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Senators: Skyrocketing Gas Prices Will Practically Cancel Out Bush $400 Tax Cut By This Summer

Schumer, Boxer, Reid unveil new study finding that average family will have spent an extra $350 for gas by the end of the summer

Senators: "Can't stimulate economy if Feds give with one hand and OPEC takes it away with the other"

Senators tell President it's now or never release Federal petroleum reserves to immediately increase supplies and lower costs for drivers

Armed with a new study showing that the average American family with two cars will be forced to spend most of their federal tax rebate on increased gas prices, US Senators Charles Schumer, Barbara Boxer, and Harry Reid today asked President Bush to immediately to stop filling and instead tap the Strategic Petroleum Reserves (SPR) to increase supplies and reduce the cost of driving for American families.

"The $400 tax cut was passed to put extra money in the taxpayers' hands, but instead it slipped right through their fingers and was snapped up by oil companies," Schumer said. "It's bad enough that tax relief was nickelanddimed to death by skyrocketing gas prices, but the truly outrageous thing is that the government could stop it by releasing oil reserves but they refuse to do so."

Families and businesses around the U.S. have been slammed by soaring gasoline prices, and Nevadans have been hit especially hard. Gas prices in Nevada are among the highest in the country; the price for a gallon of gas increased 35 cents in February alone. The American people deserve relief. Thats why I am calling on the Bush Administration to release oil from the nations Strategic Petroleum Reserve," Reid said.

The new study released today found that a twocar family with one child will have spent $350 almost their entire July 2003 tax credit just on the higher costs of gasoline by the end of this summer. According to data from the Texas Transportation Institute, the average driver burns 592 gallons of gasoline per year. Based on historic gas price data from the American Automobile Association (AAA) and the Oil Price Information Service (OPIS) and using the economic prediction that gas prices would continue to rise 7 cents per month through the end of the summer and finally level off from August to September the average driver will pay $175 more per car through July or $350 for a twocar family.

The Senators emphasized that these figures do not account for the entire cost of gas just the increase since last summer, when prices were already elevated and on their way to recordhighs. Over the last year, OPEC has repeatedly announced supply cuts to the United States and plans to bust longstanding price ceilings on barrels of crude in a deliberate attempt to extract recordhigh prices for oil.

The Senators asked the President to immediately suspend deposits into the Strategic Petroleum Reserve and instead release fuel in what experts call an "oil swap" that increases market supply and drives down prices. The US Department of Energy has been putting over 100,000 barrels per week into the Reserve even as Schumer, Boxer, and Reid and others have been arguing that the government should be releasing not stockpiling fuel. By taking this oil off the market, the government has further reduced supplies and driven costs up.

Initiating an swap of oil from the SPR to increase the supply of oil is a proven way to reduce the price of gasoline and heating oil. In the fall of 2000, when the Clinton Administration announced a swap of 30 million barrels over 30 days, causing prices to quickly fall by over 10% and to stabilize for nearly a year. Under a swap, the federal government could decide on a set quantity of oil to release from the SPR, and accepts bids from private companies for the rights to that oil. These companies would then place bids on how much oil they are willing to return to the SPR at a later date.

The federal government would then accept those bids which will result in the best return for the SPR. For example, if the federal government decided to release oil and a private company wanted to obtain 10 million barrels, the company would bid for the 10 million barrels by promising 15 million barrels to be returned to the SPR at a later date. Such an action could create a winwin scenario under which the release of oil from the SPR lowers gasoline prices, and in the long term to goal of filling the SPR is advanced at no additional cost to the taxpayer.

"In January of 2003, I urged you to utilize the fuel reserves when the price of unleaded gasoline was $1.50 in New York. Fourteen months and 36 cents higher, the Administration has still not intervened. The summer driving months are just around the corner. The petroleum reserves are intended to provide relief at times when working families are struggling to make ends meet. That time is now. I ask that you finally use the reserves and put America back on the track to economic recovery," Schumer wrote in a letter yesterday to the President.