announcing the bill.
"It makes no sense to be storing oil in a strategic petroleum reserve that is already 97% full when oil and gasoline prices are at record highs. Oil topped $100/bbl earlier this year and stocking up to put it underground drives [gasoline] prices higher by removing oil from the market," he maintained.
"Topping off" the SPR does not add much to US energy security, Dorgan continued. Combined, the SPR, private oil stocks, and refinery inventories hold the equivalent of 180 days of imports, well above the 90 days required by international treaties, he added.
"We need to use a little common sense here. I believe maintaining the current reserve is important for our economy and national security, but the time to stock up is not when prices are highest," he said.
The bill's cosponsors include Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM), Susan F. Collins (R-Me.), John F. Kerry (D-Mass.), Carl M. Levin (D-NM), Joseph I. Lieberman (I-Conn.) and Ron Wyden (D-Ore.). Bingaman, Kerry, Levin, Wyden, and others made the same request to Bodman on Oct. 18, 2007 (OGJ Online, Jan. 18, 2008).
In Bingaman's opening statement at a Feb. 6 Energy and Natural Resources Committee hearing on DOE's fiscal 2009 budget request, he again expressed concern that the costs of continuing to expand the SPR outweigh the benefits.
"In this budget, the administration is proposing to spend $584 million to buy millions of barrels of crude oil and take them off the market. It seems odd to be spending a half billion taxpayer dollars on an activity that will keep oil prices high," he observed.
Bingaman said the 2005 Energy Policy Act included specific language requiring any filling of the SPR to keep costs low and expenses minimal.
"I do not understand why you would continue to take crude oil off the market when, according to DOE's Energy Information Administration, crude oil prices over the next few years will be lower than they are today," he told Bodman, who was appearing before the committee as a witness.
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