The U.S. Congress made a rare display of bi-partisan muscle yesterday when it overwhelmingly voted to suspend shipments of roughly 70,000 barrels of oil a day into the Strategic Petroleum Reserve.



According to a report by the Associated Press, the Senate voted 97-1 and the House 385-25 to suspend the deliveries for the remainder of this year, in an attempt to bring down the price of oil. President Bush opposes the suspension, saying that it would not provide relief from soaring gas prices in a “meaningful way.” But Senator Pete Domenici, while seeming to agree with this assessment, still thinks its a good idea:

“It could have a chance of reducing the price a small amount,” said Sen. Pete Domenici, R-N.M., who joined the chorus against continuing the shipments. “But make no bones about it, this is no big energy policy. This is one little thing we can do.”

 

 



In addition to the reserve issue, the Senate debated the Republican sponsored American Energy Production Act of 2008, introduced on May 1. Domenici has long advocated increasing domestic oil production as a solution to U.S. dependence on foreign oil, including the opening of the Alaska National Wildlife Refuge to drilling. The Republican bill included a provision that would open ANWR to production, but it was defeated in the Senate yesterday.



Senator Jeff Bingaman gave a strong rebuttal from the Senate floor to the Republican stance that new oil production leases are crucial to bringing down gasoline prices. He challenged the notion that there was anything the U.S. could do on the oil & gas supply side, at all, to bring down spiraling energy prices:

The simple fact is that the market for oil is a global market and the price of oil is reflected on that market. The United States is the largest purchaser of oil in that market, but China is rapidly gaining on us in that regard. We are not even close to being the largest seller of oil. In fact, we import about 60 percent of the oil we consume.
 
So if we want to affect the price of oil either by reducing world demand or by increasing world supply our ability to do so is limited.



Interestingly, I asked Domenici spokesperson Matt Letourneau last week about the Republican proposals to increase production as a solution to high energy prices, particularly in light of their push to open a wildlife refuge to drilling while using language that made it sound as though the oil would remain in the U.S. Given the global nature of the oil market, I was curious to know if the Republicans were advocating restrictions that would allow new domestic oil to only be sold in the U.S. He replied in an email:

We don’t have a restriction on which companies can bid on contracts, but we do have a restriction that they must use the oil from Alaska in the US.



Despite his overall view that increased production wouldn’t solve the problem, Bingaman used pie charts, graphs, and loads of statistics in extensive comments from the Senate floor to make the case that there are already enough leases on federal land. Instead, he said, they simply aren’t being maximized by the oil companies that hold the leases:

As you can see, about three-quarters of all the Federal land we have leased onshore is not currently being produced. Of the over 45.5 million acres of land that has been leased, oil companies are sitting on 31 million acres, on which no production is occurring.

 
A similar story can be told in terms of the Outer Continental Shelf. Of a total of 41 million acres leased, 33 million acres are not producing.



At the end of the day, though, while Bingaman discussed extensively in his remarks what he thinks the real problems with oil prices are, he also acknowledged what many seem to think—that the current energy measures proposed by the Senate, presumably on both sides, amount to nothing but a hill of beans:

We should be honest with the American people about this so-called “debate” on high gas prices. This is election year politics in its classic form. It is Washington finger-pointing and – unfortunately – very little else.