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

To: John Mansfield who wrote (3834)	2/12/1999 3:33:00 PM
From: flatsville	Read Replies (1) \| Respond to of 9818

John--The U.S. decides to cover its' short on oil: "The time to take this step is now, when prices are low and when we can save for a rainy day," Sec. of Energy Richardson. NY Times February 11, 1999 U.S. Will Add to Reserve of Oil By MATTHEW L. WALD WASHINGTON -- To shore up the nation's shrinking protection against oil emergencies, the Clinton administration will announce on Thursday that it plans to add oil to the Strategic Petroleum Reserve for the first time since 1994. To add to the reserve, the government will take royalty payments for wells on federal land in oil rather than money. The decision represents the first time since 1990 that the government has dedicated new resources to buying oil; then, Congress voted money for purchases . The move is a sharp turnaround in policy and a hedge against a threat that looms ever smaller in the popular imagination. The strategic reserve was conceived as a billion-barrel shield against gasoline lines like the ones that formed during the Arab oil embargo of 1973-74 and again during the Iranian revolution of 1979. But the reserve reached only a little more than half its expected level, and it has shrunk precipitously in the last few years as millions of barrels have been sold -- at a loss of $10 a barrel or so -- to help balance the federal budget. Imports have grown by 60 percent since the Arab oil embargo as the country has switched to sport utility vehicles and domestic wells have run dry. The oil remaining in the reserve, 561 million barrels, represents about 60 days of imports. When Iraq invaded Kuwait in 1990 and import levels were lower, the reserve had nearly 90 days' supply. Many oil experts, though doubtful that another war in the Mideast would produce shortages, given the free-flowing world oil market, say that crude oil would soar in price. Energy Secretary Bill Richardson plans on Thursday to announce that the government will replace the 28 million barrels sold over the last few years at a rate of about 150,000 barrels a day, drawing on the government's 200,000-barrel-a-day royalties from offshore wells in the Gulf of Mexico. The Energy Department and the Interior Department, which collects the royalties, already have authority to transfer the oil and no Congressional action is needed, officials said. "The time to take this step is now, when prices are low and when we can save for a rainy day," Richardson said in a telephone interview. Oil for March delivery Wednesday was $11.75 a barrel in New York. By contrast, the average purchase price of oil in the reserve is around $27 a barrel. At the Petroleum Industry Research Foundation in New York, John H. Lichtblau said that adding to the reserve was sensible. "With the uncertainty in the Middle East, it's a lot cheaper than having military operations," he said. More of the world's oil will come from the Mideast as the years go by, he said.