[Congressional Record Volume 150, Number 116 (Thursday, September 23, 2004)]
[Senate]
[Pages S9559-S9560]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         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.

[[Page S9560]]

  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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