In an attempt to counter record fuel prices, a bill introduced in the Senate seeks to limit the amount of oil diverted to the U.S. Strategic Petroleum Reserve.
The introduction of the bill by Sen. Byron Dorgan, D-ND, comes hot on the heels of a Department of Energy recommendation to beef up the reserve in its 2009 budget request.
If passed into law, the bill would direct the energy secretary to temporarily stop putting more than 50,000 barrels of oil a day in the Strategic Petroleum Reserve when crude oil prices are at record levels.
Under Dorgan’s plan, the federal government would suspend acquisition of oil for the Strategic Petroleum Reserve for the rest of 2008 or until the price of petroleum falls to $50 per barrel or less.
“It makes no sense to be storing oil underground in a Strategic Petroleum Reserve that is already nearly 97 percent full when oil and gasoline prices are at record highs,” Dorgan said. “Oil topped $100 per barrel earlier this year, and stocking up to put it underground drives gas prices higher by removing oil from the market.”
The bill is cosponsored by Sen. Jeff Bingaman, D-NM; Sen. Carl Levin, D-MI; Sen. John Kerry, D-MA, Sen. Susan Collins, R-ME; Sen. Joe Lieberman, I-CT; and Sen. Ron Wyden, D-OR.
This isn’t the first time limiting contributions to the reserve has been suggested. In fact, Jim Johnston, president of the Owner-Operator Independent Drivers Association, encouraged doing just that in a Jan. 30 letter to President Bush.
In the letter, Johnston explained that a 5-cent increase in fuel costs per gallon adds roughly $1,000 to a trucker’s annual costs – and that diesel prices have increased 40 cents per gallon in the past six months alone.
Johnston called on President Bush to stop putting oil into the nation’s Strategic Petroleum Reserve until fuel prices ease.
“Right now they’re diverting almost 50,000 barrels of oil a day into the Strategic Petroleum Reserve,” Johnston said during an interview on “Land Line Now.”
“You have a double impact there. You first have the impact at the pump with the federal government competing with consumers for purchasing that fuel.
“The other thing is that the government is using taxpayer dollars to purchase fuel for the Strategic Petroleum Reserve at a time when fuel is at its highest price. It makes sense to discontinue that diversion until the price of that fuel drops and it has less impact on consumers.”
Johnston also called on the president to use his influence to try to stop the export of American diesel and biodiesel to other countries, noting that every drop of biodiesel is subsidized by U.S. taxpayers.
To read the letter Johnston sent to the president, click here.
– By Jami Jones, senior editor