Heating oil stockpiled State plans for worst Source: Telegram & Gazette Worcester, MA Publication date: 2000-11-24

Arrival time: 2000-11-26

With predictions of sharp spikes in oil prices this winter, state officials are overseeing the stockpiling of millions of gallons of heating oil to ensure adequate supplies for the cold months ahead. The state Division of Energy Resources has executed the first four contracts aimed at creating the first-in-the-nation statewide heating oil reserve program. The program is intended to stabilize prices and reduce the risk of supply interruptions between now and the spring.

Under contracts signed so far, four fuel oil companies will store 23 million gallons of home heating oil at terminals in Revere, Everett, Springfield and Stoughton.

The state also is seeking additional contracts that would lead to storing reserves in Central Massachusetts. Bids for additional contracts to bring the reserves up to 34 million gallons are expected to be opened Tuesday.

The stockpiling is taking place at a time when fuel oil supplies in the state are 78 percent lower than at this time last year, and concern is mounting over a possible shortage. A shortage during a severe cold spell last February led to the near doubling of oil prices in Massachusetts.

State Energy Commissioner David O'Connor said about 1 million households in Massachusetts rely on heating oil. The reserve program, he said, should dramatically increase inventories and maintain a reliable supply through the winter.

John Birtwell, a spokesman for Gov. Paul Cellucci, said the program is intended to establish a "floor" price that would enable companies to keep enough oil on hand to avoid shortages that would drive up prices.

The cost of the program is not expected to exceed $5 million, he said. The money would be used to reimburse participating oil companies if the price of heating oil drops below the amount paid for the oil they are stockpiling.

Mr. Birtwell said the state is guaranteeing oil companies a price of $1.50 per gallon. If the price goes above $1.50, the state and participating oil companies would share the profit. If it falls below that amount, the state would make up the difference between the lower price and $1.50.

Heating oil prices in Massachusetts currently average about $1.46 per gallon.

"Massachusetts has the problem of being at the far end of the pipeline," Mr. Birtwell said, referring to the state's lack of proximity to oil refineries.

The problem in past years, he said, was that oil supplies had dropped just as a cold snap developed.

Last February, he said, the state "came close to reaching a threshold where we couldn't keep up with demand."

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=16063549&ID=cnniw&scategory=Energy%3AOil

-- Martin Thompson (mthom1927@aol.com), November 27, 2000

Answers

A special meeting in Boston City Council on December 4th 2000

Nov. 18 -- The proposals put forward by U.S. economist Lyndon LaRouche are currently before the Boston City Council, in the form of a "Resolution on Emergency Governmental Action To Reduce Oil and Natural Gas Prices." That resolution, Docket #1261, was put forward by City Councillor Chuck Turner, and will be debated during a public hearing in the City Council Chambers on December 4, between 5 and 7 pm.

Councillor Turner's resolution, which was introduced to the Council on Nov. 1, reads as follows:

Whereas: The price of oil has more than tripled since January of 1999, to over $35 per barrel, and threatens to go even higher over the coming weeks and months; and Whereas: Worldwide oil prices continue to rise despite increased production by OPEC [Organization of Petroleum Exporting Countries] nations, and release of the U.S. Strategic Petroleum Reserve; and

Whereas: The citizens of Boston, Massachusetts, and the New England states in particular, will face danger from increased fire hazards, as well as severe and potentially deadly economic hardship this winter, due to increases in prices for home heating fuels; and

Whereas: The petroleum price crisis is presently but one leading economic consequence of a general hyperinflation in financial asset-prices, now being expressed at increasing rates as a hyperinflation in commodity prices, following a trend similar to that suffered by Weimar Germany during 1923; and

Whereas: The increasingly desperate effort to secure inflows of financial assets into the U.S. dollar sector, by means of various forms of speculative activity, seizes upon several combined factors, to increase asset-price accumulations from hyperinflationary trends in the delivery prices of petroleum products; and

Whereas: These factors include recent increased concentration of ownership of major oil companies through mergers and acquisitions, the increased role of the spot market in petroleum deliveries, the significance of denomination of delivery in U.S. dollars, most especially the intensity of speculative dealings in the form of financial derivatives in this area, which threaten to bring the per- barrel price of petroleum to between $40 and $50 soon, and not much later, much higher; and

Whereas: Only drastic measures taken in concert between sovereign national governments can bring the petroleum-price crisis under control; and

Whereas: Appropriate action led by the U.S. government must aim at immediate emergency cooperation among the governments of principal petroleum-exporting and principal petroleum-consuming nations; and

Whereas: The actions of legislative groupings, i.e., town and city councils, state legislatures, and Federal elected representatives must uphold the oath of office to defend and secure the General Welfare of all citizens; and

Whereas: The following actions proposed by economist Lyndon LaRouche to deal with that emergency situation contribute an important, and decisive step in the direction of moving the government of these United States to act in concert with other nations to solve the more general problem of the world's financial and monetary systems;

Therefore Be It Resolved: That the City Council of Boston urges the President of the United States, the U.S. Senate, and the House of Representatives to take emergency action to reduce oil and natural gas prices, including the following measures: A. Declare a general strategic emergency in the matter of stability of flows and prices of essential energy-supplies of national economies; B. Establish contracts, directly between the U.S. government and the governments of petroleum-exporting nations, of not less than twelve months government-scheduled deliveries of petroleum; C. Define reasonable prices for these contracts; D. On the grounds of a global emergency in petroleum prices and supplies, set priorities on processing of such contracted petroleum flows through relevant refiners to priority categories of consumers in the United States, causing other stocks to be shunted to one side in the degree that these priority deliveries must be processed first; E. Urge governments of other oil-consuming nations to take these same actions, in the context of this global emergency; F. Investigate petroleum market manipulation, through financial derivatives speculation or other unfair speculative practices, and probe allegations that some portion of the U.S. Strategic Petroleum Reserve recently released for the benefit of citizens of the Northeastern United States, are in fact being exported overseas for profit by U.S. refineries;

Be It Further Resolved: That the City Council of Boston urges the Government of the Commonwealth of Massachusetts, the Massachusetts General Court, and other state and local governments of the United States to support these emergency actions in the vital interest of the General Welfare of its citizens.

More information about the resolution, and the campaign to get it passed, are available from the Boston representatives of FDR-PAC, who can be reached at 781-380-4000. concerning the oil & utilities crisis:

-- jax (jax@borg.com), November 27, 2000.