Chet Edwards For Congress

Saturday, May 03, 2008

Waco Trib: Edwards joins call for halt to oil deposits in strategic reserve

Waco Tribune
By David Doerr

As the average price for regular unleaded gasoline in Texas crosses the $3.50 mark, a growing number in Congress, including U.S. Rep. Chet Edwards, are proposing at least a temporary halt to the stockpiling of oil in the nation’s Strategic Petroleum Reserve.

This week, U.S. Sens. Kay Bailey Hutchison and John Cornyn urged President Bush to immediately halt deposits into the reserve, citing the cost to motorists during the “busiest driving season of the year.” The letter was signed by 14 other Republican senators.

“The SPR had 554 million barrels when President Bush took office, and today it has over 701 million barrels,” Hutchison said in a release. “We are in an extreme circumstance, now that oil is around $120 a barrel.”

In the letter, the senators say they believe that a halt in deposits would provide relief to consumers by sending a message to speculators that the government will take action to curb exorbitant crude oil prices.

Edwards, D-Waco, is calling to go even further than the senators’ proposal, saying that it could take flooding the market with tens of millions of gallons of oil from the reserve to “break the psychology of speculation.”

Edwards said independent oil producers have told him that increasing prices that consumers are seeing at the pump do not reflect the actual supply and demand for oil. Some estimates are that 20 to 30 percent of the cost of gasoline is the result of pure market speculation, he said.

“Speculators don’t like risk and uncertainty,” Edwards said. “If releasing large quantities of oil from the reserve could create uncertainty that there might be so much supply of oil on the market that the prices could start dropping, then (speculators) would start selling some of their investments, and that would help drive prices down.”

On Tuesday, Bush rejected the idea of halting deposits during a news conference, saying that the amount of oil the reserve purchases is too small to affect global pricing. He noted that the purchases for the stockpile amount to 67,000 to 68,000 barrels a day, a small fraction of the 85 million barrels per day in world demand.

“If I thought it would affect the price of oil positively, I would seriously consider it,” Bush said.

Edwards said the increasing cost of gasoline has become an economic crisis for working families and businesses.

“There is no question that high energy prices are seriously hurting the American economy,” he said. “A strong economy makes America more secure, so I think this is exactly one of the reasons we have a Strategic Petroleum Reserve.”

The president has sole discretion on when to halt deposits into the reserve, but legislation has been introduced to put a cap on the per-barrel price of oil purchased by the government for the reserve. So far, Republican lawmakers have favored a temporary moratorium on such deposits.

Given the pain that high gas prices are causing consumers, Edwards said he thinks the president would be hard-pressed to veto such legislation.

“Gasoline prices are a lot higher today then they were when the petroleum reserve was opened up previously,” he said. “At the very least taxpayers shouldn’t be paying $110 a barrel for oil going into the petroleum reserve. At the very best, selling some of those reserves could break the speculative forces that are unfairly driving up gasoline costs.”

Edwards said he has concerns about the proposals by presidential candidates Sens. John McCain, R-Ariz., and Hillary Rodham Clinton, D-N.Y., for a federal gasoline tax holiday during the coming summer. Edwards said he worried that oil companies would not pass on the savings of the 18.4 cents-per-gallon tax cut to consumers. He said he was also concerned that the tax cut would lead to a cut in revenue for the federal highway system at a time when roads and bridges are in need of improvement and expansion.

“I have a lot of questions that would have to be answered before I could support that,” Edwards said.