Americans are burdened with the highest gasoline prices ever. These debilitating prices have worsened consumer pain by contributing to higher costs for food, clothing, and other essentials. They can be traced back to record oil prices linked to demand growing faster than supply, the relative inelasticity of gasoline demand (people buy it regardless of cost), and speculators driving up prices.
The fastest way to lower oil and gasoline prices is to significantly increase supply by selling a small amount of oil from the 97 percent full Strategic Petroleum Reserve. This would also burst the speculative bubble by upending the expectation that oil supplies will remain limited. Unfortunately, a minority of conservatives in the U.S. House of Representatives blocked such a measure in a vote on July 24. Not surprisingly, these same members received significantly more campaign cash from Big Oil companies compared to supporters of selling a small amount of the oil in storage. Oil companies have made record profits due to record prices. No wonder their congressional defenders want high prices to continue.
Representatives Nick Lampson (D-TX), Ed Markey (D-MA), and John Barrow (D-GA) introduced the Consumer Energy Supply Act, H.R.6578, which would require the sale of at least 60 million barrels of sweet crude oil from the reserve, and eventually replace it with heavy crude. Although it passed by 268-157, it fell 16 votes short of the two-thirds majority required when bills are on the suspension calendar.
Opponents of the bill argue that selling a small amount of our oil reserves would harm national security and would not lower prices. Both arguments don’t hold water. The reserve has 707 million barrels of oil in it, with a capacity of 727 million barrels. Selling 60 million barrels will leave it 89 percent full, and H.R. 6578 requires that oil companies replace the sold oil. Nonetheless, Rep. Charles Boustany (R-LA) claimed that “draining the Strategic Petroleum Reserve is short-sighted, foolish and hurts our national security.”
The White House and other opponents claim that selling reserve oil won’t lower prices. At a press briefing presidential press secretary Dana Perino claimed: “What we have seen in the past when people have tried to use the Strategic Petroleum Reserve to affect price is that it hasn’t worked.” In fact, her boss President George W. Bush sold reserve oil after Hurricane Katrina in 2005, and it lowered gasoline prices. This move saved families an average of $125 over 100 days. President Bush’s father, President George H.W. Bush, sold reserve oil beginning on the eve of the 1991 Persian Gulf War. Families then saved an average of $65 dollars from lower gasoline prices.
Opponents of releasing this government oil have received average lifetime contributions from oil and gas interests of $133,605. In contrast, representatives who voted in favor of reducing current gas prices have average lifetime contributions of $42,341. This 3-1 oil industry fundraising advantage indicates that opponents of selling reserve oil have much more oil industry support. It makes sense that these big oil allies would oppose the sale of this oil since it would lower prices and therefore oil company profits.
Minority Whip Roy Blunt (R-MO) falsely claimed that the bill would “drain our nation’s Strategic Petroleum Reserve.” He received $362,248 from the oil industry in campaign contributions. Representative Boustany, who made the above-mentioned remark about national security, received $281,530. And a constituent of Rep. Mark Kirk (R-IL) wondered whether his opposition to selling extra oil has “something to do with the $45,000 in contributions he’s received from Big Oil?”
Many of the opponents of selling some stockpiled oil instead favor the expansion of offshore oil drilling in the protected Outer Continental Shelf. This ignores the Department of Energy analysis that determined that opening the OCS to offshore drilling “would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.” Three of every four barrels of oil offshore of the United States are in areas already available for drilling.
Selling oil from the Strategic Petroleum Reserve to promptly increase supplies and decrease prices is a short-term fix for record prices. For the long term, the most effective policies would decrease the use of oil by making vehicles go significantly further on a gallon of gas, develop sustainable alternative fuels, and dramatically increase the affordability and accessibility of public transit.
Enhanced fuel-efficiency standards would significantly reduce oil consumption, yet House Republican leaders blocked enhanced fuel economy standards from 1995 to 2006, and many opposed them in 2007. Had the House not defeated a 2001 bipartisan proposal to make light trucks like SUVs meet the same standards as passenger vehicles, Americans would be using 1 million barrels of oil per day less in 2008.
Better fuel economy standards or immediate relief due to the sale of reserve oil are not the only energy measures that most of these members opposed. They also voted against requiring oil companies to develop the oil leases that they already posses, reining in speculators who have driven up oil prices to make a quick buck, and ending tax breaks for big oil and investing the money in clean energy. These members have chosen “none of the above”—except for drilling in protected coastal areas—for their energy policy.
With gasoline prices still near record highs, President Bush and Congress must act to provide immediate help to lower pump prices. The only policy that would accomplish this goal quickly is selling some of our extra oil in the Strategic Petroleum Reserve. As prices drop, the real work of investments in super-efficient cars, non-oil fuels, public transit, efficiency, and clean energy must begin in earnest to prevent a recurrence of skyrocketing prices and promote the sensible policies for energy Americans want.