No Help from Strategic Petroleum Reserve Litigation

Last month, both the U.S. Senate and House of Representatives overwhelmingly voted to stop shipments to the United State’s Strategic Petroleum Reserve until the price of oil falls below $75 a barrel.¹ With oil and gas prices rapidly increasing, members of the House and Senate claimed such a measure would assist U.S. consumers at the pump, some claiming as much as twenty-five cents a gallon.

Skeptics, however, including the White House, did not believe the measure would have any real impact on the U.S. market. A few lawmakers voted against the legislation, including Representative Joe Barton of Texas who referred to the measure as symbolic “feel good” legislation that would not have any practical affect on the price of gas at the pump. Despite some limited opposition, bills were passed by a vote of 97-1 in the Senate (Senator John McCain voiced his support for the bill, but was absent from the vote) and 385-25 in the House. Since the Senate and House passed slightly different versions of the bill, there was committee reconciliation before final congressional approval. A reconciled bill was quickly prepared and proposed to President Bush on May 19th, who signed it into law on the same day.²

The legislation has stopped the shipment of approximately 76,000 barrels a day to the reserve. Since the reserve was already at 97% capacity, the absence of these shipments should have little impact on the reserve itself in case of an emergency. However, the real goal of the legislation has proven to be completely ineffective thus far. The diversion of these barrels back into the market has done nothing to help the price by increasing available supply. Since the laws enactment a little less than a month ago, oil and gas prices have continued to greatly increase.³

With the upcoming election for the White House and key Congressional seats, energy prices will remain a hot political topic. However, if this recent legislative effort to find a quick solution is any indication, do not expect much help at the pump anytime soon.