1. Immediately Release Oil from the Strategic Petroleum Reserve
The fastest way to bring down gas prices and get relief to Americans is to release a small amount of oil from the Strategic Petroleum Reserve.
- Oil could arrive on the market just 13 days after presidential action, increasing supply and reducing prices.
- Offshore drilling in the Outer Continental Shelf, in contrast, “would not have a significant impact on domestic crude oil and natural gas production or prices before 2030,” according to the Energy Information Administration.
Releasing oil is a proven way to dampen speculation and bring down prices.
- The United States released oil from the reserves before Desert Storm in 1991, in the face of rising prices in 2000, and after Hurricane Katrina in 2005. In each instance the release helped calm oil markets and quickly brought down prices by $5 to $10 per barrel.
- The 1991 release “helped calm the global oil market, and prices began to moderate,” according to the Department of Energy.
The reserve is over 98 percent full; it currently holds 706 million barrels. Selling only a small fraction of these reserves—such as 50 million barrels over 100 days—would be enough to calm the markets, bring down oil prices, and generate at least $7 billion in federal revenue.
President Bush is wrong to oppose the release of oil from the reserves. A White House spokesman said that reserves are, “there to deal with threats to our oil supply, not to try to manipulate prices in the market.” But the reserve was purchased with our tax dollars in preparation for times of crisis—and millions of American families are facing an economic crisis now.
2. Require Oil Companies to Drill on the 68 Million Acres They Already Have
The vast majority of oil and gas reserves on public lands are already available to oil companies, but companies are stockpiling land rather than developing it, which keeps supply lower and prices higher even while they seek new leases in new areas.
- Oil companies are sitting on 68 million acres of leased land and offshore areas.
- Existing drilling areas could produce 4.8 million barrels of oil today, which would double U.S. production. It could also produce 44.7 billion cubic feet of natural gas, according to the House Committee on Natural Resources.
We should increase domestic production by forcing oil and gas companies to “use or lose” the land they already have. If they are not going to drill for oil, they should hand over their leases to someone who will.
3. Offer Emergency Energy Aid to American Families Now
Ordinary families are struggling with record energy prices. With gasoline prices at record highs, many families’ gas costs have increased by hundreds or even thousands of dollars a year. The price of home heating oil has doubled in the past year.
We can help families now with a $32 billion aid package.
- Emergency energy aid, such as a one-time tax rebate, that would help families cope with this year’s extremely high prices and limit the economic damage caused by higher energy prices.
- A national weatherization initiative, which would help families weatherize their homes, bringing down their heating and cooling bills. The average cost of heating a home is projected to be $2,600 this winter, and this initiative would also create jobs and stimulate the economy
The federal government can fund aid to families by ending special sweetheart deals for oil companies.
- Eliminating tax subsidies and evaded royalties would raise $25 billion from oil companies over the next 10 years. These steps were supported by Republican Sens. Grassley, Lugar, Roberts, and Thune last year.
- Selling oil from the Strategic Petroleum Reserve could raise $7 billion or more.
- Federal subsidies are particularly unjustified in this time of record profits for the oil industry: They amounted to $123 billion in 2007 alone, approximately $600 for every driver in America. The big five oil companies made $270,000 of profit per minute in 2007.
4. Crack Down on Oil Speculation
As oil prices rise, higher demand and constrained supply are exacerbated by speculation that adds as much as 10 percent to the price of crude oil, according to Department of Energy officials. Other analysts believe that it could be as high as $30 per barrel.
We can fight oil speculation that is driving up costs.
- Stepping up regulation of oil futures markets will help prevent abusive speculation. We should, for example, require speculators to invest more of their own money when they buy oil futures and close the “Enron loophole”—created by Phil Gramm in late 2000—that exempts some trades from federal oversight.
- Releasing a small amount of oil from the Strategic Petroleum Reserve would disrupt speculators’ expectation that oil prices are a safe bet for higher returns, bursting the speculative bubble.