GOP Decries Energy Secretarys Claim That Oil Release Will Ease Winter Crunch Source: Knight Ridder/Tribune Business News Publication date: 2000-09-27

Sep. 27--WASHINGTON--Republican lawmakers hammered away at Energy Secretary Bill Richardson on Tuesday, challenging the assumption that swapping oil from the Strategic Petroleum Reserve will help eliminate an expected heating oil shortage this winter. The threat of a shortage in the Northeast during the colder months is the reason the Clinton administration gave for releasing 30 million barrels of crude from the nation's emergency oil stockpile Friday.

Sen. Frank Murkowski, R-Alaska, chairman of the Senate Energy Committee, expressed skepticism Tuesday that the nation's refineries, which are already running at more than 96 percent capacity, can use the crude from the reserve to significantly increase heating oil production.

"Folks better get their acts together -- or their chain saws," Murkowski said.

Richardson told lawmakers that the administration was not trying to manipulate prices by tapping the reserve. But he noted: "We don't want the American people, the people on the East Coast, to cut back on food and medicine to pay for oil."

Last week's inventory totals continued to show that supplies are short.

After declining slightly Tuesday, oil prices could strengthen today on the basis of the American Petroleum Institute's report late Tuesday that crude oil and heating oil inventories declined last week. Gasoline inventories rose, the trade group said.

Crude oil stocks ended last week down 2.239 million barrels to 284.3 million barrels. That is about 20.7 million barrels lower than U.S. oil stocks were at this time last year.

Inventories of distillates, which include heating oil and diesel, were down 761,000 barrels. Those stocks are more than 30 million barrels lower than they were at this time last year.

Before the petroleum institute data was released, analysts had expected moderate growth in crude and distillate inventories, according to the Associated Press. Typically, a significant decline in crude and refined products results in rising prices the following day.

It will take weeks before refined products made from Strategic Reserve crude oil reach the market.

Richardson told Murkowski's committee that his analysts have been saying that refiners should have enough spare capacity to use the crude from the reserve.

Traditionally, Richardson noted, refiners trim their output so they can do routine maintenance. As a result, average capacity utilization drops to 91 to 92 percent in October. This year, administration officials are urging the industry to delay that work so they continue to operate at full tilt.

Richardson said he will meet with refining officials this week to learn what the government can do to help them increase heating oil inventories.

Murkowski raised concerns about asking refiners, many of whom deferred repair work last spring, to delay the work again.

"This decision carries its own dangers of unforeseen shutdowns," Murkowski said.

In the Northeast, residential heating oil customers are expected to pay an average of $1.32 a gallon this winter, said Mark Mazur, acting head of the Energy Information Administration, the federal government's energy research arm.

If temperatures in the Northeast are about normal, the average consumer in that region can expect to pay about $900 for heating oil, $140 more than last year, Mazur said.

Natural gas users could also feel the pinch, especially if temperatures are colder than last year's warm winter.

Assuming temperatures are about normal in the Midwest, natural gas users there can expect to pay about $730 for their supply this winter, $220 more than last year.

As Murkowski noted: "There's no strategic petroleum reserve for natural gas."

Oil prices Tuesday were little changed, with light, sweet crude for November delivery dipping 7 cents to $31.50 on the New York Mercantile Exchange.

October heating oil reached an intraday high of 95.30 cents a gallon but lost 1.08 cents on the day, finishing at 92.99 cents a gallon.

In Tuesday trading, unleaded gasoline for October delivery rose .30 cent to 93 cents a gallon and natural gas gained 4.8 cents, finishing at $5.324 per 1,000 cubic feet.

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-- Martin Thompson (mthom1927@aol.com), September 28, 2000

Answers

Good grief! Natural gas now at $5.32 That is astounding.

-- Uncle Fred (dogboy45@bigfoot.com), September 28, 2000.

With the mess in Europe I don't see how we can import refined products from their 200-some refineries. It looks like we will have to go it alone, with our crippled, old, antique 120 refineries.

-- JackW (jpayne@webtv.net), September 28, 2000.

The DOE is staffed by a large number of lawyers. What do these people know about refining capacity and cat crackers? The DOE has not brought 1 barrel of oil to the surface and here they are lecturing on how the oil industry works. Only the US would tolerate such nincompoops.

-- David Williams (DAVIDWILL@prodigy.net), September 28, 2000.

Nincompoops,I believe, equals politicians, intrested only in protecting their careers. Numbers don't lie...30m barrells from the SPR, to benefit the East Coast, traditionally a democratic stronghold, and the release won't help, we can't refine it fast enough, but upon examination, natural gas has risen just as fast, perhaps at a greater percentage, it heats 54% of US homes, so if TPTB are really intrested in helping the populace, where's the help for the NG users? I'm really tired of the lies.

D-Green

-- D-Green (greenshouse@hotmail.com), September 28, 2000.