Shelley Moore Capito announced that Congress will halt shipments of oil into the Strategic Petroleum Reserve for the time being. President Bush had opposed such a measure because the reserve currently is short of full capacity by 3%. However Capito cited statistics that claimed gas prices could drop by as much as a quarter a gallon in some areas.
Capito had called upon the president to not oppose this move and it looks like he will not veto it. From his perspective it certainly makes sense to fear a severe supply crisis, but people and the economy need relief now. However, Capito realizes long term solutions must continue to be worked upon.
Will fuel costs go down as much as anticipated? Definitely in the short term the impact will be felt. The question is whether or not the drop will be enough to restimulate demand. After all, driven miles actually dropped in the last several months for the first time in years. Stimulated demand could drive the price back up again.
More concerning is the attitude of the oil producers who rebuffed Bush's request to increase production. The US market is no longer the only major player and our leverage as consumers has decreased. If the Congress would act, we could once again command leverage as producers as we did before World War II.
In any event, Capito's work will be much appreciated by those of us scraping to put gas in our tanks this summer.
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