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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Filbert who wrote (62324)	3/17/2000 8:39:00 AM
From: Wowzer	Read Replies (1) \| Respond to of 95453

In the WSJ: March 17, 2000 Clinton Promises to Move Soon In Bid to Lower Price of Oil By JOHN J. FIALKA and JOHN D. MCKINNON Staff Reporters of THE WALL STREET JOURNAL WASHINGTON -- Pledging to get oil prices "back in balance," President Clinton said his administration will take some actions "in the next few days." The president made his remarks after meeting with his economic team and Energy Secretary Bill Richardson to discuss a series of options, including borrowing crude oil from the nation's 570 million barrel Strategic Petroleum Reserve and using part of it to establish a small heating-oil reserve for the Northeastern U.S. Pressure for action is growing. Thursday, some 150 truckers rumbled through Washington in their big rigs to protest soaring diesel-oil prices -- their second demonstration in less than a month. "People don't see the administration responding as aggressively to this as they should," complained Rep. Bernard Sanders, a Vermont Independent and one of the architects of the heating-oil plan, which is designed to thwart another price spike in home heating oil in New England. 'Some Sort of Stabilizers' A White House official said the plan was being considered as a way to provide "some sort of stabilizers in the market." The version being pushed by New England lawmakers would give the oil companies crude from the SPR on the condition it would be returned later with an additional amount. Part of the swap would require the oil companies to return 6.7 million barrels in the form of heating oil. Two million barrels of the heating oil would be stored in leased terminals in New York harbor, and the rest would be stored near the SPR, which is held in salt domes along the Gulf Coast. One drawback to the plan is that, by itself, it would do little to ease the next fuel crisis, which experts predict will take shape in the form of soaring gasoline prices in the late spring, especially in California where supplies are already tight. Another part of the swap would provide oil companies with more crude oil to ease prices now, provided that they pay it back to SPR with a small additional amount, when prices ease. That could send a price signal to the market that, if the release was large enough, would lower both crude-oil and gasoline prices. Several officials said any definitive plan for use of the SPR wouldn't emerge until after March 27, when leaders of oil-producing nations meet in Vienna to establish new production levels. According to the Department of Energy, current world production levels would have to increase by about two million barrels a day to bring stability to fuel prices. A 'Disincentive' One of several problems with the SPR swap is that major players in the oil industry don't like it. "We don't think it makes any sense," said John Felmy, director of policy analysis for the American Petroleum Institute in Washington. Having a government reserve of fuel oil in the Northeast, he asserted, would send the wrong market signal to private heating-oil dealers in the region, giving them a "disincentive" to store oil. In addition, said Mr. Felmy, heating oil can't be stored for long periods of time. "This would require a whole new bureaucracy to decide when do we sell it, when do we release it, when do we turn the product over." On Capitol Hill, there was talk about applying more diplomatic pressure on oil-producing nations to ease the supply problem. The House might begin floor deliberations next week on a bill to cut off U.S. aid, including military assistance, to oil nations that don't help the U.S. rebuild inventories. Helms Weighs In In the Senate, Foreign Relations Committee Chairman Jesse Helms (R., N.C.), urged Mr. Clinton to increase pressure on Mexico, Venezuela, Colombia and Canada, all of whom, he noted, depend on a healthy U.S. economy. In a joint statement with Sen. Paul Coverdell (R., Ga.), Sen. Helms said U.S. oil production has declined 17% since 1992. "The costs of our drastic decline in domestic exploration activities are now in full view." Meanwhile, Democrats were lining up votes to block a Republican proposal to cut gasoline taxes, noting that the cut would impair funding of commuter roads and other popular projects.