Press Release

Fuel Spike Demands DC Action

CONTACT:

Fri, Apr 11, 2008 at 1:54 pm

    Fuel Spike Demands DC Action

    NEWS RELEASE: April 11, 2008

    CONTACT: Judy Dugan, 213-280-0175; or Jamie Court, 310-392-0522, ext. 327

    Relentless Fuel Price Spike Demands White House Action, Says Consumer Watchdog

    Santa Monica, CA — As gasoline and diesel prices reached another daily
    record price today, Consumer Watchdog asked President Bush to release
    oil from the federal Strategic Petroleum Reserve with the explicit goal
    of deflating speculation in energy trading. (See the letter below.)
     
    Legislators of both parties, now including U.S. Senator John McCain,
    have asked Bush to suspend taxpayer-paid purchases for the reserve.
    That is a step in the right direction, said the nonprofit, nonpartisan
    Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer
    Rights), but not sufficient to halt the economic damage of current
    prices.
     
    “Months of deliberate White House inaction on oil and fuel prices have
    pushed consumers and the U.S. economy over a cliff,” said Judy Dugan,
    research director of Consumer Watchdog. “In fact, the President Bush
    has exacerbated the harm by spending taxpayer money on millions of
    barrels of oil at record prices for the strategic reserve, which is
    filled to near its all-time high.”
     
    The letter to Bush says:
     
    “The existing reserve is ample, particularly given today’s economic
    conditions. Repurchasing for the reserve after prices stabilize will
    benefit the Treasury.
     
    * “The SPR is near an all-time high, at over 700 million gallons–more
    than 150 million barrels above the level when you took office.
     
    * “The reserve has grown by 4 million gallons since the beginning of
    the year, and by 1.5 million gallons in the past month alone.
     
    * “Taxpayers have paid record prices for this oil. Even worse, the
    removal of this oil from the market abets continued price increases.”
     
    Suspending future purchases is not enough, said Consumer Watchdog,
    because only a show of White House determination to squeeze speculative
    bloat from trading on oil futures markets can provide relief in the
    current markets.
     
    “The strategic reserve is a powerful club to hold over these
    unregulated trading markets, and a fast one,” said Dugan. “While
    Congress struggles to add regulation and oversight to out-of-control
    electronic trading, President Bush must use the reserve as a finger in
    the dike.”
     
    The full letter follows:
     

    April 11, 2008
     
    President George Bush
    The White House
    1600 Pennsylvania Ave.
    Washington, DC, 20500
     
    Also by electronic mail
     
    Dear President Bush,
     
    Continuing record-level prices and volatility in oil and transportation
    fuel markets are weakening the U.S. economy, from family budgets to
    food prices to manufacturing costs. We agree with legislators of both
    parties, including Sen. John McCain, that you must respond by
    suspending purchases of petroleum for the federal Strategic Petroleum
    Reserve. However, you must also release reserves with an explicitly
    stated intent to deflate and stabilize petroleum prices in futures
    markets bloated by speculative trading.
     
    The existing reserve is ample, particularly given today’s economic
    conditions. Repurchasing for the reserve after prices stabilize will
    benefit the Treasury.
     
    * The SPR is near an all-time high, at over 700 million gallons–more
    than 150 million barrels above the level when you took office.
     
    * The reserve has grown by 4 million gallons since the beginning of the
    year, and by 1.5 million gallons in the past month alone.
     
    * Taxpayers have paid record prices for this oil. Even worse, the
    removal of this oil from the market abets continued price increases.
     
    In April 2006, you announced a temporary halt in petroleum deposits to
    the reserve, specifically to help alleviate high fuel prices.
     
    The price situation today is significantly worse, and the nation’s economic condition significantly weaker.
     
    Releases from the reserve are necessary as well–not because of
    outright shortage but because of uncontrollable prices, due in large
    part to market speculation.
     
    In addition to the consumer price benefits of both actions, the oil
    company royalties that are forgiven for additions to the reserve will
    flow instead to the Treasury. At a time of record deficits, and as the
    Treasury prepares to write $1,200 economic stimulus checks to American
    families, the revenue cannot be disregarded.
     
    We also request that you use your presidential bully pulpit to demand,
    for the national good, that refiners restrict their margins on fuel
    production instead of driving for maximum profits on gasoline and
    diesel, the pattern of the last two spring-summer seasons. You have a
    powerful voice in this industry, and at this point it must be used for
    the economic relief of consumers and the economy.
     
    Sincerely,
     
     
    Jamie Court                             Judy Dugan
    President                                 Research Director

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