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Clinton SPR Action Puts Energy at Center Stage

Clinton SPR Action Puts Energy at Center Stage

The Democrats barely mentioned the word "energy" in their platform at the August convention, but President Clinton put the spotlight on energy issues last week in Washington with his decision to release 30 million barrels of crude oil from the Strategic Petroleum Reserve (SPR), as well as a record $400 million of funding for energy assistance to low-income households for this winter.

Key Republican lawmakers in the Senate and House spent much of the week attacking the president for his use of the SPR in a non-emergency situation, saying it was illegal and was politically designed to help Democratic presidential nominee Al Gore. But Clinton countered that the administration simply was trying to boost home heating oil stocks in the Northeast to avoid a repeat of the high prices of last winter.

Nationwide, distillate inventories --- which include heating oil --- currently are 19% below the level they were a year ago, according to the Department of Energy (DOE). On the East Coast, where 36% of the households rely on oil as a home heating fuel, the fall-off is even more dramatic: distillate inventories are down 40% from last year, the DOE reported. In New England, stocks are about 65% under the 1999 level.

The "temporary infusion" of 30 million barrels of oil into the market is expected to add an additional three-to-five million barrels of heating oil this winter, said Energy Secretary Bill Richardson. Chairman Frank Murkowski (R-AK) of the Senate Energy and Natural Resources called this "a drop in the bucket," saying the impact on Northeast supplies and prices this winter would likely be minimal.

In addition to tapping the SPR, Clinton directed the Environmental Protection Agency (EPA) to help states identify ways to use more and different kinds of home heating oil while minimizing environmental effects; federal agencies to contract early for heating oil supplies to reduce instability in the market this winter; public utility commissions to ensure that industrial and commercial facilities (such as interruptible gas customers) which use heating oil as a backup fuel have adequate reserves; and Secretary Richardson to meet with the National Petroleum Council to discuss oil production this fall and winter.

"Taken together, these steps will enhance our nation's energy security and help to cushion working families from high heating bills. It builds on our decision in July to establish [a] home heating oil reserve in the Northeast," Clinton told reporters.

He further challenged the Republican-led Congress to "get off [the] dime and take action" with respect to electric restructuring legislation, and to reauthorize the SPR instead of "trying to make this [an issue] about drilling in the [Arctic] National Wildlife Refuge."

He also called on Congress to "immediately pass" the administration's proposed package of tax incentives for oil and natural gas production (i.e. expensing of geological and geophysical costs), as well as tax credits to promote alternative and renewable energy sources.

To increase energy security in the long term, Clinton urged lawmakers to support continuing investment in energy recovery technologies, expanded research in the development of fuel cells, and greater reliance on energy efficiency and conservation measures.

But the president failed to mention the one issue that is most important to oil and gas producers: increased access to federal onshore and offshore lands. Gas producers contend that state and federal legislators will have to address this issue quickly in order for the industry to meet the nation's growing gas appetite.

Susan Parker

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