Texas Congressman Chet Edwards (D) wants to use the U.S.’s Strategic Petroleum Reserve to lower prices at the gas pump. Needless to say, I think this is a bad idea, for reasons I list below.
He says the increased supply would help halt rising gas prices which are predicted to hit $4 per gallon by summer.
"At a time when costs for groceries, gas, health care, and education keep rising, releasing oil from the Strategic Petroleum Reserve is a common sense first step that will help ease the burden for working families and businesses struggling to make ends meet in today’s economy," said Edwards.
First, the purpose of a "strategic" reserve is not to manipulate the price of consumer-oriented petroleum products, it’s to have – full – when and if an emergency occurs.
Second, lower prices encourage consumption and discourage conservation, which is the exact opposite of what we want to do.
Third, Congressional mandates for lower fuel prices actively discourage investment in alternate energy sources that require significant capital to bring to market.
While draining the reserve is by definition only a short-term ploy, it nonetheless sends a message to energy investors that their "Congressional risk" is higher than it ought to be.