Clinton administration said split on oil swap

By Randall Mikkelsen

WASHINGTON, Feb 4 (Reuters) - There are "heated" divisions within the Clinton administration over whether to release federal oil stockpiles to dampen prices, but a decision on the issue is near, a leading release advocate said.

"Right now the discussions are pretty heated -- they are coming to a head ... within the upper levels of the administrations," Democratic U.S. Sen. Charles Schumer of New York told Reuters in a telephone interview late on Thursday.

The administration is considering releasing to the market potentially millions of barrels of oil in the government's Strategic Petroleum Reserve under a proposed "swap" in which oil companies could take oil from the reserve to sell it if they would replace it with even more barrels within a year.

The measure is being advocated by Schumer and other politicians from the cold, politically important and heating-oil dependent northeastern United States as a way to dampen rising international oil prices.

"I am talking to all people -- in the White House and (departments of) Treasury and Energy. There are divisions of opinion but they are seriously considering the swaps," Schumer said.

The split is between policy makers, such as the White House National Economic Council (NEC), who are reluctant to interfere with market functions, and others more sensitive to political pressures for quick action from the Northeast, an administration official said.

The Northeast has a major political significance to the Clinton White House. Vice President Al Gore faces a stiff challenge in New York from rival Bill Bradley, formerly a senator in neighboring New Jersey.

Also, first lady Hillary Clinton is seeking a Senate seat in New York, partly in response to strong urgings from Schumer.

The proposal has been put forward by officials in the Energy Department, whose head, Bill Richardson, is a strong Gore ally. But Richardson said while in Lithuania on Wednesday that there was "no immediacy" to a decision on the issue.

NEC head Gene Sperling said on Wednesday he believed market forces should set prices. "Our view is that the market should be determinant of prices and we have no plans to do anything inconsistent with that," Sperling said.

Schumer said he was hopeful that a swap would be approved.

"Most people feel that the swaps will have the same effect of selling the reserve ... but they'll do it in a way that makes the economists feel better."

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Ray

-- Ray (ray@totacc.com), February 04, 2000

Answers

A related article: Link
It shows that they have been doing swaps for quite a few years.

-- Possible Impact (posim@hotmail.com), February 04, 2000.