Inflated heating oil prices may be on way

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Inflated heating oil prices may be on way

Washington Bureau Wednesday, June 21, 2000

WASHINGTON--This summer's high gasoline prices could be followed this winter by equally inflated heating oil prices unless underlying crude oil reserves are replenished, Ohio's congressional delegation was told Tuesday.

In a one-hour briefing with officials from the Department of Energy, arranged at the request of Ohio congressional leaders, a bleak picture of the future was offered on fuel prices that have shot skyward in the Midwest.

"The bottom line is supply is down and demand is up," said Rep. Ralph Regula, R-Canton, who arranged the meeting.

And even if crude oil production is increased--which will be decided at today's OPEC meeting in Austria--the resulting supply of oil would take months to work its way to the market, so gasoline prices likely won't change before summer's end, said U.S. Rep. David L. Hobson, R-Springfield.

"And if you think gas prices have been bad, just wait," Hobson said after the meeting. "Heating fuel is going to go through the ceiling if we don't get this solved."

But Hobson and others who attended the meeting said they've been told Congress can do little, if anything, to solve the problem. It still is unclear how reserves were allowed to drop so low that the annual spike in gasoline consumption that comes each summer could trigger a shortage that has driven prices to $2 a gallon in some parts of the Midwest, including pockets of Ohio.

"We know reserves got low," said Michael Gessel, a senior aide for Rep. Tony Hall, D-Dayton, who attended the briefing. "But was there anyone watching that?"

An Energy Department spokesman said Secretary Bill Richardson has been "engaged in a low-key effort" to get OPEC to increase production since the U.S. has no specific leverage to force changes in OPEC policy.

Speaking at the National Petroleum Council Tuesday, Richardson made no direct demands of OPEC.

"I have continued to keep (oil) producing nations abreast of our situation," he said, "... and I hope that they will keep an open mind on production, and that they consider that this tight supply situation is simply not good for both producing and consuming nations."

http://www.activedayton.com/partners/ddn/epaper/editions/today/news_11.html

-- Martin Thompson (mthom1927@aol.com), June 21, 2000

Answers

Today's spot shortages were forcast months ago by industry executives and the risks were known to DOE.

These people could learn something from the DOE information available on the web, "refinery outages... pipeline shutdown":

http://www.eia.doe.gov/oil_gas/petroleum/special/gasoline_update/marke t_summary.html

"Gasoline - remained the center of domestic market attention, especially in the Midwest, where tight supplies have driven both RFG and conventional prices to record levels. Supply concerns were further amplified by unit outages at a number of refineries, along with a pipeline shutdown in Michigan. A small stockbuild for the week ending June 2 left inventories 23 million barrels lower than a year ago."

End quote.

As for potential #2 oil shortages, they should be listening to industry spokesmen warning about the pending EPA mandates for 97% reduction in sulfur content and the shortages that will cause, instead of going with a manageable 90% reduction level that industry experts are supporting.

Fedgov officials make decisions and take chances, blaming the industry for their unintended outcomes.

If these shortages come as such a surprise, why was Richardson petitioning refiners to waive planned maintenance over the past three months? If deferred maintenance results in unplanned shutdowns or failures, who bears the cost?

-- Tom Beckner (becknert.xout@erols.com), June 21, 2000.


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