Lugar, Grassley Seek Fuel Cost Relief

February 18, 2000

Sens. Richard Lugar (R-IN) and Charles Grassley (R-IA) are seeking ways to blunt the impact of high fuel prices that have hit U.S. consumers. Lugar wants his bill to develop fuel alternatives adopted by Congress, and Grassley wants the Strategic Petroleum Reserve opened and International Monetary Fund retaliation against OPEC countries.

"This current price gouging by OPEC (the Organization of Petroleum Exporting Countries) is the kind of event that could end our strong economic growth and trigger inflation at painful levels," said Lugar. "We must stop foreign forces from using oil as a weapon against us."

His legislation, Lugar added, would "blunt the OPEC oil weapon and put an end to its price gouging once and for all." The bill would fund research and development to bring to market a cheap form of biomass ethanol that could replace much of U.S. gasoline now refined from OPEC oil. There is a companion bill in the House, and President Clinton has endorsed the legislation.

Grassley wants Clinton to re-evaluate a recent decision against tapping the SPR. In a letter to Energy Secretary Bill Richardson, Grassley said, "The President has the power to use the reserve when a very sharp increase in petroleum prices threatens economic stability. The current situation may meet this test. At the very least, the option should be heavily weighed."

Earlier this month, said Grassley, the administration delayed delivery of 5 million barrels of oil destined for the reserve. While that is welcome, he added, 5 million barrels equals only six hours of domestic consumption. The price and supply impacts will be limited, he added.

Grassley also wants the IMF to ask for the behavior of the 11 member OPEC countries to be considered when the nations apply for loans. The United States provides 20% of funds used for loans made by the 182-member IMF, he said.

"The OPEC production quotas that led to this price crisis are especially egregious after the U.S. miliary and taxpayers saved many OPEC nations from Saddam Hussein in 1991," he noted. Grassley said he also would appeal to President Clinton to modify a request to provide $415 million in foreign aid to OPEC members. The President. s budget proposal seeks $50 million for Indonesia, $23 million more than previously budgeted. It also requests $25 million for Nigeria, $20 million more than previously budgeted.