Energy Policy Act Of 2005

ENERGY POLICY ACT OF 2005--Continued -- (Senate - June 20, 2005)

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AMENDMENT NO. 805

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Mr. SCHUMER. Mr. President, I thank my friend from New Mexico for his grace, as usual. I will be brief as I make a statement on the amendment.

I rise to offer this amendment, which will express the sense of the Senate that the Federal Government should take long, overdue action to curb the record-high gasoline prices that are plaguing American consumers at the pump. As my colleagues are well aware, for weeks, oil and gasoline prices have been placing an immense burden on working families and threatening our fragile economic recovery, and it is time that this body took action to protect our Nation's economic security from the sky-high oil prices and the whims of the OPEC cartel.

This amendment would urge the administration to provide the American consumer with relief by releasing oil from the Strategic Petroleum Reserve through a swap program in order to increase the supply, quell the markets, and bring down prices at the pump. Of course, the other side of the swap is that we would buy back the oil when the price was lower and put it back in the Strategic Petroleum Reserve, which is now just about full.

Mr. President, what we are faced with here is simple market economics of supply and demand. If demand goes up, price goes up. If supply goes up, price goes down. At a time facing record-breaking gasoline prices, it is hard to believe that the Federal Government would be taking oil off the market and exacerbate the high energy costs to working families.

The price of crude oil has remained at near record highs for over one-third of 2005, with oil having traded at over $50 a barrel since May 25. Just today, we saw the biggest jump yet, with oil closing at almost $60 a barrel. OPEC used to claim it was interested in helping to keep prices under $30 a barrel. That is when it went from a $22 to $28 rate. It may be fun to double down in Las Vegas but not in the oil market, and certainly not at the gas pump.

These prices have already burdened Americans in New York and in the rest of the Northeast. We get a double whammy because we have high home heating oil prices, as well as high gasoline prices because we depend on heating oil more than most parts of the country. Other parts are warmer or use more natural gas. I know these families were hoping for a quick spring so they could enjoy a brief respite from the high energy prices.

Unfortunately, that hasn't been the case, as the increased burden of oil costs has just moved from the home to the highway. As Americans are beginning to plan for their road trips and summer vacations, the national price of gasoline has seemingly reached a new record high every week. Last week, the Energy Information Administration reported that prices had increased for the second straight week, to $2.13 for regular self-service. That is an increase of almost 49 cents from last year. Unfortunately, it could give way to even higher prices in the future.

We know who is being hurt by these oil prices, and we know who is benefiting--OPEC. Last year, OPEC made $300 billion in oil revenue. They stand to gain much, much more if the price of oil stays as high as it is--stratospheric levels. In order to institutionalize the profits from these spikes, OPEC agreed to abandon their longstanding price target of $22 to $28 a barrel, as I mentioned before, and some of its members say they could be comfortable with oil remaining at $40 to $50 permanently. I know who will not be comfortable--American families who depend on affordable oil to commute to work, heat their homes, and provide for their energy needs.

Some of my colleagues may be asking: Didn't OPEC agree to increase production in March by 500,000 barrels a day?

The reality is that OPEC's pledge to increase production on paper has not reduced prices at the pump. OPEC, after having cut production by 1 million barrels in the face of rising oil prices--it is not that amazing--claimed that they would increase production by half the previous cut. While this would seem like a step in the right direction, the reality is they were already producing 700,000 barrels over their quota, so as a result this paper increase added no oil to U.S. markets.

These are exactly the type of shell games that the OPEC cartel uses to take money out of Americans' pockets to put toward OPEC profits.

We have to act to stop it. Once again, OPEC is talking about another 500,000-barrel increase. We will see if they actually follow through.

Instead of standing up to OPEC, what has this administration done? It has continued, incredibly enough, taking oil off the market and placing it in the SPR. This policy, which further tightens oil markets by taking much needed supplies out of commerce, is slated to take an average of almost 85,000 barrels per day off the market during the height of the driving season, between April and the end of August, despite the fact that the SPR is almost completely full.

I understand that some of my colleagues think the SPR should never be touched, even to safeguard our economic security. I would argue that concerns to this degree do not properly balance America's physical security needs against its economic security needs. With the SPR almost full, we can easily reduce 30 million barrels through a swap and still have an effective safeguard against a physical supply disruption.

Initiating a swap of oil from the SPR to increase the supply of oil is a proven way to reduce the price of gasoline and heating oil. In the fall of 2000, the Clinton administration announced a swap of 30 million barrels over 30 days, causing crude oil prices to quickly fall by over $6 a barrel and wholesale prices to fall 14 cents a gallon. Under a swap, the Federal Government could decide on a set quantity of oil to release from the SPR and accept bids from private companies for the rights to that oil. The companies would then bid on how much oil they would be willing to return, in addition to the oil they would receive under the swap, to the SPR at a later date.

The administration has had these tools in its hands and could have acted more quickly, earlier, to stand up for the American consumer, but it has not. Instead, despite repeated urgings from Members of this body, among others, it has steadfastly refused to intervene and to allow oil prices to soar. It has been good for oil companies, it has been good for OPEC and bad for the American consumer.

This amendment says enough is enough and gives this body an opportunity to do what others have refused by hitting the breaks to stop runaway gasoline prices.

An oil swap would result in a win-win situation where gasoline prices are lowered and long-term contributions to the SPR are augmented at no additional cost to the taxpayers. The SPR is intended to provide relief at times when American families are struggling to make ends meet. The time is now. The summer driving months are just beginning.

I urge my colleagues to join me in protecting the pocketbooks of working families from OPEC profiteering by supporting this amendment.

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