- The Washington Times - Wednesday, September 27, 2000

Senate Republican leaders yesterday denounced President Clinton's decision to tap into the Strategic Petroleum Reserve, saying the move was desperate and shows how ill-prepared the administration was for this year's energy crunch.

"I think they are violating the law. The Strategic Petroleum Reserve was created to supply energy sources during a severe shortage," said Senate Assistant Majority Leader Don Nickles at a hearing of the Senate Energy and Natural Resources Committee. "That's the statute. It doesn't say for price controls or to alleviate prices so candidates can gain an edge seven weeks before the election."

The Oklahoma Republican said he feels a mixture of outrage and amusement at the administration's move, made at the request of Vice President Al Gore. "The energy crisis, as it has now been defined by the vice president and others, is greatly of their own lack of action.

"I'm just almost embarrassed for the administration to think that this is a solution," he said, noting that production of oil and natural gas has been dropping in the United States under Clinton policies aimed at cutting energy use, making it difficult or impossible to explore, drill and process the oil Americans need.

Democrats and administration officials countered that the release of 30 million barrels of crude oil from the 571-million-barrel reserves, while controversial and a last resort, seems to be working for now to bring sky-high prices down and forestall a possible panic and shortages of home-heating oil in the Northeast this winter.

"Without this kind of action, there is going to be a real emergency for families, particularly elderly families on fixed incomes," said Sen. Edward M. Kennedy, Massachusetts Democrat. "If the action hadn't been taken now, the release of the SPRO wouldn't have had any impact" on home-heating supplies this winter.

Crude-oil prices leveled out yesterday at $31.50 in New York trading after falling 15 percent since Wednesday in anticipation of the release. Heating-oil prices continued to drop with the prospect of more supplies coming onstream through the petroleum release, falling from a 10-year high of $1.076 Sept. 12 to 92.99 cents yesterday.

Northeastern Republicans mostly supported the petroleum release, though not vocally. And not all Republicans agreed that the administration violated the law.

"The president has considerable latitude, flexibility in interpreting" the law, Sen. Chuck Hagel said in an interview.

But the Nebraska Republican said the move showed how few options the administration has for coping with the heating-oil crunch in the Northeast, where millions of consumers can easily be left stranded because the region has no liquid fuel pipelines to feed rapidly growing demand and no refineries to process fuel. Inventories there are 65 percent lower than a year ago.

Treasury Secretary Lawrence H. Summers said the release was needed to pop a speculative bubble that was driving up oil prices to a danger zone near $40 a barrel. But Mr. Hagel said the run-up in oil prices is not due to speculation but to unrealistic policies that have made the United States too dependent on foreign producers who control the price of oil.

"We are a captive market" because we import 60 percent of our oil from overseas, he said. "All we're doing is deferring the problem. We're not producing enough energy in this country to fill demand."

Senate Energy Committee Chairman Frank H. Murkowski pointed out that the energy crunch goes far beyond the heating-oil problem in the Northeast.

Gas prices at the pump are near record highs, electricity rates are soaring and the price of natural gas that half of Americans use to heat their homes has doubled since the beginning of the year.

"I just want to remind you of one thing. There's no [strategic reserve] for natural gas," Mr. Murkowski told Energy Secretary Bill Richardson at the hearing. The Alaska Republican said the administration created the natural gas shortage by forcing utilities to switch from coal and nuclear power to natural gas while discouraging oil and gas drilling.

"The pressure is going to be on natural gas. That's where the next train wreck is coming from," he said.

Mr. Richardson conceded that the administration has few options to grapple with the natural gas crunch and was caught off guard by the 14 percent increase in world energy demand in the last year that created the oil crunch.

The dramatically higher demand for oil in the United States is "the only downside of a booming economy," he said. The president had to release oil from the reserve, he said, to deal with a "short-term potential emergency supply problem. That's the rationale for the president's action."

Mr. Richardson said the administration is counting on oil refineries to forego their usual maintenance work in October so they can produce more heating oil from the reserve crude-oil supplies.

He said refineries normally would reduce output by about 4 percent to do maintenance at this time of year, but by continuing to run at full tilt, they could add another 5 percent or 5 million gallons to heating-oil supplies.

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