Ryan bill aims to cut price of gas

By Don Shilling

Opening more drilling areas would create bigger savings, one observer says.

Some U.S. congressmen, including Tim Ryan, say they have an idea to cut gasoline prices by 25 cents a gallon — stop stockpiling oil for a crisis.

Ryan, of Niles, D-17th, this week signed as co-sponsor to a bill that would suspend the filling of the Strategic Petroleum Reserve so that more oil is available in the market. More available oil should force down prices, Ryan said.

Supporters point to an independent report that says putting the additional oil on the market would cut oil prices by $2.25 to $6 a barrel. Ryan said this could reduce gasoline prices by as much as 25 cents a gallon.

“A quarter a gallon adds up for someone who does a lot of traveling,” he said. “That could amount to hundreds of dollars over several months for a family that’s trying to make ends meet.”

The bill, which was introduced in February by U.S. Rep. Peter Welch of Vermont, would stop placement of oil into the reserve for the rest of this year or until oil dips to $50 a barrel. Oil was trading Thursday at about $116 a barrel. The bill has 39 co-sponsors.

The reserve was created in 1975 to provide the country with a buffer in case oil imports were cut off. An energy bill passed in 2005 ordered expanding the capacity of the reserve from about 700 million barrels to 1 billion barrels. It also ordered that oil be added until the reserve is filled.

Brian Newbacher, a spokesman for AAA, said the question of whether to continue that policy is a good one. Does it make sense to divert oil from the market when oil prices have risen so much?

“We don’t have a position, but we appreciate the value of the question,” he said.

Timothy Considine, a Penn State University professor who has studied the issue, called the matter a diversion, however.

Politicians like the issue because it grabs the public’s attention, but the reserve doesn’t receive enough oil to make much of a difference, he said.

He doubted that stopping shipments to the reserve would create a 25-cent reduction in gasoline. Even if it did happen, however, he called it a small amount.

Much bigger savings could be achieved by opening drilling areas in the United States that have been ruled off-limits for environmental reasons, he said. These include the coasts of Florida and California and the Arctic National Wildlife Refuge in Alaska.

Between 30,000 and 60,000 barrels of oil a day are being sent to the reserve, but the refuge in Alaska could produce an estimated 1 million barrels of oil a day, he said.

“If 60,000 barrels a day would save 25 cents on gas, what would 1 million barrels a day do?” he asked.

The world uses 82 million barrels of oil a day, with the U.S. using 20 million barrels, Considine said.

Ryan said he is open to the idea of opening up more areas to drilling.

He added, however, that it would have to be part of a comprehensive energy plan that included less reliance on oil and more development of nuclear power and alternative energy.