Administration to halt filling of Strategic Petroleum Reserve
By David Lightman and Kevin G. Hall | McClatchy Newspapers
WASHINGTON — The Bush administration, bowing to intense political pressure, said Friday that it would cancel oil shipments into the Strategic Petroleum Reserve starting in July.
The move comes two days after Congress voted overwhelmingly to suspend filling the reserve. The surprise announcement came not from the White House but from the Department of Energy, on the same day that President Bush, traveling in Saudi Arabia, was rebuffed in his call for the kingdom to pump more petroleum in hopes of lowering today's high oil prices.
The Senate vote on Wednesday was 97-1, and the House of Representatives approved the plan 385-25 — far more than Congress would need to overturn a Bush veto.
The government has been filling the reserve, in underground salt caverns along the Texas and Louisiana coastlines, at a rate of about 70,000 barrels a day. The 727-million-barrel reserve at full capacity now has about 703 million barrels. The reserve was created in 1975 to provide insurance against supply disruptions, such as when the Organization of Petroleum Exporting Countries imposed an embargo on exports in 1973-74.
The action by the Bush administration is unlikely to have much impact on prices. The Energy Information Administration, the statistical arm of the Energy Department, has said a halt to filling the reserve could save consumers from 3 cents to 5 cents per gallon of gasoline.
But a halt to filling the reserve is symbolically important because it shows the world that the United States is acting to add oil to today's market rather than store it for the future.
Sen. Byron Dorgan, D-N.D., the Senate's chief sponsor of the bill to halt the filling, hailed the effort through a spokesman.
"This is the right thing to do," said Justin Kitsch, a spokesman for the bill's author. "He views it as a win for his efforts."
Megan Barnett, a spokeswoman for the Department of Energy, told McClatchy that the surprise action was taken as a protective step against "potential liability." The department didn't want to enter into contracts that it would later have to abrogate if the legislation becomes law as assumed.
She described the halt to filling the reserve as a 180-day pause that will be re-evaluated next year. Since taking office, Bush has increased the reserve from 540 million barrels to 703 million, enough to offset 58 days of lost oil imports should there be a supply disruption.
The White House, though, has been adamant that it didn't want to stop those shipments.
"Our position hasn't changed," White House spokeswoman Dana Perino said earlier this week. "The Strategic Petroleum Reserve is in place for specific national security reasons, in case there are supply disruptions."
Bush, she added, "believes that we need an even larger Strategic Petroleum Reserve in order to protect ourselves against oil shocks." She said that stopping the shipment "would have a negligible impact on gas prices."
Perino and Ed Gillespie, counselor to the president, briefed reporters on Air Force One Friday as the president traveled to Riyadh, Saudi Arabia, but didn't mention the reserve.
Hours later, the Energy Department issued a brief statement saying it "will not sign contracts this year for the receipt and transportation of up to 13 million barrels of crude oil" to the reserve.
ON THE WEB
The Energy Department statement.
Read more about the Strategic Petroleum Reserve.

