SENATOR COLLINS INTRODUCES PROVISION TO ESTABLISH COST-EFFECTIVE PROGRAM TO FILL THE U.S. STRATEGIC PETROLEUM RESERVE

WASHINGTON, DC – Senator Susan Collins (R-ME) today was joined by Senator Carl Levin (D-MI) in introducing an amendment directing the U.S. Department of Energy (DOE) to develop and use cost-effective procedures for filling the U.S. Strategic Petroleum Reserve (SPR). The legislation, which would amend the energy bill under consideration by the Senate, requires DOE to maximize the overall domestic supply of oil in private and government inventories while minimizing costs to taxpayers for acquiring SPR oil, consistent with national security. "At a time when oil prices are at an all-time high, it makes no sense at all for the federal government to put further pressure on supplies through large purchases for the SPR, without at least looking at the potential impact on prices and consumers," said Senator Collins. "The high price of oil has put a terrible burden on the budgets of working families in Maine and throughout the nation. And while there is not a single resolution to this problem, it is important that the government at least consider ways in which the reserve can be filled without unduly impacting gasoline prices," Senator Collins added.

"Our amendment is simple," said Levin. "It directs DOE to consider the price of oil and other market factors when buying oil for the SPR, and to take steps to minimize the program's cost to the taxpayer while maximizing our energy security. Any successful businessperson knows the saying, ‘Buy low, sell high.' It makes sense for buying oil as well as pork bellies, and it's time to apply that common sense business approach to the SPR. With oil selling at more than $50 per barrel, we can't afford to continue the cost-blind acquisition spree of the last four years."

The SPR is the United States'' emergency oil stockpile that stores crude oil at four sites along the Gulf of Mexico. Since 2001, DOE has been steadily adding oil to the SPR. In late 2001, the reserve held about 560 million barrels of oil, and today it holds about 695 million barrels. DOE anticipates filling the SPR to its current physical capacity of about 700 million barrels in August of this year. The energy bill before Congress directs DOE to increase the SPR further to 1 billion barrels.

The Levin-Collins amendment, which is nearly identical to a Levin-Collins amendment that was approved by the Senate in 2003, but later dropped from final legislation, would require DOE to develop procedures for obtaining more oil for the SPR, with particular regard to the effect that acquiring oil for the SPR has on oil prices and supplies. It also provides an opportunity for public comment on these procedures.

The amendment is based upon the findings and recommendations of the Permanent Subcommittee on Investigations of the Senate Homeland Security and Governmental Affairs Committee laid out in reports issued in 2002 and 2003. Collins is the chairman of that Committee, and Levin is the ranking Democrat on the Subcommittee. The Subcommittee investigation found that, in early 2002, DOE changed its procedures for filling the SPR and began buying oil for the SPR without regard to oil prices or supplies. Levin and Collins noted in a letter to their colleagues: "This cost-blind approach increased taxpayer expense to fill the SPR, caused the government to compete against private companies for oil in a tight market, and put upward pressure on oil prices, not only for crude oil, but also for home heating oil, jet fuel, diesel fuel, and gasoline." ####