Oil and Gas

Senators Ask Government to Stop Adding Oil to US Reserve


With oil prices at record highs and supplies tight, seven Democratic senators Thursday asked the U.S. Energy Department to suspend deliveries of crude to the nation's emergency petroleum stockpile.

"The department's insistence on further reducing commercial oil supplies at a time of tight supply and record prices has exacerbated the current oil price spike, now nearing $90 per barrel," the lawmakers said in a letter to Energy Secretary Sam Bodman.

The price of oil hit a fresh high of $89.68 a barrel in Thursday trading at the New York Mercantile Exchange, reflecting in part concerns about available heating fuel supplies this winter.

The department is scheduled to add some 6 million barrels of crude through January to the U.S. Strategic Petroleum Reserve.

The department last week also sought bids to deliver another 13 million barrels of oil to the stockpile over six months, beginning in February.

"The department should be taking prompt action to alleviate the current crisis in energy prices, rather than reducing oil supplies just when they are needed most," said the lawmakers, including Jeff Bingaman of New Mexico, who chairs the Senate Energy and Natural Resources Committee.

The department has already forecast that consumers will pay much more in heating bills this winter compared with last winter.

Taking oil off the market and putting it into the stockpile "sends a message to the marketplace that the administration is comfortable with current price levels," the senators said.

Putting an extra 13 million barrels into the reserve next year could push oil prices higher in the spring and summer of 2008, they warned.

Energy Department officials could not immediately be reached for comment. But Bodman told reporters this week that the department was sticking with its plan to add oil to the reserve.

The stockpile, created by Congress in the mid-1970s after the Arab oil embargo, now holds 694 million barrels of crude at four underground storage sites in Texas and Louisiana.