March 3, 2003
Sen. Jeff Bingaman (D-NM), the Senate Energy Committee's ranking member, today on the Senate floor urged the Administration to better define its policy for utilizing the Strategic Petroleum Reserve. "I would call on the President to give us a clear and understandable signal as to what his policy is. Merely saying that 'we will wait for a severe supply disruption' does not cut it....It certainly is a severe issue weighing down our economy at this time." Here is a full text: ------------------------------------------- "Mr. President, I would like to express my concern on the Administration's approach to oil markets and the Strategic Petroleum Reserve (SPR). What we are seeing isn't just bad policy -- it's the Administration's lack of a policy for SPR at a very critical time. This indecision has hurt consumers. "We have an oil supply crisis on our hands right now. Oil prices hit $40 a barrel last week. Domestic crude and product stocks (outside of the SPR) are at all time lows and oil prices are now hovering at levels we have not seen since the Gulf War. High energy prices like this hurt consumers and hurt the economy. "What has the Administration done to minimize the economic pain that Americans are feeling? "The average consumer may not know what the price of oil is on a daily basis, but the average consumer does know the price of gasoline at the pump. American consumers have had to bear the brunt of several weeks of high gasoline prices while Saudi Arabia ramped up their production to maintain (if not increase) their market share. Why should our national policy be to maintain their market share? "Earlier this fall (after the elections) when crude supply was first impacted and prices began to rise, the Administration did not act to perform a test sale of SPR oil as was strongly suggested by oil market analysts. An SPR release on this small scale would have been appropriate then… a simple statement outlining the Administration's SPR policy would have helped to calm increasingly jittery markets. "The situation we now face, in which curtailment of oil supplies is hurting our national economic security, is precisely what was foreseen when Congress created the SPR. The curtailment has been months in the making and the current crisis in Venezuela has pushed the supply situation to a level beyond "severe." "The Strategic Petroleum Reserve was established in 1975 in direct response to the Arab Oil Embargo. Today, the SPR contains a total of 599.3 million barrels, or about 60 days of imports. "When this body considered the Omnibus Appropriations Act for FY 2003, I offered an amendment to extend our authorities to use the SPR, which were due to expire later this year. I am pleased that the Senate adopted my provision and that, as a result, we have another 5 years of authority to use the SPR as a response to oil supply crises. However, this authority is there for a reason. "There is a supply problem. We've known this for some time now. In December, 3 million barrels of Venezuelan crude came off the market all-together. This has had a greater supply impact than removing all Iraqi crude will have under a war scenario, which we all consider to be very likely. "Prior to December 2002, Venezuela was one of the world's five largest oil exporters. Its net exports averaged 2.4 million barrels per day. During the first nine months of 2002, oil from Venezuela supplied approximately 14 percent of U.S. net oil imports (1.5 million barrels per day). The U.S. depends on Venezuela for substantial volumes of gasoline imports as well as oil imports. "A 10-week general strike in Venezuela has resulted in a sharp decrease in Venezuelan exports to the U.S. The strike comes at a time when markets are already tight. "On Tuesday, the Committee on Energy and Natural Resources heard testimony from the Secretary of Energy that everything was getting better in Venezuela, and that the crisis was passing. Recent events, though, suggest that this may not be the case. "A key factor in the uncertainty that is keeping prices up is the uncertainty surrounding the Administration's intentions about using the SPR. A clear statement from the Administration of the conditions under which oil would be released from the SPR would have an immediate effect on lowering oil prices. "The cryptic phrase that is used by the Administration is that they would release oil from the SPR only in the case of "a severe supply disruption." "Since the Administration won't elaborate on what "a severe supply disruption" entails, the suspicion is that they never will release oil from the SPR absent an all-out war in the Persian Gulf that involves major damage to Saudi oil fields. For that reason, the psychology of the market largely discounts the existence of the SPR. And consumers are paying all-time high prices at the pump. Gasoline prices have risen more than 30 cents a gallon since December. "Gasoline prices are high because our crude stocks are way down. We are operating at minimum operating levels in the refining sector, and high crude prices mean that increasing refining output will cause even higher prices at the pump. Demand for gasoline is high as we head into the driving season. "Since most spare capacity in the market is in the Middle East, it is going to take a while to get the oil we need. And it doesn't take much to send prices spiking again - colder weather, a disruption to supply in Venezuela or Nigeria, war in the Gulf. "My colleagues have listened to many speeches over the last year bemoaning the fact that we don't have an energy policy. I'm not going to ask that we come to closure today on a universal and comprehensive energy policy. I'd settle today just for one little piece. That would be a clearly enunciated and understandable policy for when we will use the SPR. "The Administration may be sufficiently captive to a minimalist ideology in dealing with this oil crisis that they never actually plan to use the SPR. I hope that is not the case. I would call on the President to give us a clear and understandable signal, as to what his policy is. Merely saying that "we will wait for a severe supply disruption" does not cut it. Consumers deserve more, and the costs to our economy may become unacceptable. It certainly is a severe issue weighing down our economy at this time."