The Energy Department will delay deliveries to
its emergency oil reserve in hopes of easing the recent surge in
fuel prices and will closely monitor heating oil markets, Secretary
Bill Richardson said Wednesday.
The administration has been under pressure to act as oil prices
have edged close to $30 a barrel from a low of less than $12 a
barrel a year ago. Also, heating oil and diesel fuel prices have
The department will renegotiate contracts to postpone delivery
on 5 million barrels of oil for the Strategic Petroleum Reserve in
Louisiana and Texas, he said.
"Given today's market conditions, it simply makes sense,"
The action is intended to put more oil into the market and ease
prices. But many economists question whether it would have much impact.
The move came a day after Richardson ruled out releasing oil
already in the emergency reserve to influence the oil markets,
saying the reserve should be used to deal with supply emergencies
and should not be used to manipulate the markets. No withdrawal
from the reserve is planned, officials said.
The government is in the process of accepting 28 million barrels
of oil as a "royalty-in-kind" payment from producers drilling on
government land. About 10 million barrels have been delivered, but
delivery of the next 5 million barrels will be postponed,
"The companies have indicated a willingness to discuss putting
additional oil into the SPR (later) if we postpone delivery
dates," he said.
Energy experts question whether a relatively small release of
oil from the reserve or diversion of deliveries greatly would
Robert Ebel, director of energy and natural security at the
Center for Strategic and International Studies, a Washington think
tank, said only a huge release of oil would have a major effect.
"I don't think that's politically doable," Ebel said at a
recent energy conference.
In the Republican presidential campaign debate Wednesday night,
Texas Gov. George W. Bush, the GOP front-runner, said he would not
dip into the strategic oil reserve to reduce fuel prices, saying
the stockpile is designed to help the nation weather a national
emergency. Instead, he said the president must "jawbone" oil
producing nations and persuade them to drop prices.
The Strategic Petroleum Reserve holds about 580 million barrels, equivalent to 62
days of oil imports.
Richardson said his department would more closely monitor the
heating oil markets to "make certain that ... oil product
suppliers can move heating oil to those who need it most."
Richardson said he planned to meet next month in Boston with
state officials and industry representatives to examine why the
rise in heating oil prices.
Also Wednesday, the president of the American Trucking
Associations urged President Clinton to withdraw oil from the
government reserves to counter soaring prices in diesel fuel.
Walter McCormick, the ATA's president, said in a letter that
diesel fuel, which is made from the same distillate as heating oil,
jumped 47 percent the past year, including an 11-cent increase last
week. Heating oil prices have nearly doubled in some parts of the
Northeast in recent weeks.
Meanwhile, Richardson said the president would seek $154 million
in the 2001 budget to help poor families make their homes more
energy efficient. The administration since 1997 had sought that
amount each year, but Congress has provided less each time,
including $135 million this year.
On Tuesday, the White House announced it was making an
additional $45 million available for low-income families to
purchase heating oil. The money is going to Northeast states and