Robinson To Congress: Use Oil Reserves To Protect The Taxpayer From Price Gouging

Roger W. Robinson, Jr., former chief economist on the National Security Council and member of the Center for Security Policy’s Board of Advisors, told Congress today that the United States and its allies have an alternative to crippling price hikes and speculation in oil prices.

In testimony before the House Energy and Commerce Committee’s Subcommittee on Energy and Power, Robinson reminded legislators of a Reagan Administration initiative developed in the winter of 1983-84 when the Iran-Iraq conflict entered into its "tanker war" phase and oil facilities were coming under periodic attack. In order to head off a round of sharply higher energy prices — spurred by anticipation of future supply disruptions and the activities of speculators — the United States obtained the agreement of its allies to release Western oil stocks at the first sign of significant price hikes.

Robinson testified, "I believe that this proven alliance policy of early stock releases calculated to help keep oil price increases manageable should have been publicly reaffirmed by the Bush Administration at the outset of this crisis. Such an action could already have contributed importantly to avoiding the 10-15 cent per gallon increase in gasoline prices which has occurred over the past six days — to say nothing of the sharp upward spiral of world oil prices now underway."

Robinson also urged Congress to reject the Bush Administration’s willingness to seize on the Middle East energy crisis as its latest pretext for providing extremely ill-considered assistance to the Soviet Union’s energy sector. He observed:

…The Soviet Union has amply demonstrated just this year, its willingness to withhold oil and natural gas deliveries as an instrument of repression against Lithuania. It is also in the midst of cutting back desperately needed oil supplies to countries in Eastern Europe such as Czechoslovakia, Hungary, Poland, and Bulgaria by some 20-30 percent.

Accordingly, I would urge [the Energy and Commerce] and other congressional committees to place this policy option — which can only enhance Moscow’s future ability to exploit for political, strategic or economic purposes resulting dependencies on Soviet energy supplies — near the bottom of the list of numerous, more sound proposals to reduce U.S. and Western exposure to cut-offs of Middle East oil supplies.

The Center’s proposal that the Reagan approach to oil stock sales be adopted at once was favorably reviewed in the prestigious trade publication Energy Daily which carried an article entitled "U.S., Allies Should Plan to Avoid Oil Price Run Up Fed by Speculation." Copies of this article and Robinson’s testimony are attached.