Petroleum reserve must be preserved

25 March 2005

George W. Bush may well be on the wrong side of environmental interests with his push to open up the Alaska National Wildlife Refuge to oil exploration. But those who are now clamoring that he bring down gas prices by drawing from the Strategic Petroleum Reserve are on the wrong side too. In fact, that demand - not Bush's penchant for drilling - is, from an environmental standpoint as well as one of national security, far more irresponsible.

Unless you're driving around New Jersey, where the average price is $1.93 (a small benefit from the refineries that otherwise stink up the air), a gallon of gasoline has firmly crossed the $2 threshold. That's a 22 percent rise from a year ago and some warn the price may go even higher, perhaps into the $3 range. True, it's nothing like the $6-plus a gallon that Europeans pay, but the jump in prices has provoked wails aplenty. And pols - Democrats in particular - have been listening.

Earlier this month, 12 senators - including New York's Hillary Rodham Clinton and Vermont's Patrick Leahy - wrote Bush, decrying the rise which, they said, "takes desperately needed money out of the hands of working families." Their solution was to use the Strategic Petroleum Reserve.

That reserve certainly makes for a tempting target. It was created in 1975 and is brimming with oil - 687 million barrels, enough to supply the nation's needs for 53 days. Its purpose is to give us a backstop in case of a major disruption in supply - such as the 1970s oil embargoes that prompted it or a war or other catastrophe. It's been tapped rarely, most notably in 1991 during the first Gulf War. The policy has been that it should be used only in the most extreme cases, not for "political purposes or to manipulate prices," as the White House said in rebuffing the senators' request.

The problem with that purist argument, however, is that we have used the reserve to "manipulate prices." Five years ago, in the midst of escalating prices, Sen. Charles Schumer (D-N.Y.) led the charge to tap it. After resisting for months, President Bill Clinton caved in August 2000. Prices at the pump fell by 14 cents. A line was crossed. And this time, Schumer argues, the price rises are far more dramatic.

Some argue that OPEC would respond by cutting production, thereby minimizing any effect on prices. They also say that the drop in 2000 was coincidence. But suppose they're wrong. Why not try?

Because in the long run, all it will do is exacerbate the problem.

Prices influence behavior. Keep gas cheap, and people will buy bigger cars, drive more and shun any efforts to become more efficient. That's exactly what happened in the late 1990s when prices dropped to under a dollar. Even more, prices also influence the development of alternatives. It is flat-out untrue that the world is running out of energy. There's plenty available; it's just more expensive. Unconventional fuels, renewable energy, domestic production or cutting-edge technologies (such as hybrids) cost more - not a lot more, necessarily, but enough more so that cheap oil has discouraged their use.

The pressure on Bush will mount. High prices anger consumers and it's easy to pander. Yet those who argue for tapping the reserve also bemoan our dependence on foreign oil (now 62 percent, up from 35 percent in the 1970s) and want the United States to be more energy independent. But you won't solve those problems or achieve those goals by cutting prices and encouraging the behavior that got us into such trouble in the first place. Higher prices may hurt. Artificially lowering them will hurt even more.