With Staten Island Gas Prices Approaching Record Highs, Schumer Demands President Release Oil Reserves to Drop Gas Costs

FOR IMMEDIATE RELEASE: March 28, 2005

WITH STATEN ISLAND GAS PRICES APPROACHING RECORD HIGHS, SCHUMER DEMANDS PRESIDENT RELEASE OIL RESERVES TO DROP GAS COSTS

Even Though President has Previously Refused, OPEC's Recent Manipulation of Oil Prices, Rising Gas Prices Demand Action

Schumer Analysis Finds Average Staten Island Family With 2 Cars Could Pay $402 More For Gas This Year; Schumer To Detail New Steps To Lower Price of Oil

With gas prices at an all time high as Staten Islanders pay 29 cents per gallon more for gas now than they did last year, and with summer driving season just around the corner, when gasoline demand and prices peak, Senator Charles E Schumer today unveiled a new analysis showing that the average Staten Island family with two cars is paying $402 more this year than last year. Schumer called on the Administration to release stored government oil reserves that would quickly lower gas prices.

"Staten Islanders are being burned by high oil prices to heat their homes and run their cars," Schumer said. "If we thought last year was bad, I'm afraid we haven't seen anything yet. Prices are already nearly three dimes ahead of where they were last year at this time with no end in sight. Today I am asking the President to release oil from the Strategic Petroleum Reserve because we must do everything possible to lower prices, and tapping the SPR is a proven way to drive down gas prices."

On Thursday, the price of crude oil on the New York Mercantile Exchange closed at the nearly record setting level of $54.17, and crude oil has been trading at above $50 per barrel since February 22nd. In addition, the average price at the pump in New York State has hit $2.20 -- already 33 cents higher than it was last year on this date. National average retail gasoline prices have increased to 2.13 and some analysts predict that prices could continue to increase as the summer driving season rapidly approaches.

This year the average two-car family on Staten Island will pay $402 above the high prices paid at the pump last year. That is over $100 more than the average New York family with two cars who will pay $255 more this year than last year. In total, Staten Islanders will pay $47, 500,000 more this year than they did last year.

"The bottom line is, people who live on Staten Island are getting gouged at the pump," said Schumer.

Schumer said today that in spite of the economic threat created by OPEC's market manipulation, the Administration has continued to adhere to its policy of taking oil off of 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 92,000 barrels per day off of the market during the height of the driving season between April and September despite the fact that the SPR is currently over 97 percent full.

Last week's tragic oil refinery blast in Texas may also help to push gasoline prices higher. Although output at the refinery, which produces 3% of the national gasoline supply, has not been seriously disrupted even minor stoppages in gasoline production can have an impact on gasoline prices due to the tightness of U.S. Refining capacity, the impending summer driving season, and the concern that a potential disruption causes in the commodity marketplace.

Schumer today urged the Administration to counteract the OPEC supply manipulation and calm the markets by deferring deliveries of oil to the SPR and releasing oil from the SPR through a swap. 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, Schumer successfully convinced the Clinton Administration to swap 30 million barrels over 30 days, causing crude oil prices to quickly fall by over $6 per barrel and wholesale gasoline prices to fall $0.14 per gallon. Under a swap, the federal government could decide on a set quantity of oil to release from the SPR, and accepts bids from private companies for the rights to that oil. The companies would then bid on how much oil they are willing to return to the SPR at a later date. For example, if the federal government decided to release oil and a private company wanted to obtain 10 million barrels, the company could bid for the 10 million barrels by promising 15 million barrels to be returned to the SPR at a later date.

"Prices at the pump are getting out control, and will get much higher unless something is done to rein them in," Schumer said. "Accessing the SPR is not only smart economic policy, it also puts money back into the wallets of Staten Islanders."

http://schumer.senate.gov/SchumerWebsite/pressroom/press_releases/2005/PR41550.Staten%20Island%20Gas.032805.html