WASHINGTON – Governmental Affairs Committee Ranking Member Joe Lieberman, D-Conn., Monday pressed Energy Secretary Spencer Abraham to conduct a review of the volatile petroleum markets, as oil supplies grow tight and prices at the gas pump hit near two-year highs. In a letter dated February 24, 2003, Lieberman also sought assurances that the Bush Administration was prepared to respond to supply disruptions that might occur as a result of developments in the Persian Gulf.
“It is imperative that the Department and the Administration assure the American people, now and in the future, that the prices that they are paying at the gas pump and for their fuel oil are not the result of price manipulation or gouging,” Lieberman wrote. “This will require aggressive monitoring of these markets in coordination with state and local energy and consumer protection officials.” Last week, Lieberman joined with a bipartisan group of senators in another letter to Abraham asking for solutions to problems faced by home heating oil consumers in the wake of dramatic increases in the price of heating oil. Following is a copy of Lieberman’s letter:
February 24, 2003 The Honorable Spencer Abraham
Secretary
U.S. Department of Energy
1000 Independence Ave. SW
Washington, D.C. 20460
Dear Secretary Abraham,
As we have seen in recent weeks, U.S. consumers are directly feeling the impact of the volatility of the crude oil market as the price of gasoline at the pump spikes higher each day. Since December alone, the price of crude oil, which accounts for almost half of the cost of a gallon of gasoline, has risen by roughly 25%. Gasoline prices, in turn, have increased an average of 24.7 cents a gallon in the past nine weeks – roughly 18% according to your Department’s Energy Information Administration. And the Automobile Association of America reported last week that the cost of regular gasoline is 45 percent higher than February 2002, and is now higher than its been since June 2001. It goes without saying our nation is extremely vulnerable to abrupt changes in energy supplies and demand. More than half of our oil needs are met by imports – imports that must be purchased on the world market and often from countries subject to domestic and geopolitical crises. Roughly 20% of our oil imports come from the Persian Gulf, according to EIA. Iraq alone produces more than 1.5 million barrels of oil a day for the world market, of which almost one third comes to the U.S. We have also been seriously affected by the dramatic reduction in supplies from Venezuela, the world’s fifth largest oil exporter and the fourth largest supplier to the U.S., due to national strikes now entering their third month. On February 10, 2003, I joined a number of my colleagues from the Northeast requesting that you order the release of heating oil from the Northeast Home Heating Oil Reserve to respond to price spikes and supply shortages that we are experiencing due to the extremely cold winter weather. The problems in the Northeast are real and need a real response. So does the reality that motorists in some parts of the country are now paying upwards of $2 a gallon for gasoline. Consequently, I am calling on you to initiate a review of the current petroleum supply and demand situation and our preparations, both nationally and internationally, to respond to supply disruptions, including possible impacts as a result of developments in the Persian Gulf. The Department should monitor both domestic and international petroleum markets and take additional steps to mitigate supply disruptions. Such measures should include consideration of the use of the Department’s Strategic Petroleum Reserve, suspension of Royalty-in-Kind and Exchange additions to the Reserve, and increased coordination with other Organisation for Economic Cooperation and Development countries on supply conditions and the use of their own petroleum reserves. It is also imperative that the Department and the Administration assure the American people, now and in the future, that the prices that they are paying at the gas pump and for their fuel oil are not the result of price manipulation or gouging. This will require aggressive monitoring of these markets in coordination with state and local energy and consumer protection officials. Please report to me as soon as possible on your plans to address these matters.
Sincerely,
Joe Lieberman