- The Washington Times - Friday, September 8, 2000

President Clinton yesterday said he is considering releasing oil from the Strategic Petroleum Reserve to force down soaring home heating oil prices, particularly in the Democratic stronghold states of the Northeast.
His comments at the U.N. Millennium Summit in New York came as the Massachusetts governor and Northeastern lawmakers pleaded for dramatic action to relieve heating oil prices that on average are 30 percent over last year and could spike by 100 percent before the year is out, analysts say.
With pressure building in the United States and Europe for an easing of tight oil supplies, OPEC members in New York for the summit also signaled that they will raise crude-oil production by at least a small amount at a meeting of the oil cartel Sunday.
"In the United States, we had a particular concern because our inventories are at a 24-year low and because in this region, New York and up north, are so dependent on heating oil," Mr. Clinton said after a meeting with Saudi Arabian Crown Prince Abdullah Bin Abdel Aziz at which he pressed for more oil.
"We're attempting now to fill our reserve and to look at what all of our options are, particularly for meeting the home heating oil needs of the American people," he said.
Analysts say any release of petroleum reserves would be politically motivated, since the reserves primarily were created to alleviate disruptions in supplies of oil, not high prices. New York and the New England states are must-wins if Vice President Al Gore is to gain the presidency.
The administration in June released 1 million barrels of oil from the Strategic Petroleum Reserve to avert shortages of gasoline in the Northeast that were threatened because of crude supply disruptions at the Louisiana refineries that funnel oil to the region.
Sen. Charles E. Schumer, New York Democrat, and Sen. Susan Collins, Maine Republican, wrote Mr. Clinton Wednesday urging him to dip into the petroleum reserves again to head off a surge in prices for heating oil and gasoline this winter.
"We must not sit idle with the knowledge that American families and, quite possibly, the entire U.S. economy, will suffer this winter," they said.
Fears of shortages in New England this winter also prompted Massachusetts Gov. Paul Cellucci, Republican, to call yesterday for an increase in the size of a 2-million-barrel heating oil reserve the administration is preparing for the Northeast. That reserve is expected to be available in October.
The average bill for heating oil in New England this winter will climb to $901 from $765 last year, the Energy Department estimates. And with inventories of heating oil down to 6.5 million barrels from 17.1 million a year ago, prices are likely to climb even higher during cold spells, analysts said.
Mr. Clinton said the Saudi prince assured him that he is pressing for an increase in crude-oil production at the Sunday meeting of Organization of the Petroleum Exporting Countries in Vienna, Austria.
"I told him that I was very concerned that the price of oil was too high, not just for America, but for the world," Mr. Clinton said. "If it's a cause of recession in any part of the world, that would hurt the oil-producing countries… . And he agreed with that, he's been very strong about that."
Analysts say the fragile economic recovery in Japan and some other Asian countries could be derailed by this year's jump in oil prices. European leaders also are warning that high crude prices threaten growth on that continent.
"For some months now, oil prices have increased massively. This is a problem for all oil-consuming countries. The situation is a grave concern to me," said French President Jacques Chirac.
While OPEC had been expected to increase production by 500,000 barrels a day, Saudi officials in New York yesterday said they are pressing for even more 700,000 barrels. Saudi Arabia is by far the biggest producer within OPEC and has the greatest capacity to increase production. The cartel controls about 40 percent of the world's oil supply.
But OPEC members that took a hard line against higher production earlier this summer signaled yesterday that they are ready for an increase.
"In principle, we are not against the output rise in proportion to the rise of the world demand," Iranian President Mohammed Khatami said at a press conference.
Despite news of a possible 700,000-barrel increase in daily output, crude-oil prices rose to a new 10-year high of $35.46 in midday trading on the New York Mercantile Exchange yesterday. The United States alone consumes 19 million barrels a day. Oil analysts say an increase of at least 1 million barrels a day is needed to bring down prices.
David Jones contributed to this report in New York.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide