President Announces Steps to Alleviate High Oil Prices

By H. Josef Hebert

Associated Press Writer

WASHINGTON (AP) - President Clinton today asked Congress to create an emergency heating oil reserve in the Northeast to blunt future shortages, but said there is "no overnight solution" to the current high oil prices.

Clinton said he was concerned about the hardships facing many Americans because of the soaring gasoline and heating oil costs. Still, he said in his weekly radio address, "we also need to take a longer view" to protect consumers and "strengthen America's energy security."

None of the president's proposals was aimed directly at alleviating the high prices and low supplies.

Meantime, energy officials have suggested gasoline prices may climb even more this summer.

Some lawmakers have urged Clinton to release oil from the government's emergency petroleum reserve and to halt the export of about 60,000 barrels a day of Alaska crude oil to Asia, diverting it to West Coast markets.

Clinton addressed neither option today.

"There's no overnight solution to this problem," said Clinton, adding he wanted to avoid "taking shortsighted and risky steps now we might regret later."

Administration officials said no decision would be made on whether to free oil from the government's Strategic Petroleum Reserve until after Organization of Petroleum Exporting Countries oil ministers meet March 27 to decide on additional worldwide production.

"What is most effective at this time is quiet diplomacy," said Gene Sperling, the president's chief economic adviser. He said "the single most important thing" is to persuade OPEC nations to pump more oil.

To that end, Energy Secretary Bill Richardson was to head overseas again Sunday with stops in Nigeria, Indonesia and Algeria to press the U.S. argument that higher oil production and stable prices benefit both producing and consuming nations.

On Friday, the president appealed to OPEC members to agree to "substantial production increase" when they meet - big enough to rebuild depleted reserves and bring down high prices.

At the same time, he said oil producers deserve "a fair return" that would avoid the see-sawing market that produced $10-a-barrel oil in 1998 and more than triple that price now, 14 months later.

In addition to stockpiling heating oil in the Northeast - which will need congressional approval - for quick distribution during supply shortages, Clinton today urged Congress to:

-Quickly reauthorize the government reserve "to insure that we have all available tools in the event of a crisis." The authorization expires at the end of the month, but Energy Secretary Bill Richardson said even if it expires, he still could draw on the supply if needed.

-Approve a package of tax incentives to promote energy efficiency, use of nonfossil fuels and domestic oil production. Republicans in Congress have accused the administration of ignoring the domestic oil industry.

-Pass "common sense tax credits" the White House has proposed in each of the past two years to promote the development of highly fuel efficient automobiles and energy-efficient homes. Clinton said on Friday that he had spoken with Saudi Arabia's King Fahd about the need to stabilize oil prices at levels that satisfy both producing and consuming nations. Saudi Arabia already has said it favors increasing production.

"I think everybody's struggling now to find a consensus" on easing oil prices, Clinton told reporters. The OPEC oil ministers are expected to agree to additional production when they meet in Vienna, but no one knows how much or how soon. Administration officials, speaking on condition of anonymity, said a use of the emergency oil reserve stocks might be warranted if the new OPEC production levels are insufficient, or delayed to cause problems with supplies during heavy demand this summer.

The Energy Department reported recently that oil inventories and gasoline stocks already are at precariously low levels as refiners move into the period when they seek to build inventory for the heavy summer driving season.

According to the department, refineries need to increase their crude oil amounts by 1 million barrels a day to build gasoline inventories during March and April to meet summer demand. With stocks already low and a shortage of crude, "the situation is ripe" for further gasoline price spikes, the department's Energy Information Administration in a report last week.

Should OPEC increase production beginning in April, it would still take four to six weeks for any of the additional oil to reach the U.S. market, officials said.

http://ap.tbo.com/ap/breaking/MGIIDLDGZ5C.html

-- Carl Jenkins (Somewherepress@aol.com), March 18, 2000