Soaring Oil Prices: Another Culprit?

By Adam Zagorin

What's responsible for sky-high oil and gasoline prices? To the threat of war in Iraq and this year's cold winter, add another culprit: the Administration's oil policies. That's the charge in a new Senate report produced by Democrat Carl Levin of Michigan. After 9/11, Bush developed a plan to fill the Strategic Petroleum Reserve (SPR), a 700 million--bbl. store meant to sustain the U.S. in an emergency. Last year 40 million bbl. were added to the SPR. The report states those purchases drove up prices by adding to the demand for oil. An independent analyst says that had the Administration not acted, oil would be selling for just $28 per bbl. instead of its current price of nearly $38 per bbl. and gas would be 35-c- per gal. lower. The government oil-buying binge has not even increased the supply of available oil, the report claims, since most of the petroleum added to the SPR was bought from private refiners, which have not replenished their stocks because of high prices.

The Bush Administration argues that the purchases were essential for national security and too small to affect prices. But the Senate report uncovered internal memos from the Energy Department warning of the plan's potential adverse impact. Sources tell TIME that Senate investigators have asked for additional documents on the purchases, but the Administration has refused because they contain communications with the White House. The last time Congress asked for energy-related documents, Vice President Dick Cheney refused to hand them over, claiming Executive privilege. --By Adam Zagorin