by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Congress didn’t appropriate money this year for a Department of Energy emergency gasoline-reserve project, a component of President Barack Obama’s “Climate Action Plan.” So the DOE held a yard sale of sorts to raise the cash.
Last March, it used a five-million barrel “test sale” from the Strategic Petroleum Reserve to raise $500 million, part of which paid for Obama’s pet project. This is drawing House Energy and Commerce Committee scrutiny, because it looks as if the DOE thumbed its nose at Congress, and because experts claim that such relatively small releases of oil can seriously damage the salt caverns in which it is stored. Similar releases over the years have reduced the caverns’ storage capacity from 727 million barrels to less than 700 million, according toa July report for the Energy Policy Research Foundation by John Shages, the DOE’s deputy assistant secretary for petroleum reserves from 2003 to 2007.
The new gasoline reserves, one in New England and the other near New York Harbor, each hold 500,000 barrels. Construction was inspired by Hurricane Sandy, the 2012 superstorm that flattened East Coast seaside communities and left many gas stations without electrical power and thus unable to pump gas. Gas prices spiked at stations that managed to get power.
DOE SECRETARY ERNEST MONIZ authorized the project on June 14, with no details about funding. “This gasoline reserve will ensure that just because a dangerous storm soaks our region, it doesn’t mean that consumers have to get soaked at the pump,” said Democratic Sen. Ed Markey of Massachusetts. But Shages says there was plenty of gasoline at disabled gas stations; the problem was the loss of electricity. …
… Despite increased domestic crude production, the SPR is needed, Shages says. The U.S. still imports some oil, and disruptions from Russia or the Middle East could cause supply problems here and for our allies in Europe and Asia, with whom we have mutual agreements to share reserved oil during a crisis. “We have an international obligation to maintain 90 days’ worth of imports,” he notes.
The Energy and Commerce Committee asked Moniz in May for a briefing on the gasoline reserves, including proof that the DOE had authority to build them. The briefing left a host of unanswered questions.