Senate Democrats question continued crude oil purchases for SPR

Noting that crude oil prices have reached the $90/bbl range, seven US Senate Democrats asked Energy Secretary Samuel W. Bodman on Oct. 18 to suspend further purchases for the Strategic Petroleum Reserve.

Nick Snow
Washington Editor
WASHINGTON, DC, Oct. 19 -- Noting that crude oil prices have reached the $90/bbl range, seven US Senate Democrats asked Energy Secretary Samuel W. Bodman on Oct. 18 to suspend further purchases for the Strategic Petroleum Reserve.

The US Department of Energy deposited 2.6 million bbl in the SPR during September and plans to buy another 6 million bbl in the next few months, said Energy and Natural Resources Committee Chairman Jeff Bingaman (NM) and six other Senate Democrats.

"This action sends a message to the marketplace that the administration is comfortable with current price levels, and can only add to US crude oil prices and the prices of related commodities," they said in a letter to Bodman.

The seven Senate Democrats also criticized DOE's issuing a solicitation Oct. 10 for 13 million bbl of crude from federal leases in the Gulf of Mexico under the royalty-in-kind program (OGJ Oct. 22, 2007, Newsletter). DOE said the action was in accordance with the 2005 Energy Policy Act, which directs that the SPR be filled to its authorized 1 billion bbl capacity. It added that there are no immediate plans to replace 11 million bbl of SPR crude which were sold in response to Hurricane Katrina.

DOE's policy of continuing to fill the reserve is bad for taxpayers as well as consumers, the lawmakers said. "Based on the department's own forecasting of crude oil prices and on current futures prices, a deferral of SPR deliveries for 12 months would allow the department to acquire the oil at a discount of more than $10/bbl compared to today's prices," they said.

In addition to Bingaman, Sens. Byron L. Dorgan (ND), John F. Kerry (Mass.), Carl M. Levin (Mich.), Claire McCaskill (Mo.), Jack Reed (RI) and Ron Wyden (Ore.) signed the letter.

Contact Nick Snow at nsnow@cox.net.

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