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.”
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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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