US Reps File Bill To Tap SPR To Counter Oil Price Rise

By Ian Talley, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Several influential U.S. House Democrats have filed a bill that would require the government to tap the nation's Strategic Petroleum Reserve to counter rising oil prices.

Reps. Ed Markey, D-Mass., Chris Van Hollen, D-Md. and Peter Welch, D-Vt., said their legislation would direct the Department of Energy to sell 70 million barrels of more expensive light, sweet crude and replace it with cheaper heavy crude.

Swapping the oil, the lawmakers say, would help to undercut rising oil prices. The proposal has been offered in previous sessions, but failed to win approval in both chambers last year despite GOP support in the House.

Under the Obama Administration, the DOE has shifted its SPR policy, saying that it was prepared to tap the emergency stocks to moderate prices. The Bush Administration said it would only use the SPR oil in severe supply shortages.

By mandating a release of oil into the market, legislators want to try and shake some speculators out of the market. Many lawmakers blame what they term " excessive" speculation in the market for skyrocketing crude prices, despite many economists citing the fundamentals of supply and demand as being the primary drivers.

Analysts say that the swap would make the SPR more compatible with modern U.S. refineries, increasing the energy security of the country.

The revenues brought in from the price differential in the swap would then go back into the SPR account to fill the reserve back up to its 727-million barrel capacity.

The legislation would also require the SPR oil purchases at a constant dollar value rather than constant volume of oil and authorize the DOE to purchase refined petroleum product for emergency stocks

-By Ian Talley, Of Dow Jones Newswires, 202-862-9285; ian.talley@dowjones.com

http://www.nasdaq.com/aspx/stock-market-...