US Senators Urge Clinton Administration to Threaten SPR Release as Tool for OPEC Production Quota Increase

Strategic Insights -

US senators Charles Schumer (D-N.Y.) and Susan Collins (R-Maine) have sent a letter to Energy Secretary Bill Richardson, urging the Clinton administration to consider releasing oil from the Strategic Petroleum Reserve (SPR) as a means to pressure OPEC to increase production quotas. The senators argue that high oil prices above $30/barrel and potential gasoline prices of $2/gallon this summer are unacceptable and necessitate a SPR release. The Energy Department has disputed the senators' projections, predicting average gasoline prices will be $1.40-$1.45 nationally by summer's end.

Key Takeaways:

  • US senators Charles Schumer (D-N.Y.) and Susan Collins (R-Maine) have written a letter to Energy Secretary Bill Richardson, urging the Clinton administration to threaten a release from the Strategic Petroleum Reserve (SPR) to pressure OPEC for increased production quotas.
  • The senators argue that high oil prices above $30/barrel and potential gasoline prices of $2/gallon this summer are unacceptable and necessitate a SPR release.
  • The Energy Department disputes the senators' projections, predicting average gasoline prices will be $1.40-$1.45 nationally by summer's end.
  • The senators suggest a "swap" plan, where the government would "loan" energy companies oil from the SPR, allowing them to sell it on the open market, which would then be replaced and supplemented at a later date.
  • Energy Secretary Bill Richardson has been described as being "unnecessarily alarmist" by a department spokesman regarding the senators' views on gasoline prices.

Statistics:

  • Oil prices above $30/barrel are deemed unacceptable by the senators.
  • Gasoline prices could reach $2/gallon this summer, according to the senators' projections.
  • The Energy Department predicts average gasoline prices will be $1.40-$1.45 nationally by summer's end.
  • The Strategic Petroleum Reserve (SPR) contains 570 million barrels of oil.

Sources:

  • Letter from Sen. Charles Schumer (D-N.Y.) and Sen. Susan Collins (R-Maine) to Energy Secretary Bill Richardson.