SENATE PASSES COLLINS LED EFFORT TO LOWER GAS PRICES

WASHINGTON, D.C. -— Early this morning, the US Senate approved an amendment authored by Senator Susan Collins, chairman of the Governmental Affairs Committee and Senator Carl Levin (D-MI), the Ranking Member of the Senate Permanent Subcommittee on Investigations, that will decrease the cost of petroleum and increase funding for homeland security.

The legislation was offered as an amendment to the fiscal year 2005 budget resolution and requires the US Department of Energy to temporarily suspend the purchase of oil for the Strategic Petroleum Reserve (SPR) so those funds, estimated at $1.7 billion, could be used to restore funding for homeland security that was cut in the President's proposed budget. In addition, a suspension in the government's purchase of oil for the SPR would result in lower prices for American consumers. According to three economic reports, gasoline prices would decrease by 10 to 25 cents per gallon.

"At a time when oil prices are at near record highs and the Strategic Petroleum Reserve is already at 93 percent of capacity, it makes good public policy sense to temporarily suspend SPR purchases and use these dollars for homeland security. This will also have the positive effect of decreasing gasoline prices to relieve American families from extremely high prices," said Senator Collins.

Specifically, the legislation would defer the purchase of 53 million barrels of oil to the SPR over the next year and a half. This would free up $1.7 billion in royalty revenues. The funds would be directed to increase dollars available in the budget for homeland security to include port security, the homeland security grant programs and the FIRE grant, to benefit first responders.

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In 2002, Senators Collins and Levin requested information from the Department of Energy on the impact of filling the SPR on crude oil prices, thus gasoline prices. As a result of their request, in March of 2003, a report was released that indicated that inconsistent Department of Energy policies had led to filling the reserve during tight market conditions and that this action had resulted in increased oil prices, which were ultimately passed on to consumers.

Senators Levin and Collins believe that this amendment will create a sensible, win-win situation with the FY 05 federal budget whereby vital funds for homeland security will be increased while federal tax dollars are spent more wisely to decrease the price of oil and gasoline.

The amendment was included as part of the Senate's fiscal year 2005 budget resolution and will soon be considered by a House-Senate conference committee.