Statement of Administration Policy: S. 694 - Strategic Petroleum Reserve Amendments of 1989

(Senate)
(Johnston (D) Louisiana)

The Administration supports enactment of legislation which would reauthorize the Strategic Petroleum Reserve (SPR) for five years. The Administration, however, opposes S. 694, unless it is amended to delete a requirement for a one billion barrel SPR at a cost to the taxpayers of $6 to $8 billion.

It is premature to legislate a 33 percent increase in SPR size prior to the Administration's completion of its study on this issue. A 750 million barrel SPR should provide substantial protection against even the most severe potential supply interruption. It is not clear that an additional 250 million barrels will provide any net benefits to the United States. Further, the United States already has the biggest SPR, on an oil import basis, compared to other major importing countries. Other countries should increase their strategic stocks before the United States commits to a further increase.

Finally, the Administration recommends deletion of a requirement that a report on SPR financing arrangements include legislative proposals. Such a requirement is contrary to Article II, Sec. 3 of the Constitution which grants the President discretion to submit such legislation to the Congress "as he shall judge necessary and expedient."