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Bush Forced to Cap Oil Reserve

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Fri, May 16, 2008 at 3:26 pm

    Bush Forced to Cap Oil Reserve

    White House Forced to Cap Oil Reserve; Should Embolden Congress to Push for More To Drop Energy Prices

    Consumer Watchdog Calls for Sales from Reserve, Warning to Refineries, Swift Action on Oil Trading Curbs

    Santa Monica, CA — The Energy Department’s announcement that it will
    cap taxpayer-funded additions to the federal Strategic Oil Reserve is a
    small first step, and a late one, said Consumer Watchdog. Even so, it
    is a symbolic move that could drop gasoline prices by several cents
    this summer.
     
    President Bush, in an abrupt about-face, was forced to act by
    Congressional votes to cap purchases for the reserve, and by oil prices
    that leaped today above $127 a barrel.
     
    Even with this first step, motorists nationwide are likely headed
    toward $4.00 a gallon gasoline nationwide this summer, said Consumer
    Watchdog. If refineries continue on a path of cutting back production
    to increase gasoline prices, any effect from capping the reserve would
    be canceled out at the pump.
     
    “Both parties in Congress were forced to hear drivers’ anger at both
    unaffordable pump prices and the ‘oil tax’ that consumers are paying on
    everything from groceries to air travel,” said Judy Dugan, research
    director of Consumer Watchdog. “Now Congress has forced the White House
    to listen, too. Capping the reserve will signal at least awareness of
    the magnitude of the economic problems caused by oil and fuel prices.”
     
    It will also save taxpayers at least $90 million over six months, given
    the program’s $187 million budget for this year, said Consumer
    Watchdog. The actual savings would probably be much larger, given that
    the budget was decided long before the rise to even $100 a barrel oil.
     
    The effectiveness of this first belated move will depend on whether
    government keeps pushing to get speculative markets under control and
    prevent refinery profits from eating up any savings from lower oil
    prices, said Consumer Watchdog.
     
    “At a minimum, the White House should also state its willingness to
    “loan” some of the reserve into the market as it did after Hurricane
    Katrina, which effectively dampened oil prices,” said Dugan. “Congress
    and the White House must also put newly enacted regulation of
    speculative trading on a fast track, and hire the financial cops to
    detect manipulation.”
     
    – 30 –
     
    Consumer Watchdog is California’s leading non-profit and non-partisan consumer policy advocacy group.
    For more information visit us on the web at: www.ConsumerWatchdog.org  and www.oilwatchdog.org

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