Oil Takes a Spill After Senate Vote

An early-morning vote by the Senate to suspend purchases for the Strategic Petroleum Reserve in an election-year effort to lower gasoline prices roiled the oil markets Friday.

With consumers complaining about the high cost of gasoline, Sens. Carl Levin (D-Mich.) and Susan Collins (R-Maine) sponsored a measure to suspend purchase of 53 million barrels of oil over the next 18 months.

That would save the government an estimated $1.7 billion, which would be used for debt reduction and for homeland security grants for firefighters and port security, which the senators said were shortchanged in President Bush’s budget. And it would reduce oil prices, they said, by making more oil available on private markets.

“At a time when oil prices are at near-record highs and the Strategic Petroleum Reserve is already at 93% of capacity, it makes good public policy sense to temporarily suspend SPR purchases and use these dollars for homeland security,” Collins said in a statement. “This will also have the positive effect of decreasing gasoline prices to relieve American families from extremely high prices.”

But the amendment is nonbinding; the Senate attached the provision to its fiscal 2005 budget, which is used to guide spending and tax decisions for the rest of the year but does not have the force of law.

Congressional sources said the slide in crude oil futures -- down as much as 4% by the afternoon -- stopped when Senate Energy and Natural Resources Chairman Pete V. Domenici (R-N.M.) announced he opposed the amendment.

After oil markets closed, the Energy Department reiterated the administration’s policy of filling the reserve.

Levin has criticized Bush’s policy on the petroleum reserve, which he said has added between $4.50 and $8 a barrel to the price of oil.

U.S. airlines in January called on Bush to limit deliveries to the reserve and blamed the current policy for pushing up the cost of jet fuel.

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Wire services contributed to this report.