Byron Dorgan Lies, Claims Halt To Strategic Oil Purchases Saved Americas $600 Million

Byron Dorgan is claiming that 2008 legislation he backed to stop the Bush administration from purchasing oil for the national strategic oil reserve has saved Americans some $600 million. Now, I’m not exactly sure we need the SPR, but the idea that Dorgan’s move saved Americans money is patently absurd.
As I pointed out at the time, oil flows out of the strategic oil reserve as fast as it flows in. Unless the size of the reserve itself is being expanded, the daily purchases of oil are done to keep the supply up as older oil in it is shipped out. Older reserves are sold to be used in the market while new reserves are purchased to keep the supply at the level mandated by Congress and the President.
I’m not sure why they do this as I didn’t think petroleum in this form was something that could go bad, but the fact is that they do it. Or were doing it, anyway. You can still see the column for SPR drawdowns here on their website, though they don’t draw down oil any more thanks to Dorgan’s legislation.
This means that the SPR’s impact on the market is essentially neutral. The Department of Energy lets as much out as is put in unless the overall size of the reserve is being expanded. But that isn’t happening right now.
Let’s also keep in mind that 70,000 barrels of oil is a drop compared to overall US oil consumption. Our country uses approximately 20 million barrels of oil a day. Even if that 70,000 barrels of purchased oil didn’t have a neutral impact on the market (as I just explained) it would still represent just 0.35% of overall oil purchases in a day.
For anyone to say that minuscule amount is driving up oil prices as much as $10 a barrel is ludicrous. Just as ludicrous as the idea that it has saved Americans $600 million over the last couple of years.
I’m not sure I necessarily disagree with Dorgan’s stance on banning the the purchase of new oil to cycle through the SPR. I’m not sure we need the SPR to begin with. But Dorgan’s not a stupid man. He should know better than to peddle this sort of economic illiteracy.