Clinton Defends Tapping Oil Reservegreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
Clinton Defends Tapping Reserve
President Also Supports OPEC Target for Crude Oil Prices
Sept. 27 A day after Energy Secretary Bill Richardson insisted the decision to release crude oil from the nations emergency stockpile was protection against a supply shortfall this winter, not politics, President Bill Clinton today defended the move.
Clinton also said the United States supported the Organization of Petroleum Exporting Countries target price range of $22 to $28 per barrel for crude oil.
Most Prudent Thing
We discussed all the pros and cons of it, Clinton told reporters. OPEC had set a target range of $22 to $28 a barrel which most of us certainly we and the producing countries thought was a reasonable range, he added.
The accumulated decisions [by OPEC] were not going to come near that target and that there seemed to be a trend line going quite high, he said. U.S. crude oil prices briefly soared to nearly $38 a barrel early last week.
On Friday, the administration announced it would release 30 million barrels of crude oil from the 570-million barrel Strategic Petroleum Reserve, a move which sent prices lower. Most of the oil will be delivered to energy companies in October in a swap arrangement, in which they must re-stock the reserve with a larger amount of oil next year when prices are cheaper.
Clinton also said he had considered three or four options to cope with soaring oil prices. The most prudent thing to do was what we did, he added.
Politics of Oil
On Tuesday, Richardson defended the administrations decision before the Senate Energy and Natural Resources Committee in Washington.
But the Republicans on the panel werent buying it.
Sen. Don Nickles, R-Okla., said oil from the Strategic Petroleum Reserve is supposed to be used in a severe shortage, not for what he characterized as an attempt to help a candidate seven weeks before the election.
Committee Chairman Frank Murkowski, long an advocate of opening areas like the Arctic National Wildlife Refuge to oil exploration, criticized the decision to tap the reserve as a drop in the oil bucket.
But Richardson said the government oil will ease a 40 percent shortfall in heating oil inventories on the East Coast. He also said the Clinton administration remains committed to let the market dictate prices.
Heating Supplies at Two-Decade Low
Richardson also said hell urge refinery operators to maintain heating oil production at near full capacity as winter approaches.
Heating oil supplies are at a 20-year low. Analysts say that once the 30 million barrels of government crude are refined, they will provide less than a weeks cushion for a nation burning more than 1 million barrels of heating oil a day.
Homeowner Evelyn Ashby thinks the decision to release oil from the nations emergency reserves is political posturing but she hopes it works.
Everything is politics with them, said Ashby, who paid $2,300 last winter to heat her home in Bostons Dorchester neighborhood. Last year was really terrible. If there is more oil on the market, maybe it will cost less.
Oil dealers, meanwhile, were keeping a close eye on the European Union to see whether it might release its own emergency supplies.
OPEC Gathers in Venezuela
At their first summit in 25 years, OPEC leaders in Caracas, Venezuela today repeated promises to get oil prices below $28 a barrel, pledges theyve had little luck fulfilling.
Many analysts and market watchers, however, doubt the cartels ability to corral prices into that range, and even OPEC itself is considering raising the target to make it easier to hit.
Oil-importing countries are paying the highest prices in a decade thanks to cartel output cuts made in 1998 and 1999.
OPECs recent decision to boost daily output by 800,000 barrels the third increase this year has failed to offset steady increases in consumption.
ABCNEWS Betsy Stark, The Associated Press and Reuters contributed to this report.
-- (M@rket.trends), September 27, 2000