The House and Senate voted
overwhelmingly Tuesday to temporarily stop filling the Strategic
Petroleum Reserve, a response to public anger over rising oil prices as
the average price of regular unleaded gasoline nationwide hit a new
high of $3.73 per gallon.
The move was a challenge to President Bush, who had threatened to
veto the measure, saying it would do little to lower prices. But the
lopsided votes - 97-1 in the Senate and 385-25 in the House - may have
changed his mind. White House aides said Tuesday Bush would not veto
the legislation, although he still believes it will have a negligible
impact.
Lawmakers acknowledged the measure may shave just pennies off the
price of a gallon of gas, but said it is wrong to keep filling the
emergency stockpile - which is 97 percent full - while crude oil is
reaching record highs.
"We are buying the most expensive crude oil in the history of the
world and storing it," said Sen. Byron Dorgan, D-N.D., chief sponsor of
the measure. "When American consumers are burning at the stake by high
energy prices, the government ought not be carrying the wood."
The votes showed how politically explosive the issue of gas prices
could be this November. Both Democratic presidential candidates, Sen.
Barack Obama of Illinois and Sen. Hillary Rodham Clinton of New York,
took a detour from the campaign trail to vote for the measure. The
presumptive Republican presidential nominee, Sen. John McCain of
Arizona, was campaigning in the Pacific Northwest Tuesday, but supports
the measure.
Republicans shift stance
Many Republicans opposed past efforts to stop filling the reserve,
but shifted their position in response to the rapidly rising price of
oil.
"I have changed my mind on that because the increases in the price
at the pump have gotten so dramatic and so outrageous," said Sen. David
Vitter, a Louisiana Republican.
The defiance by Republicans of Bush's veto threat signaled that
lawmakers are fearful of voting against anything that could be seen as
lowering gas prices. Sen. Wayne Allard, R-Colo., who is retiring at the
end of the year, was the only senator to vote no, saying that halting
shipments to reserve without increasing supply by opening new areas to
oil drilling would be "a disservice to the American people."
The legislation would halt shipments for the rest of the year of
roughly 70,000 barrels a day into the reserve, a system of four
underground salt domes on the Gulf Coast run by the Energy Department.
The reserve currently holds about 702 million barrels of oil, an amount
equal to two months of U.S. imports. The government pays the market
price for the light crude oil it stores in the reserve.
Created in 1975
Congress created the reserve two years after the 1973 Arab oil
embargo as a way to prevent supply disruptions. Bush released oil from
the reserve in 2005 after refineries were shut by Hurricane Katrina.
Bush's father, President George H.W. Bush, ordered the first drawdown
from the reserve in 1991 in the buildup to the Gulf War.
President Bill Clinton tapped the reserve several times to help
consumers cope with rising energy prices, including releasing 30
million barrels of crude oil in September 2000, which Republicans
criticized as an effort to help Vice President Al Gore's presidential
campaign six weeks before the election.
Bush's decision not to veto the measure may have been a step to
avoid giving Democrats the publicity coup of holding another vote to
override his veto. His trip this week to Saudi Arabia to meet with
Saudi King Abdullah, leader of the world's largest oil producer, would
have given Democrats even more ammunition.
But on Tuesday his aides were still criticizing the legislation.
White House spokeswoman Dana Perino repeated Bush's view and said the
reserve should only be tapped in emergencies. She said the 70,000
barrels of oil - the equivalent of one-tenth of one percent of the
world's oil demand - would not help consumers.
"We don't believe that it would have a big enough impact on prices for anybody to really notice," Perino said.
House Speaker Nancy Pelosi, who has been pressing Bush to suspend
the oil deposits, released a fact sheet Tuesday citing one analyst's
prediction that the move could lower oil prices by between 5 and 24
cents. The estimate came from Philip Verleger, an energy consultant who
headed President Jimmy Carter's Office of Domestic Energy Policy at the
Treasury Department.
Verleger has argued that even a small shift in demand by halting
U.S. government purchases of light, sweet crude - a sought-after and
easy-to-refine oil, which is used as a benchmark on the New York
Mercantile Exchange - could trigger a significant drop in the price of
oil.
More skeptical view
Other energy analysts are more skeptical. Kevin Book, senior energy
analyst for Friedman, Billings, Ramsey & Co., noted that in the
hour after the Senate passed the measure nearly unanimously the price
of crude oil jumped by a dollar. (The price of crude oil closed at $127
per barrel, a new record, after reports that Iran is considering
cutting its production.)
Book said, "70,000 barrels is a rounding error. It is not material in an 85.7 million barrel per day market."
Book added that it will take much more significant action - such as
increasing the supply of oil by opening up new areas in the eastern
Gulf of Mexico to drilling - for the markets to take notice. Soaring
energy prices are starting to convince more Americans to buy hybrid
cars and fuel-efficient appliances, which could reduce demand and lower
oil prices, he said.
The Senate, by a 56-42 vote, defeated a Republican measure Tuesday
that would have opened Alaska's Arctic National Wildlife Refuge to
drilling and allowed states to drill off their shores. Democrats
criticized the measure, saying the country can't drill its way to
energy independence and should focus instead on conservation and
renewable energy.
