U.S. To Add Oil to Crisis Reserve
WASHINGTON (AP) - The government will add to the petroleum reserves
being hoarded as a protection against times of oil crisis, the Clinton
administration announced Thursday, saying the move would improve the
country's energy security.
Energy Secretary Bill Richardson unveiled a plan to add 28 million
barrels to the Strategic Petroleum Reserve, replenishing oil that was
sold off by the government in recent years to raise revenue for federal
spending elsewhere.
The move makes economic sense at a time when oil prices are at historic
lows, Richardson told a news conference. While the oil currently in the
reserve cost an average $27 a barrel, new oil could be added for less
than $12 a barrel.
''The American taxpayer wins because oil prices are low and we store for
a rainy day,'' Richardson said.
The reserve, conceived as a billion-barrel cushion to protect against
supply disruptions like the 1970s Arab oil embargo, now stands at 563
million barrels - enough to replace 62 days of imports.
Some lawmakers are pressing the administration to completely fill the
reserve, which is about 119 million barrels shy of full capacity. ''If
I'm disappointed in anything about today's decision, it's that it did
not go far enough,'' said Rep. Mac Thornberry, R-Texas, who last week
introduced legislation similar to the plan put forth by Richardson.
The move was well received within the energy industry and on Capitol
Hill, where Oil Patch lawmakers have been prodding the administration to
help domestic producers reeling from depressed crude oil prices.
''It is good to see certain officials in the administration finally have
recognized a need to protect our nation's energy security,'' said Senate
Energy and Natural Resources Committee Chairman Frank Murkowski,
R-Alaska.
Said Sen. Kay Bailey Hutchison, R-Texas, co-chair of the Congressional
Oil and Gas Caucus: ''Instability in the Middle East and increasingly
volatile oil markets require every effort to ensure our nation has an
adequate emergency supply.''
The administration proposal, which doesn't require congressional
approval, would add up to 100,000 barrels daily to the reserve stored in
underground salt caverns in Texas and Louisiana. The oil would come from
companies drilling on federal leases in the Gulf of Mexico. Instead of
paying their royalties in cash, the producers would make their payments
''in kind.''
Domestic producers, who have seen prices plunge 55 percent over two
years because of a worldwide glut, have been clamoring for help from
Washington as their industry has sustained thousands of job losses and
tens of thousands of idled wells.
Gil Thurm, president of the Independent Petroleum Association of
America, praised the reserve replenishment as ''a first step on the road
to preserving our nation's ability to continue to supply our energy
needs and avoid complete reliance on uncertain and unstable
international markets.''
But, Thurm added: ''Much more remains to be done.''
Federal oil purchases likely would do little to increase world oil
prices, which are at Depression-era lows when adjusted for inflation,
Petroleum Industry Research Foundation analyst John Lichtblau told a
Senate committee recently.
While acknowledging the plan does little for the small producers who
have been among the most affected by low prices, Richardson pledged help
for them in a series of announcements due next week.
''We want to help our domestic industry. They are hurting. We recognize
that,'' he said. |
