Petropolitics
Posted 03:26 p.m., May 13, 2008
In his State of the Union Address in January 2007, President Bush unveiled an ambitious program he said was intended to wean the United States from its dependence on imported oil. Part of that program was a plan to double the amount of crude oil stored in the U.S. Strategic Petroleum Reserve, a big hole in the ground in Louisiana and East Texas where the government started storing crude oil for emergency use back in the 1970s.
The SPR has been a bit of a political football at times. The Clinton administration pumped oil out of the reserve a couple of times, most notably in the fall of 2000, in an effort to slow the rise of gasoline prices. The Bush administration has generally resisted any similar moves even as gas prices have risen much higher, though it did sell off about 15 million barrels from the SPR in the fall of 2005, after Hurricanes Katrina and Rita trashed much of the Gulf Coast's petroleum industry.
Overall, however, the Bush administration has been much more inclined to pump oil into the reserve than out. Since President Bush took office in January 2001, the amount of oil in the SPR has soared from about 540 million barrels to a current level of 701 million barrels, a 30 percent increase, as the following chart shows:
Something else the chart shows is that the Bush administration has not followed through on its plan to double the size of the SPR. Since January 2007 (the red dot), the government has added only 12.7 million barrels, an increase of just 1.8 percent.
Given the record-high price of oil over the past year or two, even that increase has come at a cost – about $1.1 billion, based on spot West Texas Intermediate crude prices. Overall, since taking office the Bush administration has spent somewhere in the neighborhood of $6 billion adding oil to the SPR, as the next chart shows:
The recent acceleration in this graph began last September. Over the period since then, the SPR has grown 1.3 percent while the price of oil has climbed 40 percent.
The reason I’m bringing this up is that the U.S. Senate voted today to stop pumping oil into the SPR until the end of this year. Lawmakers reason that shipping roughly 70,000 barrels a day to the SPR is adding demand at a time when oil supplies are already pretty tight and prices are setting one daily record after another. The vote was 97-1, and the House of Representatives is supposed to take up a similar measure today.
Stopping the shipments probably won’t make a significant dent in the concatenation of causes responsible for the current high price of oil. But continuing to pump tens of thousands of barrels of oil a day into a hole in the ground while Americans are getting daily sticker shock at the gas pump certainly would qualify as being politically tone-deaf.
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