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In his letter to President Bush, the governor wrote: "Two
weeks ago, I wrote to you, asking that you authorize the release of
30 million barrels of oil from the nation's Strategic Petroleum
Reserve in order to help bring down gas prices for consumers. With
the onset of Hurricane Katrina and its effect upon oil shipments and
production from the Gulf Coast, I respectfully request that you
reconsider the option of releasing oil from the Strategic Petroleum
Reserve. The Gulf of Mexico produces approximately one-quarter of
our national domestic output of oil. Limitations to that supply will
likely have an extremely detrimental impact on oil prices and gas
prices. Prices are expected to increase by 25 to 45 cents a gallon
today alone. As a nation, we need to take action, and we need to
take action now. Only you can single-handedly authorize the release
of oil from the Strategic Petroleum Reserve and save consumers money
every time they fill up their cars."
On Sunday, Hurricane Katrina, a Category 4 storm, halted an
estimated 633,000 barrels of daily crude oil production -- 42
percent of the daily average output from the Gulf Coast. At least
eight refineries with a combined capacity of 1.8 million barrels per
day were also shut down, according to operators. Monday morning, gas
stations across Illinois increased their prices -- in some cases as
much as 40 cents, to nearly $3 a gallon.
Tapping the strategic oil reserve in response to a hurricane is
not unprecedented. Last year when Hurricane Ivan disrupted gas
supplies, the government exchanged more than 5 million barrels of
crude oil from the Strategic Petroleum Reserve.
In his letter to President Bush, the governor pointed out that in
2000, an oil swap was used to withdraw 30 million barrels over a
30-day period. The move helped bring prices down by more than $6 per
barrel and wholesale gasoline prices by 14 cents per gallon. At that
time, a barrel of oil cost $33. Today, that same barrel of oil costs
$66.
The governor wrote: "After we made our initial request two weeks
ago, your office rejected our request, saying that the Strategic
Petroleum Reserve could only be used in cases of emergencies and
that skyrocketing gas prices was not an emergency. I'm sure we can
all agree that a Category 4 hurricane cannot be considered anything
but an emergency, meeting the criteria your office has set for
authorizing the release of oil."
Blagojevich also sent a letter to Attorney General Lisa Madigan
asking her to investigate potential price gouging at Illinois gas
stations.
Blagojevich wrote: "While losing a significant portion of our
nation's domestic oil production will likely cause an increase in
oil prices, it is critical that we ensure that no one be allowed to
use this natural disaster as an excuse to exploit consumers. The
vast majority of gas stations would never consider using a natural
disaster like a hurricane to increase prices any more than dictated
by the market, but there are always a few bad apples. Unfortunately,
the actions of those few bad apples could mean higher gas prices for
drivers. Considering the high price of gas already, we must take
every possible step to prevent price gouging from taking place."
In Illinois, Blagojevich has boosted fuel supplies and helped
reduce the demand for gasoline through three effective initiatives:
promoting the use of renewable fuel, monitoring the gas consumption
and encouraging state government to use renewable fuels.
Promoting the use of renewable fuels
Provided $80 million to further research, production and
consumption of ethanol in Illinois, including:
- Eliminated the state sales tax on some biodiesel fuels and
E-85, which is 85 percent ethanol fuel, creating a tax break of
15 cents per gallon.
- Established the Renewable Fuels Development Program at the
Department of Commerce and Economic Opportunity. The program is
investing millions in new ethanol production in Illinois.
- Tripled the number of E-85 fueling stations statewide to 44,
with the goal of adding another 66 new E-85 stations statewide
by the end of 2006.
Monitoring gas prices
- Issued an executive order ordering the Department of Revenue
to monitor gas prices and created the Illinois Gas Price Monitoring site,
www.illinois.gov/gasprices, where people can:
- Check average gas prices in any city or town in Illinois.
- File a complaint if they suspect price gouging.
- Get tips for buying gasoline.
- Learn driving tips to save fuel.
- Find information about public transit and other driving
alternatives.
- Learn more about the petroleum industry.
Encouraging state government to use renewable fuels
- Issued an executive order requiring state agencies and
employees to use ethanol and biodiesel in state fleet vehicles
and expanding the number of E-85-capable vehicles.
- Created an interagency Renewable Fuels Working Group to
implement the executive order.
[to top of second column in this article] |
 Text of letters:
Office of the
Governor
Chicago, Illinois 60601
Rod R. Blagojevich
Governor
August 29, 2005
The Honorable
George W. Bush
President of the United States
The White House
Washington, D.C. 20500
Dear Mr. President:
Two weeks ago, I
wrote to you, asking that you authorize the release of thirty
million barrels of oil from the nation's Strategic Petroleum Reserve
in order to help bring down gas prices for consumers. With the onset
of Hurricane Katrina and its effect upon oil shipments and
production from the Gulf Coast, I respectfully request that you
reconsider the option of releasing oil from the Strategic Petroleum
Reserve.
So far, an
estimated 633,000 barrels of daily crude oil production – 42% of the
daily average output from the Gulf Coast – has already been halted
because of Hurricane Katrina. The Gulf of Mexico produces
approximately one quarter of our national domestic output of oil.
Limitations to that supply will likely have an extremely detrimental
impact on oil prices and gas prices.
As a result of
delays in production and shipments caused by Hurricane Katrina,
prices are expected to increase by .25 to .45 cents a gallon today
alone. As a nation, we need to take action, and we need to take
action now. Only you can single-handedly authorize the release of
oil from the Strategic Petroleum Reserve and save consumers money
every time they fill up their cars.
After we made our
initial request two weeks ago, your office rejected our request,
saying that the Strategic Petroleum Reserve could only be used in
cases of emergencies, and that sky rocketing gas prices was not an
emergency. I'm sure we can all agree that a Category 4 hurricane
cannot be considered anything but an emergency, meeting the criteria
your office has set for authorizing the release of oil.
According to the
United States Department of Energy, the Strategic Petroleum Reserve
will reach its maximum capacity of 700 million barrels of oil this
month. If the Reserve were only at half capacity, I would understand
your reluctance to lower it any further. But the Reserve is full,
gas prices are extremely high, and Hurricane Katrina is upon us, so
it is time to act.
In 2000, an oil
swap was used to withdraw 30 million barrels over a 30-day period.
At that time, a barrel of oil cost $33. Today, that same barrel of
oil costs $66. This strategy lowered crude prices by more than $6
per barrel and wholesale gasoline prices by $0.14 per gallon (this
would save drivers about $3 each time they fill their tanks).
Withdrawing more than 30 million barrels would mean even lower gas
prices and greater savings for drivers.
I urge you to act
swiftly to provide relief to Illinois residents and all Americans.
Thank you for your consideration.
Sincerely,
Rod R. Blagojevich
Governor
* *
*
Office of the
Governor
Chicago, Illinois 60601
Rod R. Blagojevich
Governor
August 29, 2005
The Honorable Lisa
Madigan
Attorney General
James R. Thompson Center
100 W. Randolph
Chicago, IL 60601
Dear Attorney
General Madigan:
I am writing today
to request that your office immediately begin to investigate
potential price gouging at gas stations in Illinois. In the wake of
Hurricane Katrina, Illinois residents are seeing a dramatic spike in
the price of gasoline. Just this morning in Springfield, drivers
witnessed a 40-cent increase in the price of gasoline – to an
astounding $2.96 a gallon at some stations.
Hurricane Katrina,
blasting through the heart of the US oil and refinery operations in
the Gulf of Mexico, shut down an estimated one million barrels of
refining capacity. While losing a significant portion of our
nation's domestic oil production will likely cause an increase in
oil prices, it is critical that we ensure that no one be allowed to
use this natural disaster as an excuse to exploit consumers.
The vast majority
of gas stations would never consider using a natural disaster like a
hurricane to increase prices any more than dictated by the market,
but there are always a few bad apples. Unfortunately, the actions of
those few bad apples could mean higher gas prices for drivers.
Considering the high price of gas already, we must take every
possible step to prevent price gouging from taking place.
I have also
directed the Illinois Department of Revenue to monitor gas prices,
and they would be happy to work with your office in any way
necessary to help prevent price gouging from taking place.
Thank you for your
consideration.
Sincerely,
Rod R. Blagojevich
Governor
[News release from the governor's
office] |
