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“HIGH ENERGY PRICES AND THE STRATEGIC PETROLEUM RESERVE” mentioning the U.S. Dept. of Energy was published in the Senate section on pages S9559-S9560 on Sept. 23, 2004.
The publication is reproduced in full below:
HIGH ENERGY PRICES AND THE STRATEGIC PETROLEUM RESERVE
Mr. BINGAMAN. Mr. President, I have come to the Senate floor to speak briefly, again, about the impact high energy prices are having on consumers and the increasingly misguided filling of the Strategic Petroleum Reserve. This is not a new topic for discussion on the Senate floor. Rather, it is one we keep coming back to. Given the increase in oil prices we have seen this year, many of us have been contemplating the administration's decision to continue to fill the Strategic Petroleum Reserve in this high-priced environment and have been criticizing the administration's decision in that regard.
Yesterday, oil prices hit $48.35 a barrel. Today, oil futures hit $49 a barrel, just 40 cents under the all-time high of $49.40 a barrel that was reached on August 30.
Market analysts attribute yesterday's sharp increase in prices to trader reactions to the Energy Information Administration's weekly inventory report. U.S. crude inventories dropped by 9.1 million barrels. More surprising was the decrease observed in petroleum product inventories, in particular in heating oil. Distillate inventories plunged by 1.5 million barrels. This may not sound like a lot, but given that this is the season in which stocks are normally built in anticipation of winter heating, it is a significant decline.
In a season in which we should be building stocks, we see national commercial crude stocks at the lowest level since February, and we see draws on the heating oil inventory we have. Heating oil prices have hit all-time highs on the NYMEX this past week, and the crude price, as I mentioned before, is once again near its all-time high.
Curiously, the administration is seeking to remove some 5 million barrels of crude oil from the market in October to continue with the filling of the Strategic Petroleum Reserve. This does not make good economic sense. The direct effect of removing that 5 million barrels from the market is to add more pressure to what we already know is a very tight market. It is to create even higher energy prices for consumers, and these are the same consumers who have been faced with record energy prices for the entire past year.
According to a recent analysis by the Energy Information Administration, the prices consumers pay for heating oil and natural gas and propane have increased 46 percent since 2000 when the current administration took office. Gasoline prices increased more than 30 percent this year alone. When can we hope that this administration will do something to help consumers fight these high energy costs? How high do prices have to go before we see some action?
Yesterday, rumors began circulating that the administration was contemplating a release of Strategic Petroleum Reserve in response to the disruptions by Hurricane Ivan to U.S. offshore production and oil imports. Reports in this morning's newspapers claim there are two companies that have requested permission to defer their Strategic Petroleum Reserve deliveries. They have requested that authority from the Department of Energy.
This afternoon, the Department of Energy announced that it intends to enter into negotiations with refiners for a loan of oil from the Strategic Petroleum Reserve. The press release notes that the Secretary has authorized those negotiations concerning that loan. I hope this announcement signals that the administration will start to take a more realistic approach to the current situation in oil markets.
For several months, I have advocated that we should suspend delivery of oil to the Strategic Petroleum Reserve until prices come down to a more reasonable level. Suspending the fill of the Strategic Petroleum Reserve during times of high oil prices makes good economic sense. Diverting high-priced Federal oil into the Strategic Petroleum Reserve does not make good economic sense.
By filling the Strategic Petroleum Reserve in this high-priced environment, we are effectively paying more for oil now than we would if we waited until prices came down. Filling the Strategic Petroleum Reserve when oil prices are high costs American taxpayers unnecessarily. Buy high, sell low is not a good strategy. It puts more pressure on already tight fuel markets and keeps oil prices higher for a longer period.
The royalty-in-kind oil program--that is the program being used to fill the Strategic Petroleum Reserve--was first envisioned in a low-
price environment. The Government took oil from domestic producers on Federal lands when prices were low to absorb some of the excess oil. The royalty-in-kind program was used to keep domestic oil prices from falling even further. At that time, we were talking about $14 per barrel of oil. Now we are talking about $50 per barrel of oil. The royalty-in-kind program was not established to help high oil prices stay high, but by taking oil off the market in a high-priced environment, we essentially do that.
Suspending the filling of the Strategic Petroleum Reserve does not hurt our energy security. The Reserve already has 96 percent of its capacity. It has 670 million barrels that are now in storage--the highest level we have ever had. It currently covers 67 days of import capacity at a level of 10 million barrels per day of imports.
I do not know how this administration can justify its current plan of taking 5 million additional barrels off the market in October at the same time we are talking about granting loans of oil from the Strategic Petroleum Reserve, effectively releasing oil to refiners from the Strategic Petroleum Reserve. I hope the administration will rationalize its position and stop the filling of the Strategic Petroleum Reserve for the time being.
Mr. President, I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. McCONNELL. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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