Clinton's good oil sends bad signal By Nigel Wilson, Energy Writer 25sep00

PRESIDENT Bill Clinton's decision to order 30 million barrels of oil to be released from the US emergency reserves in the next month is not a smart move, according to the Australian Institute of Petroleum.

Executive director Bryan Nye said the decision sent a message to the Organisation of Petroleum Exporting Countries that the US was not serious about reforming the oil market in tune with world economic requirements. At the weekend, Mr Clinton announced the release  equivalent to about one day's OPEC production  claiming it was good energy policy, good national security policy and good family policy.

The release from the stockpile, established in 1975 to counter the Arab oil embargo, was one of four measures announced by Mr Clinton to ease the prospect of sharply higher heating oil prices in the next two months in the run-up to a predicted severe northern hemisphere winter.

Crude oil for November delivery fell 3.9 per cent to $US32.68 a barrel on the New York Mercantile Exchange, the lowest closing price since August 25.

Mr Nye echoed US analysts' views in saying the move was motivated partly by political considerations ahead of the November presidential elections and would have a limited impact on crude oil prices.

"The oil release is not crucial to the debate, " Mr Nye said.

"Realistically we will have to wait for about four weeks for shipments from the Middle East to reflect this move.

"By that time US oil refineries will have reconfigured their production capabilities to produce more diesel and heating oil."

Mr Nye noted that the Group of Seven industrial nations meeting in Prague had backed away from taking a strong line with OPEC in the face of criticism at petroleum product taxation policies, particularly in Europe.

OPEC appears to be toughening its position, with officials saying the price of crude oil is not on the agenda for its summit in Caracas, beginning on Wednesday.

The meeting of the heads of state of member nations designed to mark the 40th anniversary of OPEC will instead look at broad issues and principles.

At this stage OPEC is unlikely to examine market conditions and prices until its scheduled ministerial meeting in Vienna in November.

http://theaustralian.com.au/common/story_page/0,4511,1239090%255E643,00.html

-- Martin Thompson (mthom1927@aol.com), September 24, 2000