US trucking industry joins airlines in call for slower SPR fill

Washington (Platts)--16Mar2004

The US trucking industry has joined the airlines in urging the Bush Administration to slow its push to fill the US Strategic Petroleum Reserve to its 700-mil bbl capacity, saying the policy is having the effect of raising fuel prices. "This industry is on a recovery path, which is a great indication that the economy is on solid footing, but surging energy costs could easily act as a roadblock," American Trucking Association President Bill Graves wrote in a letter to US Energy Secretary Spencer Abraham. Diesel fuel is often the second-highest operating expense after labor for a trucking company, equaling between 10-20% of total operating expenses, Graves wrote. Just as the airlines proposed earlier this year, Graves suggested the Bush administration reduce the rate at which the SPR, which currently holds 648.2-mil bbl of crude, is being filled. "I know that you recently testified to Congress that the SPR fill has a negligible impact on the price of crude oil, but we politely disagree," Graves wrote to Abraham. "When the government becomes a major purchaser of oil, it bids up the price exactly when we need relief...The trucking industry understands the need to have the SPR for emergencies; we are only asking that the DOE be sensitive in implementing its policy to boost the reserve's inventory." The US Senate last week approved a non-binding amendment to the FY 2005 budget resolution that requires the DOE to cancel the scheduled delivery of 53-mil bbl of crude to the SPR. Both Democratic and Republican lawmakers have called on the administration to defer scheduled deliveries into the SPR or to release oil onto the market to loosen the tight supply-demand balance. But the administration has rebuffed the calls, saying that the SPR should only be used in supply emergencies, which current market conditions do not constitute.