Markey, House Dems Push Obama on Strategic Petroleum Reserve
As Prices Rise, Deploying SPR Can Reduce Prices; Dems Show Broadening Support for Action
WASHINGTON (April 12, 2011) – With gas prices approaching the all-time high per gallon in the United States, House Democrats are stepping up their efforts to deploy a small fraction of the nation’s oil reserves to tamp down speculation and reduce prices for American families and small businesses. Today, Rep. Edward J. Markey (D-Mass.) is leading an effort with Reps. Peter Welch (D-Vt.) and Rosa DeLauro (D-Conn.) and 14 of their House colleagues to push the president to initiate a sale of oil from the fully-stocked reserves.
“As we approach the summer driving season, we must carefully consider our only immediate option to mitigate the runaway increase in prices that we saw in the summer of 2008,” says the letter to President Obama. “We therefore urge you to consider leveraging the SPR to respond to supply disruptions and combat the rapid price escalations resulting from rampant fear and speculation in the oil markets.”
The full text of the letter is pasted below.
While supplies of gasoline remain at similar levels to this period last year, prices are nearly one dollar more at the pump for regular grade gasoline. Many economists have said that up to $20 of the price of a barrel of oil is currently from speculation in the marketplace that does not reflect true supply and demand. As events unfold in Libya and across the Middle East, prices could continue to spike higher, potentially stultifying the nascent U.S. economic recovery. Therefore, the members of Congress suggest using the Strategic Petroleum Reserve soon.
“[I]n the short term, considering releasing oil from the SPR as we approach the summer driving season could help prevent oil prices from escalating as they did in 2008,” write the lawmakers. “Releasing even a small fraction of that oil could have a significant impact on speculation in the marketplace and on prices. It would also remind the world that the U.S. is ready, willing and able to use the SPR aggressively and effectively if needed.”
The lawmakers also called attention to a legislative proposal offered in February by Reps. Markey, Welch, DeLauro and others to modernize the SPR by releasing oil from the SPR now and replacing it with refined petroleum product, such as gasoline and diesel fuel, in the longer term. Replacing a small percentage of the oil in the SPR with refined product would put downward pressure on prices in the short term and could also protect more adequately against future disruptions in domestic refining capacity or supply disruptions of heavy crude from countries like Venezuela, the lawmakers say.
# # #
April 12, 2011
The Honorable Barack Obama
President
The White House
1600 Pennsylvania Avenue
Washington, DC 20500
Dear President Obama:
This month, oil prices have spiked over $108 per barrel on the New York Mercantile Exchange as unrest in the Mideast has intensified. This price spike is now directly impacting American consumers, with gasoline prices rising 20 cents in just the past two weeks. Markets are incorporating the increased risk of a prolonged conflict in Libya disrupting two percent of global supply for a sustained period as well as spreading regional tension bringing more supplies into question. While the current supply disruptions highlight the need to strengthen our energy independence over the long-term by developing alternatives to oil, we encourage you to consider utilizing the Strategic Petroleum Reserve (SPR) now -- the only tool we possess which can counter supply disruptions and combat crippling price spikes in the short term.
While Saudi Arabia and other OPEC members with available spare production capacity have pledged to raise production for
Next Article