Congressional action that stopped U.S. purchases of crude oil for the Strategic Petroleum Reserve in 2008 saved taxpayers more than $600 million, according to the Energy Department.
Sens. Byron Dorgan (D-N.D.) and Jeff Bingaman (D-N.M.) sponsored the legislation that stopped payments for reserve oil shipments until the end of 2008 or oil prices fell below $75 per barrel, DOE said in a letter that the lawmakers released today.
When the bill passed the Senate by a 97-1 margin in May 2008, the Bush administration was purchasing 70,000 barrels a day for the reserve at a price of $120 per barrel (E&E Daily, May 15, 2008).
Oil prices ultimately hit nearly $150 a barrel that summer before the financial crisis hit and oil prices fell to around $30 a barrel.
Continuing the fill would have cost $1.7 billion, the letter says. When the fill resumed last year, the same amount of oil cost $1.1 billion, DOE said.
"It made no sense for the government to continue buying oil at that high price and put it underground when the Strategic Reserve was already 97 percent filled," Dorgan said in a statement. "I felt that it was going to be a waste of the taxpayers' money. It wasn't rocket science."
Click here to read the letter.