Senators Collins and Schumer Call for Congressional Hearings on Rising OPEC Oil Pricesand their Legislation to Sell U.S. Oil from the Strategic Petroleum Reserve
Senators Warn that Heating Oil Inventories are Stretched too Thin and even Steeper Price Hikes are Inevitable without U.S. Intervention
With the price of home heating oil rising rapidly, Senators Susan Collins (RME) and Charles Schumer (DNY) have called for Senate hearings on their legislation to offset production cutbacks from OPEC nations by selling oil from the federal government's Strategic Petroleum Reserve. The Senators also renewed their call for the Administration to use its authority to sell oil from the reserve.
"The price of crude oil is now at $29.20 a barrel, nearly triple what it was less than a year ago and at a level not seen since the start of the Gulf War in 1991. Our government needs to do all it can to break the resolve of the OPEC cartel. We believe this should include temporarily drawing down on our wellstocked Strategic Petroleum Reserve to restore market discipline of oil prices," Collins and Schumer wrote to Senate Energy and Natural Resources Chairman Frank Murkowski (RAK).
The recent cold snap has dramatically accelerated home heating oil prices in recent weeks. The wholesale price of home heating oil from New York City distributors has increased from .72cents on January 1 st to $1.31 today an increase of 82% over three weeks. According to the New York Oil Heating Association, the price of home heating oil has increased by twenty one cents per gallon since yesterday.
"What was once a nuisance has become a crisis. Oil inventories have been dwindling due to OPEC cutbacks and the recent turn in the weather has pushed us beyond the danger zone. With the weather turning bitter cold, this shortage and price explosion couldn't come at a worse time for low and middle class families and seniors on a fixed income," said Sen. Schumer.
"OPEC's decision last week to continue its anticompetitive assault on the world's oil markets is based on a simple notion the strategy is working," said Sen. Collins. "Last week, the price of home heating oil in parts of Maine was $1.01.9 a gallon. While still lower than most of New England, this week, the price is $1.37.9. There's talk that by tomorrow, it could rise another 11 cents."
"We need to do all we can to break the resolve of the OPEC cartel, enegincluding considering temporarily drawing down our massive strategic petroleum reserves to restore market discipline of oil prices," Collins continued. "Senator Schumer and I have introduced a bill that would give the President the authority to do just that. We are urging the Energy Committee to take swift action on our bill."
In addition to causing increased home heating oil and gasoline prices for consumers, Schumer and Collins expressed their concern that high oil prices can have a dramatic negative impact upon our economy by increasing energy, production, and transportation costs.
"We are greatly concerned that sustained high crude oil prices could slow our nation's economy and have lasting negative economic effects on all Americans," wrote Schumer and Collins. "Prices above $30 a barrel will create inflationary pressures; already we see major airlines adding a new surcharge to tickets to offset high oil costs."
Last November, Schumer and Collins introduced S. 1951, the Oil Price Protection Act, in anticipation that newfound discipline among OPEC members and steep production cutbacks would lead to a surge in U.S. gas and heating oil prices. The legislation would require the Administration to consider selling off some of the government's 571 million barrel Strategic Petroleum Reserve should oil prices become too high. Both senators believe that by simply releasing some of the oil in the reserve OPEC will increase production.
"Our legislation offers a way to hold OPEC accountable to market discipline," Collins and Schumer wrote.
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