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Capital Region gasoline prices up 37% over last year, heating oil prices up 11% and heating costs expected to increase 41%

Schumer urges Bush Administration to keep SPR an option in face of potential disruptions to oil supply due to war with Iraq and oil strike in Venezuela

US Senator Charles Schumer released findings today showing that the Capital Region is facing new highs in gasoline and heating oil prices with more increase to come as the oil strike in Venezuela deepens and war with Iraq becomes more likely. Schumer urged the Bush Administration to reconsider its decision to rule out using oil from the Strategic Petroleum Reserve (SPR), a stockpile created in 1975 to deal with oil emergencies in the United States, in order to calm crude oil supply fears and arrest rising prices.

"Capital Region residents are being socked with a triple whammy this winter: a soft economy, rising unemployment, and higher gas and heating oil prices. Unfortunately, with the oil strike in Venezuela and continuing unrest in the Middle East, we might not see relief from high oil prices unless something is done quickly," Schumer said.

Schumer says that oil futures closed over $32 on December 23, 2002, a 2year high, because of the turmoil in Venezuela and continued tension in Iraq. The price has risen over 25% just from this past November. Experts such as John Kilduff, head of Energy Risk Assessment for FIMAT USA, predict prices of up to $35 should crisis continue.

• Gasoline: Currently, gasoline prices in the Capital Region are 37% higher than last year. Were oil prices to reach $35, the price of gasoline could each increase by another 10 cents per gallon, Schumer revealed. This estimate is based on longterm oil price trends, which demonstrate that for every dollar increase in the price of crude oil, gasoline prices increase $0.024. This increase would lead to prices at the pump being $0.50 per gallon higher than last year and cause the annual gas bill for the average Capital Region driver to rise by $348.

• Home Heating Oil: 107,312 Capital Region residents rely on heating oil to warm their homes during the winter months. The Department of Energy has predicted a heating oil expenditure increase of 41% percent this winter. As of December 30, 2002, the cost of residential heating oil in the Capital Region was approximately $1.34 per gallon, an 11.4% increase over last year. The average New York State heating oil user would face a winter heating bill of $909, up from $643 last year. With this year's winter expected to be on average 6 degrees colder than last year according to the National Oceanic and Atmospheric Association, per capita expenditures on heating oil could increase even more.

"When the price of oil goes up, it's not just a disruption in the balance of global economic or diplomatic factors, it's real money coming out of the pockets of average people, every single day," Schumer said. "Who wants to spend an extra $266 on heating oil? Over the course of the winter, these increases add up and could really hurt hard working families already struggling in this soft economy."

Last week, President Bush ruled out using the Strategic Petroleum Reserve which stores in reserve some 600 million barrels of oil. Schumer today argued that in the face of a strike in Venezuela and unrest in the Middle East, the United States must be clear that it is not afraid to use its own petroleum reserves. Keeping the option open, as much as actually using the SPR, can go far to reassuring the markets that a constant oil supply will exist and thus keep prices down.

As gas prices soared during the summer and fall of 2000, President Clinton responded to Schumer's repeated calls to tap into the SPR by releasing 30 million barrels over 30 days. Prices quickly fell by over 10% and helped stabilize gas prices for nearly a year.

"We have a Strategic Petroleum Reserve for some very good reasons," Schumer said. "And those include countering threats from nations like Iraq, keeping gas prices reasonable, and letting the world know we cannot be intimidated. President Bush's spokesman said that the SPR should only be used in times of emergency. Well, with oil prices continuing to rise and the possibility of further disruptions, I'd call that an emergency."

The disruptions in the oil market are caused by both the tensions in the Middle East and the situation in Venezuela. Venezuela currently finds itself in the midst of a protracted oil strike as part of a political protest to the rule of President Hugo Chavez. Venezuela is the 4th largest exporter of oil to United States at 1.5 million barrels of crude per day or 14 percent of all of the US's imported oil. During the current strike, Venezuela is not producing enough oil for its own consumption - let alone for export - and has begun negotiations to import gasoline.

For every 1 millionbarrel disruption in the flow of oil, the price of crude increases $3$5 increase, according to the Department of Energy. Estimates are that it could take Venezuela anywhere from 10 days to two weeks to increase production to previous levels once the strike ends, so price shocks are likely to continue after the political situation is resolved. If OPEC decides to increase output to compensate for Venezuela's demise, it is not likely to affect prices anytime soon because it takes 40 days or more for tankers from the Persian Gulf to reach the United States.

"How could we possibly rule out the use of the SPR, and take our greatest weapon against high oil prices off the table? Facing an oil shortage without using our special reserves is like going into Iraq without our Stealth bombers," Schumer said. "In tough economic times, and especially in these dangerous and uncertain times, every dollar counts. High gasoline costs hurt everyone. Drivers pay for it at the pump and shoppers pay for it at the department store. Using the SPR is a clear way out of this dilemma. The President owes it to the American consumer and the American economy to take all options into consideration, and reversing his stand on the Strategic Petroleum Reserves would do just that."

Ralph Bombardiere, Executive Director of the New York State Association of Service Stations and Repair Shops; and Lou Polsinello, Jr., the owner of ten area service stations and a local supplier of home heating oil, are expected to join Schumer.

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