The Great Oil Controversy Why Is the U.S. Shipping Oil Abroad When It Is Facing a Shortage at Home? By Bill Redeker

Oct. 6  Its called the Strategic Petroleum Reserve because the oil it contains is supposed to be used only in a domestic emergency. But analysts say that some of that oil, which was sold to American companies this week, may actually end up in the more lucrative markets of Europe and there is little that can be done about it.

One, its totally legal, says Larry Goldstein of the Petroleum Research Foundation. Secondly, prices are a magnet for supply and prices tell you where the product is most needed. Right now, the greatest demand is in Europe where inventories are tighter and prices higher. But Joseph Kennedy of the Citizens Energy Corporation, says U.S. oil companies should be banned from selling reserve oil overseas. Theres no question, he says, U.S. taxpayers paid for this oil and it should not go to the benefit of people in other countries.

Still, the Department of Energy has no legal authority. And it is extremely difficult to track where the reserve oil ends up. So Energy Secretary Bill Richardson can only discourage overseas sales. We are concerned about it, Richardson says. We have been talking to refineries and home heating oil operators that the priority is that the home heating oil stay in this country, particularly the East Coast.

In New England, heating oil inventories are 65 percent below normal levels. The release of strategic oil was supposed to increase supplies and lower prices. And it did, as we found a barrel of oil to be about a dollar-and-a-half cheaper today than it was only a couple of days ago, before the sale. But if supplies end up in Europe that could blunt the impact of this weeks strategic petroleum sale and drive prices back up

http://abcnews.go.com/onair/WorldNewsTonight/wnt001006_ShippingOil_feature.html

-- Martin Thompson (mthom1927@aol.com), October 06, 2000

Answers

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