Wednesday, March 17, 2004 | 9:36 a.m.
Sen. Harry Reid, D-Nev., on Tuesday called on the president to release oil from the nation's Strategic Petroleum Reserve, which the senator said would almost immediately lower gasoline prices at a time Nevadans are paying near-record prices at the pump.
Reid, the Senate minority whip, said he's been told the high prices are caused by a lack of supply and high demand. But Reid said he believes that instead the high prices are the result of price gouging by oil companies.
"Nobody can say exactly why prices have risen so high, so fast. But I suspect price gouging by the big oil companies," Reid said during a press conference Tuesday at the corner of Eastern Avenue and Russell Road in Las Vegas.
"I'm not blaming the local gas station owners or the distributors," Reid said. "The big oil companies say it's just a matter of supply and demand. That's the same thing Enron said when it manipulated our power supply a few years ago.
"If this is just a problem with supply and demand, let's increase the supply."
Reid was especially critical of Organization of Petroleum Exporting Countries, for recently cutting production, and of Saudi Arabia, which he said should be doing more to help America with its oil needs.
Reid also said he would introduce legislation that would require a federal investigation into "market manipulation" if prices ever went up by 15 percent to 20 percent in one month. If no wrongdoing were found, the legislation would seek to have the president and Energy secretary release oil from the reserve. Reid said he decided Monday night to introduce legislation on the matter, after hearing complaints from Nevadans for the last few days.
"People are so, so incensed about what's happening to gas prices," he said.
Reid's call for presidential action on Tuesday followed a Monday announcement that Sen. Barbara Boxer, D-Calif., and Rep. Mike Thompson, D-Calif., sent a letter to Energy Secretary Spencer Abraham asking him to stop filling the reserve and to release oil to ease the high prices in their state.
Reid sent a similar letter to Abraham on Tuesday.
The least expensive gasoline at the stations at the site of Reid's press conference ranged from $2.01 a gallon at an M&M Minimart to $2.08 at a Chevron and Union 76.
According to AAA figures, regular unleaded gasoline cost an average of $2.06 a gallon on Tuesday in Nevada. That price was down a penny from the record high of $2.07 Nevadans saw on March 10.
Tapping into the reserve is not going to help the problem, said John Femly, chief economist for the American Petroleum Institute in Washington. The reserve is set up for emergency purposes, not to regulate prices, he said.
"Fundamentally, what we need is a federal energy policy," Femly said. "Simply calling for an investigation doesn't solve anything."
Rep. Jim Gibbons, R-Nev., does not want to open the reserve and used Reid's action to call for a national energy policy.
"I do not believe our nation's strategic petroleum reserve should be used to sugar-coat an unresponsive, out-dated energy policy," Gibbons said. "Of course, tapping our reserves and providing increased supplies may bring down prices temporarily, but it doesn't dismiss the fact that we need a modernized domestic energy policy."
Rep. Jon Porter, R-Nev., said Nevada's high gas prices come from a limited supply of refined gasoline and that "tapping into reserve crude oil without expanding refining capabilities would not solve the problem."
Porter spokesman Adam Mayberry said the congressman does support Reid's call for an investigation and is trying to solve the gas price problem in the state.
Berkley said an investigation also needs to be done of OPEC.
"I believe that OPEC is breaking World Trade Organization rules and will be working with other members of Congress to prompt action against this ruthless cartel," Berkley said.
But she did not join in the call to tap the oil reserves.
"There is no question that the high price of gas is hurting families and businesses in southern Nevada and I am actively reviewing the Senate proposal, but after 9/11, it is also critical that the U.S. maintain maximum oil reserves for national security," she said.
Sen. John Ensign, R-Nev., had no comment on the proposal yet and wants to review it more, spokesman Jack Finn said via e-mail.
Other critics of the plan said the reserves are intended to only be tapped in cases of national emergency, or in case of a boycott from oil-producing nations, but Reid said "we have a mini-boycott right now."
"We are building them up for a time like this," he said, adding that the security of the nation depends on people being able to afford to buy medicine and pay their mortgages. Reid spoke of Presidents Bill Clinton and George H.W. Bush releasing oil from the strategic reserves in the past, and said Clinton was pushed to do so "because we got on his case."
But Felmy said the 2000 release of oil did not stabilize prices.
"That's not what history shows," he said.
AAA Nevada spokesman Sean Comey said AAA would support any investigation into high gas prices, but was unable to comment on Reid's proposal because he was unfamiliar with it.
Comey also said: "AAA feels that the Strategic Petroleum Reserve is to be tapped in times of national emergencies."
But Comey said deciding what constitutes a national emergency is something the group is leaving to the elected leaders.
The long-term solution to high gas prices, Reid said, is to develop alternative energy sources.
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