On July 23, Romm testified before the House Select Committee on Energy Independence and Global Warming. He offered a temporary solution to high gas prices (which are even higher today than when he testified). Romm recommended that the government sell a relatively modest amount of crude oil–about 500,000 barrels a day--from the nation's Strategic Petroleum Reserve.
The SPR was created during the 1970s after the Arab oil embargo. Currently, it's close to its capacity of more than 700 million barrels. Oil was drawn from the SPR on two previous occasions: on the eve of Operation Desert Storm and after Hurricane Katrina.
Romm argued that selling SPR oil would pop the speculative oil price bubble and drive down the price of gasoline. Currently, speculators have to put down only five to seven of the purchase price for oil futures, enabling them to dramatically increase the size of their purchase. (By contrast, those who trade stocks on margin have to put up 50 percent.) The recent drop in oil prices might have burned some of the speculators but don't worry: they'll back as fast as you can say "peak oil."
In addition, selling oil from the SPR would bring in tens of billions of dollars, which could be used to help the hardest-pressed Americans cope with high energy prices. Selling 180 million barrels of oil at today’s prices would bring in $15 to $20 billion.
Romm also punctured some of the GOP's pet talking points about drilling policy. Republicans have claimed that Nancy Pelosi and House Democrats are solely to blame for the high price of gas at the pump because they won't declare open season for drilling. His response:
This is a false claim. The House Committee on Natural Resources investigated this charge and found that, "'Between 1999 and 2007, the number of drilling permits issued for development of public lands increased by more than 361 percent, yet gasoline prices have also risen dramatically contradicting the argument that more drilling means lower gasoline prices. There is simply no correlation between the two."
He also pointed out that oil companies hold leases for offshore tracts but haven't drilled there. In response to these undeveloped leases, House leaders introduced H.R. 6251, the Responsible Federal Oil and Gas Lease Act of 2008. It is a "use it or lose it" policy: if the oil companies sit on their leases rather than drill, they lose their leases.
Romm also refuted the Republicans' contention that "Drill Here, Drill Now" would solve the current oil shortage. He did so with figures from the Energy Information Agency, the Energy Department's data-gathering arm:
Look closely. As of 2003, oil companies had available for leasing and development 40.92 billion barrels of offshore oil in the Gulf of Mexico. I asked EIA how much of that (estimated) available oil had been discovered in the last five years. They said "about 7 billion barrels have been found." That leaves about 34 billion still to find and develop.
The federal moratorium only blocks another 18 billion barrels of oil from being developed. But, as you can see, most of that is off of California, which has bipartisan opposition to drilling from Republican Governor Schwarzenegger--who seems serious about his commitment to greenhouse gas reduction--and the Democratic legislature, which remembers all too well the devastating 1969 oil spill off the coast of Santa Barbara.
Finally, Romm got to the real reason why Republicans are pushing "Drill Here, Drill Now":
It is hard for me to see how anyone who thinks oil prices will drop if we end the federal moratorium on coastal drilling--which might deliver 100,000 barrels of oil a day sometime after 2020--could oppose releasing 500,000 barrels a day of oil starting now. Of course, the first strategy would benefit oil companies and the second strategy would benefit the American people, so that may explain who supports which policy.
Your Grand Oil Party in action.
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