As Oil Hits $115 a Barrel Consumer Watchdog Renews Calls for Bush to Stop Buying Oil for U.S. Reserve, Release Oil to Dampen Price

As oil prices topped $115 a barrel today on futures markets, President Bush continued his near-silence on the damage that energy inflation is doing to consumers and the economy, said Consumer Watchdog. “The White House clings to a pallid strategy of blaming OPEC even as it continues buying oil off the market at a rate of 1.5 million barrels a month for a Strategic Petroleum Reserve that is already filled to near-record levels.”

“In 2006, President Bush dramatically announced that he would stop taxpayer-paid purchases for the petroleum reserve in order to help bring down prices,” said Judy Dugan, research director of Consumer Watchdog. “Now, in a much more urgent situation, he has not taken even this symbolic step to show seriousness in the face of serious economic damage from energy prices.”

Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer Rights) recently asked President Bush to cease purchases for the reserve, and also to begin releasing oil from the 700-million barrel store to show his administration’s determination to quell volatility and speculation in oil on futures markets.

“It is two-faced of Bush to assert that OPEC’s refusal to increase supplies is the sole cause of this slide to disaster even as the White House itself takes oil off the market,” said Dugan. “The White House has failed even to push for regulation of energy trading that could wring out some of the purely financial trading that is helping to spike prices. It also continues to oppose legislation that would create jobs in green energy businesses by canceling just a portion of oil companies’ multibillion-dollar tax subsidies.”

Energy prices are the chief cause of inflation that is deepening the U.S. economic slide and giving consumers a double whammy in the pocketbook, at the gas pump and again at the grocery store, said Consumer Watchdog. Oil companies are reaping continued record profits while other businesses falter.

“Every day there is a new reason put forward for the daily oil price and fuel price record,” said Dugan. “The sliding dollar, a new blip of violence in Iraq, the faltering U.S. economy, or a temporary dip in the oil supply somewhere… All of this combined cannot account for $115 dollar-a-barrel oil. It’s hedge funds feeding off the last bit of bad news to keep prices spiraling higher.”

Beyond drawing on the strategic reserve, Consumer Watchdog has called for:

– Closure of the “Enron Loophole” in commodity trading regulation. A regulatory measure in the federal farm bill (S.2058 by Sens. Dianne Feinstein and Carl Levin) would regulate trading markets to help stop speculative oil pricing. (See more on Enron Loophole and farm bill amendment at: http://www.oilwatchdog.org/articles/?storyId=18735 ) With the farm bill stalled, the Senate measure should be passed separately and sent quickly to the White House.

– Regulatory increase of the amount of margin funds that buyers must put up in energy trades to help suppress speculation by traders who will never take possession of a barrel of oil.

– Senate approval of a measure to withdraw $1.8 billion a year in unjustified taxpayer subsidies to oil companies and use the funds for development of job-creating green energy businesses. This measure, passed by the House, has not been taken up in the Senate, where opponents are using a filibuster tactic to require 60 votes for passage. A similar House measure was removed from the federal energy bill by the Senate last year under pressure from the oil lobby.

– Oversight of refinery operations, including regulation of national gasoline supplies. In the last decade, the average on-hand supply of gasoline has dropped from 30 days’ worth to about 22 days. This makes prices increasingly sensitive to any cuts in gasoline production.

Source: Consumer Watchdog

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