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Technology Stocks : Discuss Year 2000 Issues -- Ignore unavailable to you. Want to Upgrade?

To: NickSE who wrote (3448)	1/27/1999 6:38:00 PM
From: flatsville	Read Replies (1) \| Respond to of 9818

To all those interested in the y2k oil supply issue there is an excellent article in the San Diego Union Tribune by Bruce V. Bigelow dated 01/16/99. I can't give a direct link as w3 site requires registration. uniontrib.com "flatsville"

To: NickSE who wrote (3448)	1/28/1999 5:39:00 PM
From: NickSE	Read Replies (1) \| Respond to of 9818

Re: Oil Reserves Oil Industry Wants Government Help By H. JOSEF HEBERT Associated Press Writer WASHINGTON (AP) -- Oil state senators and industry representatives called on the Clinton administration and Congress to intervene Thursday and help the oil industry survive the most severe economic downturn in decades. "If we do nothing, things are going to get worse," Sen. Frank Murkowski, R-Alaska, declared at the opening of a hearing by his Energy and Natural Resources Committee on the oil industry's economic woes -- what some have called a severe depression. The committee members expressed support for legislation that would give modest tax relief to small oil operators. Some witnesses at the hearing suggested the Energy Department should buy oil for its emergency reserve in hopes of giving prices a nudge upward. Legislation introduced Thursday by Sen. Kay Bailey Hutchinson, R-Texas, would give a tax credit to operators of marginal oil wells and tax relief to those willing to restart some of the thousands of wells that have been shut down because they're not profitable with the currently depressed prices. Murkowski and some industry witnesses chided the Clinton administration for not buying oil for the Strategic Petroleum Reserve at a time when prices are the lowest since 1986, and some say the lowest in 50 years, adjusted for inflation. Federal oil purchases for the reserve likely would raise worldwide oil prices only slightly, said John Lichtblau, an analyst for the Petroleum Industry Research Foundation. The Strategic Petroleum Reserve contains 563 million barrels, purchased over two decades for use in case of a sudden oil shortage. But no oil has been bought since 1993. While the Energy Department has acknowledged it might be prudent to buy oil for the reserve now that prices are the lowest in 12 years, no decision to do so has been made. But the industry's problems, stemming from a 55 percent decline in crude prices over the last two years, have seen thousands of workers lose their jobs, with no improvement in sight. Small companies are threatened with bankruptcy, while larger ones such as Exxon and Mobil are pushing toward consolidation to reduce costs. The price of a barrel of benchmark West Texas Intermediate was at just over $11 a barrel last month, compared to $25 a barrel in December, 1996. And some lesser grades have been sold for less than $6 a barrel, Jay hakes, head of the federal Energy Information Administration, told the committee. And, he added, "the recovery may take some time," with prices not likely to rebound to the $20 a barrel level until 2000 or 2001. Lichtblau attributed the collapse to an oversupply and unexpected drop in worldwide demand, largely because of the Asia economic crisis and warmer winter weather. "The single most important reason was, and still is, the Asia-Pacific economic recession," said Lichtblau. This region had accounted for 80 percent of the annual growth in worldwide oil demand. Sen. Don Nickels, R-Okla., said Iraq also was to blame for problems in America's oil patch. Iraq's oil exports were allowed to increase from 700,000 barrels a day in late 1996 to 2.5 million barrels a day at the end of 1998 under a U.N.-approved program, in which the country's oil revenue is used to pay for humanitarian assistance. The added supply increased the downward pressure on prices, analysts said. Still, while the oil industry suffers, others are benefiting. With gasoline prices dipping below a $1 a gallon in many places around the country, motorists are enjoying the lowest gasoline prices in inflation-adjusted terms since 1942, and possibly the lowest ever, according to government analysts. And the impact has been felt on the economy as a whole, contributing, economists say, to overall economic prosperity. "We estimated that some $40 billion of purchasing power was transferred from oil to other sectors of the economy last year as a result of the oil price decline," said Lichtblau. Hake said that because of low oil prices, "instead of inflation being about 2.3 percent in 1998, we only saw about a 1.6 percent increase." newsday.com