Washington (Platts)--3Jan2008
US Senator Charles Schumer Thursday demanded an independent investigation
of the Bush administration's plan to continue stockpiling oil in the US
Strategic Petroleum Reserve even as crude prices breached $100/b.
The New York Democrat asked the Government Accountability Office to probe
whether the Bush administration's planned acquisition of 12 million barrels of
crude oil to fill the SPR over the next six months skirts a law meant to stop
the federal government from acquiring oil amid a price shock.
When Congress passed the Energy Policy Act of 2005, it included language
to ensure that future oil acquisitions made fiscal sense for taxpayers, and
that fills would not "appreciably" affect the price of crude oil or crude
products, like gasoline, diesel or heating oil.
Schumer said that to comply with the law today, the Bush administration
would have to "defer in-kind transfers of oil and instead accept cash
payments, at a premium, from the oil companies holding government leases to
drill in the Gulf of Mexico."
In a written request to the GAO, Schumer noted that the act, which
authorized the refilling of the SPR, stipulated that any purchasing plan
"minimize the costs to the Department of the Interior and the Department of
Energy in acquiring such petroleum products (including foregone revenues to
the Treasury when petroleum products for the SPR are obtained through the
royalty-in-kind program)."
Schumer questioned whether the administration's plan to increase its
deposits to the reserve by 20,000 b/d beginning in February despite record oil
prices is at odds with this cost-minimization requirement.
He urged the GAO to do a cost-benefit analysis to resolve the question,
and in the interim, demanded that the Department of Energy release the
internal economic analysis supporting the agency's decision to push ahead with
filling the SPR at this time.
"The administration's insistence on refilling the strategic reserve at
this time isn't just a bad business decision, it may very well go against what
is intended by law," Schumer said in a statement.
--Cathy Landry, cathy_landry@platts.com
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