The price of oil clearly isn't high enough for Democrats and Republicans in Congress. As they spend time arguing about legislative measures in Congress, oil prices stay volatile in the world outside Washington, D.C.
Democrats presently pursue two pieces of legislation focused on releasing oil from the
(SPR) and placing restrictions on oil speculators, while Republicans insist offshore drilling would lower oil prices. The opposing positions resulted in a standoff with no relief for businesses or consumers in sight.
Democrats have pushed for immediate solutions to lower petroleum prices, in particular H.R. 6578 that releases oil from the SPR. Speaker Nancy Pelosi (D., Calif.) spoke in favor of it Thursday on the floor of Congress:
"Seventeen days ago, the Congress called upon the President to free our oil from a government stockpile known as the Strategic Petroleum Reserve. The American people have paid for more than 700 million barrels of oil to be held in this government stockpile. At significant taxpayer expense, the SPR is currently 97 percent full - its highest level ever. The President has not heeded the call of the Congress or the American people to free our oil, so today the House must act."
The measure, however, failed along party lines with all Democrats voting in favor and all Republicans opposed.
Speaker Pelosi used a legislative technique to ensure that the measure could not be amended. Republicans were outraged by the political process. They had hoped to offer amendments in favor of offshore drilling in Alaska, California and Florida. President George Bush, Republican Presidential nominee John McCain and their allies in Congress favor offshore drilling as an immediate solution.
Republican Minority Leader John Boehner criticized Pelosi's actions in a press release:
"With just days remaining before a five-week August recess, Democratic leaders are irresponsibly putting another bill on the House floor masquerading as a real energy plan. The American people know better. They support new American-made energy to help lower gas prices, but this bill does not offer a single drop of new American oil or gas. It's little more than a three-and-a-half day 'solution' to a year-round problem for American families and small businesses"
According to the
, the SPR has been used twice in critical times to decrease the price of oil.
After Hurricane Katrina, President Bush authorized the release of crude oil from the SPR causing a one day drop of 3.7% in the price of oil. The most dramatic drop occurred at the outbreak of Operation Desert Storm in 1991. President George H.W. Bush opened the SPR spigot gushing out 34 million barrels of oil, causing a precipitous one day decline of 33% in the price of oil from $32.25/barrel to $21.48/barrel.
Democrats oppose offshore drilling on several grounds. Foremost, the U.S. has already granted massive offshore drilling contracts in the oil rich Gulf of Mexico. Democrats claim the big oil companies, like Exxon
are sitting on 68 million undeveloped acres, or twice the size of the state of Ohio.
Developing drilling sites also takes time. The Energy Information Administration has stated that it would take 10 years for drilling in the Arctic Wildlife Refuge to occur, while drilling on the Outer Continental Shelf would have no effect on oil prices until 2030. Even then, prices would only drop marginally by about 2 cents a gallon.
Democrats and Republicans also disagreed on another measure, this time in the Senate, to regulate oil speculation. Republicans filibustered the legislation successfully, meaning it would need 60 votes to close discussion on the bill before coming to the Senate for a vote. Democrats fell short 50 to 43. Again, Republicans opposed the bill because it didn't include offshore drilling provisions.
Both parties have demagogued speculators as the root of higher oil prices. Markets analysts
argue , however, that rising demand in developing countries is the primary cause of higher prices rather than the increase in contracts offered by firms like Goldman Sachs
to provide investors an inflation hedge, Thus, the regulation would have minimal impact on prices.
And so the energy impasse continues in Congress. A five week August recess starting August 11 rates to set any progress even farther into the future.