Sen. Boxer and Rep. Thompson Call on the Administration to Open the Strategic Oil Reserve

With gas prices reaching an all time high, Senator Barbara Boxer and Congressman Mike Thompson today called on the Department of Energy to stop filling the Strategic Petroleum Reserve (SPRo) and use the reserve to ease prices for consumers. In a letter sent to Energy Secretary Spencer Abraham today, the two California lawmakers called for federal intervention against record-setting gasoline prices. "These high gas prices are a tremendous financial strain on families in California," Boxer said. "People shouldn't have to shell out every last dime just so they can get to and from work. Californians need relief, and taking advantage of the Strategic Petroleum Reserve should result in lower gas prices." Thompson added that California motorists are suffering from recent price spikes. "It's alarming that one community in California is paying 45 cents more per gallon than another community seven miles north in Oregon," he said. "Until we get to the bottom of these questionable pricing practices, using the Petroleum Reserve to reduce the cost of gasoline is a necessary step to provide help to California residents." Boxer and Thompson asked Secretary Abraham to undertake an "exchange" similar to the kind used by President Clinton during the home heating oil crisis of 2000. At that time, crude oil was released from SPRo in exchange for additional crude oil in the future. Boxer and Thompson noted that SPRo is "90% full," making this an opportune time to help consumers. Last week, Boxer and Thompson also called on Federal Trade Commission (FTC) Chairman Timothy Muris to launch a formal investigation into the disparity in the price of retail gasoline sold in California compared with most other parts of the country. Currently, only an informal FTC investigation is being conducted by Chairman Muris. "The fact that California is seeing much higher gas prices than most of the country needs to be carefully investigated," Thompson said. "Citizens in my district and all around my state are losing faith in our federal government's ability to ensure that the gas market is not being manipulated by a chosen few. Only a formal investigation into this matter will ensure that such activities are not taking place." Attached please find a copy of Boxer and Thompson's letter to Secretary Abraham: March 15, 2004 The Honorable Spencer Abraham Secretary U.S. Department of Energy Washington, DC 20585 Dear Secretary Abraham: We are extremely concerned about the rapidly rising price of gasoline in the state of California. We call on you and the U.S. Department of Energy to help the people in California by utilizing the Strategic Petroleum Reserve (SPRo) to ease prices. Since the beginning of the year, the price of regular gasoline in California has increased more than 50 cents per gallon. Currently, according to the U.S. Department of Energy's Energy Information Agency, the average price of gasoline throughout the state is $2.11 per gallon. This price is substantially higher than the national average of $1.73 per gallon. In Crescent City, a coastal community located near the Oregon border, the average price of gasoline is $2.20, while in Brookings, Oregon, a comparable community seven miles north of the border, the average price is $1.75. These high prices and sharp increases in California are suspicious. And we have called on the Federal Trade Commission to undertake a formal investigation. In the meantime, however, the people of California need relief. Many people are dependent on driving their cars to work - in many cases they do not have any other choice. Higher gasoline prices mean less money for other necessities. This is especially burdensome given the overall state of the economy. Furthermore, according to oil economist Phil Verleger, continuing gasoline price increases "will put pressure on corporate profits, which might lead to more layoffs." Therefore, to increase the supply of crude oil and lower prices for consumers, we call on you to stop filling SPRo, which is 90 percent full. In addition, we urge you to undertake an "exchange" similar to what occurred during the home heating oil crisis in 2000, which released crude oil from SPRo in exchange for additional crude oil in the future. Please contact us with your decision immediately. Sincerely, Barbara Boxer United States Senator Mike Thompson U.S. Congress ###