Senators: More oil, or no arms

WASHINGTON -- A group of senators pressed President Bush on Thursday to halt billions of dollars in sophisticated arms sales to Saudi Arabia and several other Gulf oil producers unless they agree to pump more petroleum, reflecting growing frustration in Congress over soaring energy costs.

Separately, House Speaker Nancy Pelosi said Bush should stop putting 70,000 barrels of oil a day into the government's Strategic Petroleum Reserve, saying the oil would be better left in the market place to help lower prices. The Energy Department recently announced it is extending oil shipments into the reserve, which holds 700 million barrels, through the end of the year.

And Senate Majority Leader Harry Reid said Thursday he had directed key committee chairmen to begin assembling a package of proposals aimed at addressing the growing impact high gasoline and other energy prices are having on the economy. Reid declined to say what proposals were being considered. The plan is to bring a package to the Senate floor before Memorial Day.

The senators said if Saudi Arabia does not increase production, they would seek a resolution that would block the arms deals. But such a move would be difficult to achieve since it would require 60 votes to pass the Senate, must also pass the House and then would be subject to an almost certain veto by the president.

In their letter to Bush, the five senators -- four Democrats and one of the chamber's two independents -- said Saudi Arabia has reduced oil production from about 9.5 million barrels a day in 2005 to 8.7 million barrels a day last year, well below its stated capacity of 11 million barrels a day.

"At a time when high energy prices are causing widespread anxiety among American households, we question the merit of rewarding members of OPEC with lucrative arms sales," they wrote.

"The Saudis have to understand that this is a two-way street," Sen. Charles Schumer, a New York Democrat said. "We provide them weapons ... and then they rake us over the coals when it comes to oil."

Joining Schumer in the letter were Democratic Sens. Byron Dorgan of North Dakota, Mary Landrieu of Louisiana, Bob Casey of Pennsylvania and independent Sen. Bernie Sanders of Vermont.

At issue are administration plans to supply Saudi Arabia with $123 million worth of sophisticated precision-guided bomb technology as well as shipments of Patriot missile defense equipment worth $9.7 billion to the United Arab Emirates and a $1.7 billion deal with Kuwait to upgrade their missile systems. The arms sales are part of an effort by the administration to boost the defenses of friendly Arab nations in the oil-rich Gulf region.

Pelosi said the availability of an extra 70,000 barrels of oil now going into the reserve "could cut as much as 5 cents ... to 24 cents off a gallon of gas" and send "a signal to oil markets to stop runaway speculation." She noted the Energy Department has estimated a change in cost of $2 a barrel for every 100,000 barrels of change in supply.

But administration officials in the past have maintained the amount of oil going into the reserve is so small it would have little if any effect on gasoline prices.

At a House hearing Thursday, Kevin Book, a senior energy analyst at FBR Capital Markets Corp., appeared to support that argument, saying that with global oil demand at 86 million barrels a day and other market factors "suspending the SPR fill might do very little" to reduce price volatility or speculation.