http://www.vny.com/cf/News/upidetail.cfm?QID=61124

Gov has plans to make SPR oil available:

-- Notforlong (Fsur@aol.com), January 31, 2000

Answers

White House unlikely to approve reserve oil swap By Tom Doggett WASHINGTON, Jan 31 (Reuters) - The White House is unlikely to approve an Energy Department oil swap proposal intended to drive down crude and heating fuel prices from their nine-year highs, a U.S. official said on Monday.

"This is not an option that's likely right now," said the official, who spoke on condition of anonymity.

While the plan to put millions of barrels of crude from the U.S. Strategic Petroleum Reserve on the market through swaps with energy companies would eventually return more oil to the emergency stockpile, it would likely push down crude oil and heating oil prices that have recently reached nine-year highs.

The White House official said the administration was against trying to control oil prices, saying "the price of oil should be established in the market place."

Energy Secretary Bill Richardson has taken a similar position, arguing the reserve should be used only in case of a supply disruption.

Under the swap proposal, energy companies would submit bids to take oil from the reserve and then sell it in the market. Instead of paying cash for the reserve oil, the firms would replace it at a future date with other oil.

A company could pay for one barrel of oil by replacing it in the reserve with two or three barrels at a later date when oil might cost less, after the additional supplies pushed down prices.

The strategic reserve was created in the mid-1970s after the Arab oil embargo. It holds 567 million barrels of oil in underground salt caverns in Texas and Louisiana.

Richardson said on Monday the swap proposal was still being debated among administration officials, while the White House official said no formal proposal had been received. "There's nothing happening with this at the moment," he said.

Still, a final decision on the plan could be made as early as two weeks from now, an energy department official said. The official said the plan would have to be implemented quickly so current high prices would make selling swapped reserve oil profitable for firms.

If the swap plan is adopted, it would take at least several more weeks for reserve oil to find its way into the market.

When the department drew up plans in December to handle any supply disruptions caused by Y2K computer problems, it said it would take take 15 days to conduct bids and put reserve oil on the market.

It is unclear how much oil the department believes could be swapped under its plan. A department official pointed out the reserve has a maximum withdrawal rate of four million barrels a day.

Meanwhile, Sen. Charles Schumer, a New York Democrat, urged the administration on Monday to sell oil from the reserve to bring down prices.

Standing with homeowners in his New York office, Schumer said output cuts by the Organization of Petroleum Exporting Countries (OPEC) and cold weather had boosted heating oil prices.

"We have reached a crisis point. It's time for the administration to face down OPEC and release part of our Strategic Petroleum Reserve," Schumer said.

Richardson is conducting what he called an "intensive round" of energy diplomacy with major U.S. oil suppliers, including OPEC members, to discuss production levels.

He spoke with Mexico's oil minister over the weekend and will meet on Tuesday with Norway's energy minister. At the end of February he travels to Saudi Arabia, the biggest U.S. oil supplier.

-- Jackson Brown (Jackson_Brown@deja.com), January 31, 2000.

OHH

I get it now, they say they are going to let it go(maybe) on Sunday, after the market closes, on Monday, they say they are not going too, and then they got a plane crash to keep the media busy...how convienient.

-- sandy (rstyree@overland.net), February 01, 2000.