As I visit communities around the state of Maine, I hear time and again that the high cost of energy is causing a crisis for many of our citizens. Rapidly increasing prices for home heating oil, gasoline, diesel fuel, and other products refined from oil are a huge burden for many families, truckers, and small businesses. High oil prices affect virtually every corner of the economy, here in our state and throughout the country, and are a significant cause of the current economic downturn.
The White House recently agreed to my request that it release millions of dollars from the Low Income Home Energy Assistance (LIHEAP) contingency fund. Of this, Maine is receiving nearly $9 million. This money, along with the increased baseline LIHEAP funding I have fought for, will help our most vulnerable citizens through the winter. The need for additional assistance remains critical, and I will continue to seek the release of the remaining $160 million in contingency funds. In addition, generous Mainers throughout our State are donating to funds to keep our less fortunate citizens warm.
While these are positive steps toward helping relieve the effects of high energy prices, we also need to address the root causes of the sharp rise in oil prices. Among those causes are increased global demand for crude oil, instability in the Middle East and Venezuela, supply decisions of the OPEC cartel, insufficient U.S. refining capacity, the declining value of the dollar, speculative trading on futures markets, and the federal government’s purchases of oil for the Strategic Petroleum Reserve (SPR).
Last month, I participated in a hearing to examine the causes of the recent price spikes in world oil markets. Of particular concern to me is a development that I have discussed with the Maine Oil Dealers Association and our commercial truckers -- that excessive speculation may well be a factor pushing up oil prices. Unfortunately, there is a lack of publicly available data to track the effect of speculation on market prices, and manipulation can go undetected on certain unregulated markets. That is why I support expanding the authority of the federal government to provide greater regulation and transparency to guard against manipulation.
Another issue I raised at that hearing is the decision made by the U.S. Department of Energy last year to buy additional oil for the Strategic Petroleum Reserve despite the impact of this decision on oil prices.
The SPR is an emergency stockpile and an essential safeguard against major disruptions in global oil markets. However, the SPR already contains nearly 700 million barrels of oil, an amount more than sufficient to meet a crisis. For the federal government to be taking oil off the market and thus further driving up prices at a time when consumers are struggling to pay their fuel bills simply defies the laws of supply and demand. It is also a bad deal for taxpayers for the Department to be purchasing oil when prices are sky high.
The impact is likely significant and damaging to consumers. In fact, one of our expert witnesses at the hearing testified that the Department of Energy’s purchases are largely responsible for the increased price of light sweet crude oil.
I believe these purchases may violate a law passed by Congress. The Energy Policy Act of 2005 contains a bipartisan provision I authored with Senator Carl Levin of Michigan that directs the Department of Energy to better manage the SPR by suspending purchases when prices are high.
Earlier this month, I authored a bipartisan letter with Senator Levin and other senators to Energy Secretary Samuel Bodman urging that the filling of the SPR be suspended, reiterating our position that adding to the SPR at this difficult time exacerbates the increase in oil prices. In addition, we stated that the Department of Energy has provided no compelling national security justification for buying oil at this time and that its actions appear to contradict the Levin-Collins provisions of the 2005 Energy Act.
Our long-term challenge to address energy prices is, of course, to reduce our reliance on imported oil. We need to pursue the goal of energy independence just as fervently as the nation embraced President Kennedy’s goal in 1961 of putting a man on the moon. Energy independence, stable energy costs, and environmental stewardship are goals that are within our reach, but they require a major national effort. As we undertake that long-term effort, we must ensure that the federal government is not taking actions today that are harmful to the American people.