Washington (Platts)--31Dec2008

The US Department of Energy said it may restart buying crude oil for
the nation's Strategic Petroleum Reserve next month as oil prices have
plummeted, a department spokeswoman said Wednesday.

"Current market conditions appear to favor a purchase of new SPR supplies
in 2009, and DOE will continue to look at the market in early January," said
spokeswoman Healy Baumgardner in an e-mailed statement. "The administration
believes that filling the SPR is essential for national security," she said.

The DOE comments came after Representative Edward Markey, chairman of the
House Select Committee on Energy Independence and Global Warming, on Tuesday
called on the Bush administration to restart filling the SPR, saying that
prices have fallen far enough to start buying oil again.

"Just as it was prudent to stop buying oil at record high prices, we
should continue to fill the reserves now that prices have plummeted," said
Markey, Democrat-Massachusetts. "That's sensible fiscal policy, plain and
simple," he said.

After the price of crude oil soared to over $100/barrel, Congress this
summer forced a halt of the Bush administration's royalty-in-kind program,
which on average for the year until then had delivered about 70,000 b/d of
crude to the SPR.

The SPR is a series of underground salt caverns in Texas and Louisiana
which currently hold more than 700 million barrels.

Members of Congress claimed that the 70,000 b/d in deliveries
contributed to higher oil prices, despite the Energy Information
Administration's calculation that the RIK program only added at most $2/b to
the market price of oil.

Crude oil prices rose to a record $147.27/b in July, before plummeting
to their current level of $38.97/b in midday Wednesday trading.

The SPR has a capacity of 727 million barrels of crude oil and will be
expanded to 1 billion barrels later this decade. The Bush administration
loaned or sold about 5.8 million barrels of oil this fall after hurricanes
Gustav and Ike caused refinery outages and disruptions along the Gulf Coast.

--Daniel Goldstein, daniel_goldstein@platts.com