Moonage Political Webdream

Senator Debbie Ann Stabenow has introduced legislation to tap the Strategic Oil Reserve in order to drive down the price of gas.

It’s a short bill, so here it is:

109TH CONGRESS
S. 847
1ST SESSION

To lower the burden of gasoline prices on the economy of the United States and circumvent the efforts of OPEC to reap windfall oil profits.

IN THE SENATE OF THE UNITED STATES
APRIL 19, 2005
Ms. STABENOW (for herself and Mr. SCHUMER) introduced the following bill; which was read the first time APRIL 20, 2005
Read the second time and placed on the calendar

A BILL
To lower the burden of gasoline prices on the economy of the United States and circumvent the efforts of OPEC to reap windfall oil profits.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. GASOLINE AND CRUDE OIL PRICES.

(a) FINDINGS.–Congress finds that–

(1) the prices of gasoline and crude oil have a direct and substantial impact on the financial well-being of families of the United States, the potential for national economic recovery, and the economic security of the United States;

(2) on April 12, 2005, crude oil prices closed at the exceedingly high level of $51.86 per barrel and the price of crude oil has remained above $50 per barrel since February 22, 2005;

(3) on April 11, 2005, the Energy Information Administration announced that the national price of gasoline, at $2.28 per gallon–

• (A) had set a new record high for a 4th consecutive week;

• (B) was $0.49 higher than last year; and

• (C) could reach even higher levels in the near future;

(4) despite the severely high, sustained price of crude oil–

• (A) the Organization of Petroleum Exporting Countries (referred to in this section as “OPEC”) has refused to adequately increase production to calm global oil markets and officially abandoned its $22$28 price target; and

• (B) officials of OPEC member nations have publicly indicated support for maintaining
  oil prices of $40$50 per barrel;
  

(5) the Strategic Petroleum Reserve (referred to in this section as “SPR”) was created to enhance the physical and economic security of the United States;

(6) the law allows the SPR to be used to provide relief when oil and gasoline supply shortages cause economic hardship;

(7) the proper management of the resources of the SPR could provide gasoline price relief to families of the United States and provide the United States with a tool to counterbalance OPEC supply management policies;

(8) the Administration’s current policy of filling the SPR despite the fact that the SPR is more than 98 percent full has exacerbated the rising price of crude oil and record high retail price of gasoline;

(9) in order to combat high gasoline prices during the summer and fall of 2000, President Clinton released 30,000,000 barrels of oil from the SPR, stabilizing the retail price of gasoline;

(10) increasing vertical integration has allowed–

• (A) the 5 largest oil companies in the United States to control almost as much crude oil production as the Middle Eastern members of OPEC, over 1/2 of domestic refiner capacity, and over 60 percent of the retail gasoline market; and
• (B) the top 10 oil companies in the world to make more than $100,000,000,000 in profit and in some instances to post record-breaking fourth quarter earnings that were in some cases more than 200 percent higher than the previous year;

(11) the Administration has failed to manage the SPR in a manner that would provide gasoline price relief to working families; and

(12) the Administration has failed to adequately demand that OPEC immediately increase oil production in order to lower crude oil prices and safeguard the world economy.

(b) SENSE OF CONGRESS.–It is the sense of Congress that the President should–

• (1) directly confront OPEC and challenge OPEC to immediately increase oil production; and
• (2) direct the Federal Trade Commission and Attorney General to exercise vigorous oversight over the oil markets to protect the people of the United States from price gouging and unfair practices at the gasoline pump.

(c) STRATEGIC PETROLEUM RESERVE.–

(1) IN   GENERAL.–For   the period beginning on the date of enactment of this Act and ending on the date that is 30 days after the date of enactment of this Act–

• (A) deliveries of oil to the SPR shall be suspended; and
• (B) 1,000,000 barrels of oil per day shall be released from the SPR.

(2) EXTENSION.–If necessary to lower the burden of gasoline prices on the economy of the United States and to circumvent the efforts of OPEC to reap windfall crude oil profits, 1,000,000 barrels of oil per day shall be released from the Strategic Petroleum Reserve for an additional 30 days.

This, as mentioned, has been used before.  Early in Bill Clinton’s 1996 campaign against Bob Dole, Clinton released 12 million gallons during a spike in prices.  During the 2000 campaign of Gore versus George Bush, the debate was again turned to releasing more oil from the SPR.  The debate centered on whether it was prudent to allow the SPR to be manipulated for purely political reasons.  During that debate, Bill Richardson commented that "Price was not a factor in the deliberations."  The Independent Petroleum Association of America cited four arguments against the move after the fact in a fax to members:

1. It is hard to see how releasing oil from the SPR will improve heating oil supplies when refineries are running at 96%, and there is no more capacity.   
2. It is unclear what the effect will be on price, since price is determined by commodity markets and, so far, commodity markets have not substantially reduced prices based on increased volumes of production.   
3. For the past two years, IPAA has said that U.S. policies have placed control of oil prices in the hands of Saddam Hussein. One of the few tools the U.S. has to temper Saddam’s actions is the controlled release of oil in the Strategic Petroleum Reserve, should Iraq cut its exports.   
4. It would seem far more beneficial for Congress to assure that Northeast and Midwest, low-income, heating-oil users have adequate assistance to help them, and to enact some energy conservation tax credits. At the same time, Congress should pass a program of tax provisions that would encourage domestic energy production–proposals that have been endorsed by both parties in this Congress.

Not exactly a ringing endorsement.

Now, the reason Bush is demanding the SPR be kept at maximum is mainly because of the very uncertain nature of the world today.  Things have not exactly been rosy between the US and the Middle East for some time.  This is the only real buffer we have to curtail an economic disaster should destabilization occur in Saudi Arabia alone.  That alone is the reason I am all for keeping the SPR at maximum.

Secondly, there are plenty of arguments that I deem valid that releasing the reserves in a very limited capacity will not affect the price of gas one cent.  Primarily because it would be a drop in the bucket for US consumption.  The US is currently consuming about 20 million barrels a day.  Releasing one million would represent about 5% of the consumption.  The 2005 Energy Act allows for up to 20% bio-diesel in diesel fuel.  Let’s just get that going ASAP for starters and not worry so much about the short term fix.

Thirdly. "China will begin filling its first strategic oil reserve tanks in the east coast city of Ningbo at the end of 2005. That facility will hold 33 million barrels, representing about a third of China’s initially planned emergency reserves. In order to meet capacity demand, China will need to add between 70,000 and 90,000 barrels per day. The amount of oil China plans to stockpile may increase."  That 30 million barrels Stabenow wants to release will just make it that much easier for China to fill their reserves.  Once the SPR allotment is spent, gas will just go back up, probably even higher.

And fourthly, not to be dismissed, she will have to overcome some political obstacles.  Something like this statement made during the discussions of 2000:

A release "is not relevant. It would take months for the oil to get to the market��.

That statement was made by Senator John Kerry, running for POTUS.

As it stands now, this bill has no chance of passing the Senate.  If it did, it would be Bush’s first veto.

Bottom line, I don’t want the SPR released for several reasons named above.  Additionally, and more importantly, I don’t want it released because I value the safety of the US over the pain I feel at the gas pump.  Bush has pushed through a monumental new energy policy that looks more to the future than a quick political fix right now.  I want people to feel a little pain right now in order to fully commit once and for all to the future.  That future HAS to exist without relying on petroleum as a major economic factor.  And that ain’t going to happen tomorrow.  But, the longer we put it off, the sooner Hubbert’s Peak will become moot.  And that folks, will solve the price of oil in Saudi Arabia once and for all.

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