| Fill ‘er up. Part of the Strategic Petroleum Reserve near Freeport. (HO/AFP/Getty Images)
For Rep. Ed Markey (D-Mass.) to rail against a Bush administration policy is nothing new. But record high oil prices are fueling the latest cry from the chairman of the Select Committee on Energy Independence and Global Warming : he’s calling on Bush to stop buying 70,000 barrels per day of oil to fill the Strategic Petroleum Reserve and instead start releasing oil back into the markets.
“The Bush Administration’s own Department of Energy projects that ending the fill of the reserve could reduce prices by about $2 per barrel of oil and 5 cents per gallon of gas.” he said in a statement
A number of people have been saying this for the past year, that the purchases help support speculators whom many blame for much of the price increase. The DOE has said it doesn’t inflate prices, but there’s an ongoing debate about the policy.
The Government Accountability Office reports today that the administration could be filling the reserves in a more cost effective way, however.
In addition to encouraging purchases of cheaper heavy crude, which most Gulf Coast refineries can handle, the GAO suggests the Department of Energy “… consider acquiring a steady dollar value–rather than a steady volume–of oil over time when filling the SPR. This “dollar-cost-averaging” approach would allow DOE to acquire more oil when prices are low and less when prices are high.”
How much would this have saved?
“GAO found that if DOE had used this purchasing approach between October 2001 through August 2005, it could have saved approximately $590 million, or over 10 percent, in fill costs. GAO’s simulations indicate that DOE could save money using this approach for future SPR fills, regardless of whether oil prices are trending up or down as long as there is price volatility.”