There are few more unattractive sights than Congress in full deal-making mode, but for sound political and economic reasons, there’s been support for deals that have been brokered over a broad budget resolution and specific plan for a six-year federal transportation program.
We needed a new highway bill, particularly in Louisiana, and we also see the need for the larger budget deal, but members of the Louisiana delegation have been right to be concerned about one of the dubious funding sources for the new measures.
That is the use of the Strategic Petroleum Reserve as a piggy bank.
The reserve, oil in storage in salt domes on the Gulf Coast, is America’s energy insurance policy.
Should there be a massive disruption of oil production or imports, the reserve would be able to ensure that refineries and other users would have oil available to them.
The reserve was tapped, legitimately, because of the disruptions caused by Hurricanes Katrina and Rita in 2005. Yet, the institutional memory of the U.S. Congress is short. And its desire for cash is limitless.
Even with oil prices at dramatic lows, half of the highs of last year, Congress agreed again to tap the reserve, selling some of the oil on a depressed market.
Earlier, some oil was earmarked for sale to pay for a bill promoting medical research. U.S. Sen. Bill Cassidy, R-Baton Rouge, is a physician favoring biomedical advances, but he noted then that SPR sales are a bad way to pay for a good bill.
The same concerns involve a $9 billion sale from the reserve to pay for highway construction.
In the heart of the oil patch, Lafayette’s Republican U.S. Rep. Charles Boustany has observed that using SPR for sales “precisely while global oil prices are low is tremendously stupid.”
His scorn is withering: “Only in Washington could you justify the policy of ‘buy high, sell low’ and hope to get away with it.”
“Idiotic,” commented U.S. Rep. Garret Graves, R-Baton Rouge.
“If anything, we should be purchasing oil right now while prices are low. We are in fundamentally different times today and our SPR and national energy security policies need a full update.”
These criticisms are correct, although it could be noted that if Congress doesn’t raise more money via the gasoline tax — last raised in 1993 — the result is short-term expedients like oil sales and other budget gimmicks.
All that said, the reality is that dumping oil from the reserves on a political schedule is particularly poor policy.