On May 20th Speaker Nancy Pelosi issued a statement celebrating House passage of a bill preventing President Bush from adding oil to the Strategic Petroleum Reserve. From the statement: “As the price of oil per barrel nears $130, suspending purchases will expand oil supplies and help bring down fuel costs for consumers.” Oil closed at $129 that day and by July 11th Pelosi’s oil policy had driven the price of a barrel of oil all the way down up to $147. On July 14th President Bush lifted the executive ban on offshore oil exploration and the price of oil fell the very next day to $136.
The price of oil reflects the fundamentals of supply and demand: worldwide demand continues to grow and supply remains tight. According to current Energy Information Administration estimates, if Congressional bans on oil exploration in the Outer Continental Shelf (OCS) and Arctic National Wildlife Refuge (ANWR) were lifted, the United States could more than double our proven oil reserves. No wonder the market acted so favorably to Bush’s lifting o f the executive ban on exploring the OCS.
But instead of allowing a vote that could double our proven oil reserves, Pelosi wants to return to the failed policy of tinkering with the Strategic Petroleum Reserve. Now, instead of halting SPR’s replenishment, she wants to release 10% of it. Pelosi says: “The president says that’s for emergencies. This is an emergency, Mr. President.”
Heritage senior research fellow Dr. Ariel Cohen sets Nancy straight:
The Strategic Petroleum Reserve is, first and foremost, a tool of national security policy. It was never intended that the SPR would be used to tamper with the market or to play politics, that its oil would be released in order to bring prices down, or that we would stop filling the SPR to accommodate either the market or short-term electoral interests in the campaign season.
