With Gas Prices Expected To Skyrocket, Gillibrand Urges President to Release Oil From Strategic Petroleum Reserve

Washington, DC – With gas prices rapidly increasing due to turmoil in the Middle East, U.S. Senator Kirsten Gillibrand is urging President Obama to release oil from the Strategic Petroleum Reserve (SPR). In the last year, gas prices in New York State have increased by 25 percent. This action would immediately stabilize gasoline prices which, according to the Energy Information Administration, were higher last month than in any February on record.

“Gasoline prices are at an all time high this month and are up $0.71 per gallon from a year ago,” Senator Gillibrand said.  “Our families are already struggling in this difficult economy, and the last thing we need is rising gas prices. Releasing oil from the Strategic Petroleum Reserve is critical to relieve this extra burden on our families here in New York and across the country.”

Gas prices have climbed more than 50 cents per gallon over the past 12 months and are now above the $3 mark.  These prices are putting a significant dent in the budgets of middle class families across the country.  The price of oil has risen over $10 per barrel in the last month, a price that would cost Americans an additional $40 billion annually, according to the Petroleum Marketers Association of America.

*Data for regular gas from AAA.

In a letter to the President, Senator Gillibrand wrote, “The current price spike couldn’t have come at a worse time.  When gas prices last peaked in July 2008, unemployment was 5.8%.  Now, unemployment has been at or above 9% for 21 months.  The Consumer Price Index increased 1.5% for all items in 2010, but for gasoline, the increase was 13.8%.”

The full text of Senators Gillibrand and Sheldon Whitehouse’s letter to President Obama is below:

Dear Mr. President:

With gas prices around the nation at near-historic highs, we write to urge you to exercise your emergency authority to release oil from the Strategic Petroleum Reserve (SPR).  This action would immediately lower gasoline prices, generating significant revenue to invest in your call for one million electric vehicles on the road by 2015.  This would be a win-win for American consumers:  short-term help at the pump, and long-term help in accessing cost-saving, oil-free electric cars. 

Gas prices have climbed more than fifty cents a gallon over the past twelve months and are now above the three-dollar mark.  These prices are putting a significant dent in the budgets of families across the country.  According to the Energy Information Administration, gasoline prices were higher last month than in any other February in history.  In the last fifty years, prices in real terms have only been this high twice – in 1981 after the oil crisis, and in parts of 2007 and 2008. 

The current price spike couldn’t have come at a worse time.  When gas prices last peaked in July 2008, unemployment was 5.8%.  Now, unemployment has been at or above 9% for 21 months.  The Consumer Price Index increased 1.5% for all items in 2010, but for gasoline, the increase was 13.8%.  This hits elderly Americans especially hard since there hasn’t been a Social Security cost of living adjustment since early 2009.  

Unlike drilling for additional oil, which won’t reduce our fuel prices in the near term, we know that releases from the SPR work quickly to lower gas prices.  When President George H. W. Bush announced that he was authorizing a drawdown in 1991, oil prices fell by nearly $10 per barrel the next day. 

We also know that oil company profits are again approaching record levels.  ExxonMobil reported a 53% increase in its fourth-quarter profit in 2010.  Chevron reported fourth-quarter earnings 72% higher than last year, and ConocoPhillips reported 46% higher profits.  It should come as no surprise that as Americans are paying more at the pump, oil companies are once again reaping the benefit. 

A sale from the SPR could generate billions of dollars in revenue to invest in the development of electric vehicles and other clean energy programs.  As you know, your important goal of one million electric vehicles on the road by 2015 will save consumers a significant amount in fuel costs.  The Department of Energy estimates that an electric vehicle costs between 2-4 cents per mile to fuel, while a conventional gasoline-powered vehicle costs between 10-15 cents per mile.  Electric vehicles have the added benefit of reducing our reliance on foreign oil – an important goal, particularly given the uncertain conditions in the Middle East.  In the current budget climate, funding for the much-needed investments to move us toward electric vehicles may be constrained.  We ask that you work with Congress to direct half of the proceeds from any SPR sales to electric vehicle investments, while using the remaining half for deficit reduction.

Thank you for considering this proposal.  We believe that high gasoline prices represent an emergency for middle-class families, and look forward to working with you on this important matter.