"The bipartisan adoption of this amendment by the Senate sends a clear message," said Levin. "It is time for DOE to stop filling the SPR without regard to taxpayer expense, and restore its prior policy of taking into account the price and supply of oil when filling the Reserve. In other words, DOE should buy oil when prices are low and supplies are plentiful, instead of the other way around, as DOE has been doing for the last year. There is simply no reason for DOE to pay top dollar for SPR oil right now. If implemented properly, our amendment will promote our national energy security, while saving taxpayer money and reducing oil and gasoline prices for consumers."
"By deferring deliveries of oil to the SPR when prices are high, the Department of Energy estimates we can save taxpayers hundreds of millions of dollars, without any detriment to our energy security. We are simply requiring an economical, cost-based approach to managing our country's emergency oil supply," said Collins. "Dramatic spikes in gas prices harm Americans who need to fill their tanks in order to do their jobs, buy their groceries, and drive their kids to school. We should use every tool at our disposal to reduce gas prices, and properly managing the SPR is one such tool."
The SPR is the United States'' emergency oil stockpile which stores crude oil at four sites along the Gulf of Mexico. Since late 2001, DOE has been filling the SPR to its maximum capacity of 700 million barrels. The SPR currently holds about 620 million barrels, and DOE anticipates filling the SPR to its capacity sometime in 2005.
The Levin-Collins amendment, which was accepted by both parties on the appropriations committee and adopted by the full Senate on voice vote, requires development of procedures for filling the SPR, with particular regard to the effect they have on gas prices and oil markets. It also provides an opportunity for public comment on these procedures.
The amendment is based upon the findings and recommendations of a year-long investigation conducted by the Permanent Subcommittee on Investigations of the Senate Governmental Affairs Committee. Collins is the chairman of that Committee, and Levin is the ranking Democrat on the Subcommittee. The Subcommittee investigation found that, in early 2002, DOE began buying oil for the SPR without regard to the price of oil. Levin and Collins noted in a letter to their colleagues: "This cost-blind approach increased taxpayer expense to fill the SPR, caused the government to compete against private companies for oil in a tight market, and put upward pressure on oil prices, not only for crude oil, but also for home heating oil, jet fuel, diesel fuel, and gasoline." "Yesterday, OPEC cut oil production by nearly 1 million barrels per day in order to maintain high market prices for oil, which means high-priced gasoline and home heating oil for American consumers this winter," Levin added. "DOE should not add to high oil prices by taking even more oil off the market for the SPR."