As unrest has spread in the Middle East, and gas prices continue to rise, House Democrats today introduced new legislation that would initiate a modest release of oil from the nation's oil reserves to temper prices in the short-term, and update the reserves to provide long-term security. The Enhanced Strategic Petroleum Reserve Act would direct the Department of Energy to release at least 30 million barrels of oil from the reserves, or about 5 percent of the current total volume, and replace the oil with refined product like gasoline and diesel fuel.
The legislation is authored by Rep. Ed Markey (D-Mass.), the top Democrat on the Natural Resources Committee, and co-sponsored by Reps. Lois Capps (D-Calif.), Rosa DeLauro (D-Conn.), Peter Welch (D-Vt.) and Bill Owens (D-N.Y.).
Releasing even modest amounts of oil from the SPR has had a history of driving down prices in the short term. Unrest in the Middle East has expanded, and is now threatening larger cutoffs in supply and encouraging rampant speculation in the marketplace, driving up prices further. This could have a serious effect on America's economic recovery, with some analysts worrying it could send the U.S. economy back into a recession.
The bill would direct the Obama administration to sell oil beginning within six months to help control skyrocketing oil prices. Later on, the proceeds from the sale would be used to gradually acquire refined petroleum product, such as gasoline or diesel fuel over the next 5 years.
Having refined product in the reserve in the future would allow the reserve to better protect Americans from future supply disruptions, including a loss of heavy crude from countries like Venezuela. Possessing refined products could also help ensure the reserve can be used to help consumers even in the event of refinery outages as a result of a hurricane.
The legislation would also allow the Department of Energy to either acquire new storage facilities or make upgrades to existing facilities, and would do so in a deficit-neutral way.
"Whether higher prices or disrupted supplies occur because of an act of God, or the actions of a Gaddafi, we should be prepared to deploy the one weapon we hold to help consumers immediately," said Rep. Markey. "This bill sends a simple message to the speculators, to the OPEC cartel, to the oil companies: it is time to release our oil to help consumers at the pump."
"This bill will help to calm the markets in the short-term and decrease oil prices without compromising our ability to respond to emergencies and protect consumers," said Rep. DeLauro. "With oil hovering around $100 per barrel, gas nearing $4 dollars a gallon in Connecticut, and our nation's still fragile economic situation right now, we need to provide immediate relief to Americans who are already suffering from high energy prices, and make sure that we are not victim to more shocks in the near future."
"American consumers need a plan that will help them with rising gas prices now. The President should release oil from the Strategic Petroleum Reserve and Congress should consider our proposal to give American families relief. Republicans in Washington have no plan for American families except the same old call for "Drill Baby Drill," which will do nothing to bring gas prices down for nearly a decade," said Rep. Capps.
"As rising gas prices hit Vermonters at the pump and threaten a fragile economic recovery, we must use every tool we can to ease the burden," said Rep. Welch. "Modernizing the nation's oil reserves will lower gas prices in the short term and save taxpayers money in the long term. This is a common sense way to support families struggling to get by in a down economy."
"The rising cost of gas is a growing concern for my constituents. I support a responsible plan to tap into the Strategic Petroleum Reserve as a way to increase supply and reduce the price at the pump," said Rep. Owens. "My district covers nearly 14,000 square miles, and for rural residents who commute long distances every day, higher gas prices are completely unaffordable. We need to consider all reasonable measures to control this recent spike and prevent any erosion to America's economic recovery."