Washington, DC – The Obama Administration announced today that they plan to sell some of the oil in the Strategic Petroleum Reserve (SPR) into the market to help bring down gas prices, a move that Senator Sheldon Whitehouse called for in a letter to the president in March. Today Whitehouse praised the move:
“Rampant oil speculation has driven up the price of gas and taken money out of the pockets of Rhode Islanders. With the announcement today, I hope this eases summer gas prices and provides some much-needed relief to our strained household budgets,” said Whitehouse.
The text of the letter is below:
March 4, 2011
Dear Mr. President:
With gas prices around the nation at near-historic highs, we write to urge you to exercise your emergency authority to release oil from the Strategic Petroleum Reserve (SPR). This action would immediately lower gasoline prices, generating significant revenue to invest in your call for one million electric vehicles on the road by 2015. This would be a win-win for American consumers: short-term help at the pump, and long-term help in accessing cost-saving, oil-free electric cars.
Gas prices have climbed more than fifty cents a gallon over the past twelve months and are now above the three-dollar mark. These prices are putting a significant dent in the budgets of families across the country. According to the Energy Information Administration, gasoline prices were higher last month than in any other February in history. In the last fifty years, prices in real terms have only been this high twice – in 1981 after the oil crisis, and in parts of 2007 and 2008.
The current price spike couldn’t have come at a worse time. When gas prices last peaked in July 2008, unemployment was 5.8%. Now, unemployment has been at or above 9% for 21 months. The Consumer Price Index increased 1.5% for all items in 2010, but for gasoline, the increase was 13.8%. This hits elderly Americans especially hard since there hasn’t been a Social Security cost of living adjustment since early 2009.
Unlike drilling for additional oil, which won’t reduce our fuel prices in the near term, we know that releases from the SPR work quickly to lower gas prices. When President George H. W. Bush announced that he was authorizing a drawdown in 1991, oil prices fell by nearly $10 per barrel the next day.
We also know that oil company profits are again approaching record levels. ExxonMobil reported a 53% increase in its fourth-quarter profit in 2010. Chevron reported fourth-quarter earnings 72% higher than last year, and ConocoPhillips reported 46% higher profits. It should come as no surprise that as Americans are paying more at the pump, oil companies are once again reaping the benefit.
A sale from the SPR could generate billions of dollars in revenue to invest in the development of electric vehicles and other clean energy programs. As you know, your important goal of one million electric vehicles on the road by 2015 will save consumers a significant amount in fuel costs. The Department of Energy estimates that an electric vehicle costs between 2-4 cents per mile to fuel, while a conventional gasoline-powered vehicle costs between 10-15 cents per mile. Electric vehicles have the added benefit of reducing our reliance on foreign oil – an important goal, particularly given the uncertain conditions in the Middle East. In the current budget climate, funding for the much-needed investments to move us toward electric vehicles may be constrained. We ask that you work with Congress to direct half of the proceeds from any SPR sales to electric vehicle investments, while using the remaining half for deficit reduction.
Thank you for considering this proposal. We believe that high gasoline prices represent an emergency for middle-class families, and look forward to working with you on this important matter.
Sincerely,
Senator Sheldon Whitehouse, Rhode Island
Senator Barbara Boxer, California
Senator Robert Menendez, New Jersey
Senator Bernie Sanders, Vermont
Senator Jeff Merkley, Oregon
Senator Kirsten Gillibrand, New York
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