Democratic Sen. Ed Markey warned President Trump on Wednesday about coming gasoline shortages in the Northeast in the wake of Hurricane Harvey, while pressing him to open the nation's strategic oil reserve in order to avoid shortages and price spikes.
"As Hurricane Harvey impacts refineries located along the Gulf Coast, I urge you to tap the Strategic Petroleum Reserve (SPR) to help consumers and mitigate upward pressure on refined product markets," the Massachusetts senator wrote in a letter to Trump.
"The hurricane has forced the shutdown of nearly 20 percent of our nation's oil refining capacity, including America's largest refinery — Motiva Port Arthur — and this could put significant additional pressure on our nation's gasoline supply in the days ahead," he wrote. "In the Mid-Atlantic and Northeast region, refineries remain fully operational, but gasoline inventories were already nearly 10 percent below last year's level before the storm."
The SPR includes a number of federal underground storage facilities around the Gulf Coast that maintain primarily crude oil, not gasoline or other refined fuels, to be used in the event of significant supply disruption. It is unclear how those facilities have been impacted. The president can order the Energy Department to conduct a sale of the oil to U.S. refiners. The reserve holds hundreds of millions of barrels of crude oil.
"An immediate release of gasoline or crude oil, if also warranted, from the SPR would help protect consumers from price spikes at the pump and tame any market speculation that could be unduly affecting markets and harming consumers," Markey wrote.
There were proposals to update the reserve to include gasoline under the Obama administration, but those ideas were never implemented. Therefore, crude oil is the only option.
The senator explained that gasoline prices are not responding to the price of crude oil, which has gone down, rather than up, in recent days. Instead, prices for gasoline futures "surged earlier this week by more than eight percent" to levels not seen for two years, he wrote.
"This gasoline price spike has occurred despite the fact that the price for U.S. benchmark crude oil has fallen more than three percent during that time," Markey continued. He noted that gasoline futures rose six percent in intraday trading on Wednesday, "even as crude oil prices continued to decline by one percent."
Markey explained that tapping the reserve could help protect consumers "by addressing this market dynamic of the divergence of gasoline and oil prices and any speculation that may be further fueling it."
The oil reserve was created 40 years ago in response to the Mideast oil embargoes backed by Saudi Arabia in response to America's support for Israel. In recent years, however, and due to the shale oil boom, lawmakers have seen the SPR as a source of funding, rather than a necessary strategic asset. Some recent bills use the sale of government-procured crude oil from the reserve to fund a variety of programs, including those that support medical research.
"The SPR has a proven record of effectively protecting consumers from price spikes in gasoline, home heating oil, diesel or other fuels," Markey added. "I urge you to tap the SPR in response to Hurricane Harvey to help protect families in Massachusetts and across the country from rising prices."
Markey is typically considered a stalwart on global warming, having co-authored climate change legislation that passed the House almost a decade ago when he was a congressman. The Waxman-Markey bill, as it was known, stalled in the Senate.