NGI The Weekly Gas Market Report
Sen. Frank Murkowski (R-AK) last week urged the Clintonadministration not to intervene in the domestic crude oil market toreduce rising prices. The chairman of the Senate Energy and NaturalResources Committee was especially concerned about reports that theadministration was considering tapping into the Strategic PetroleumReserve (SPR) to bring down prices.
This “would be a disastrous decision from the standpoint of bothenergy and national security policy. The government has nevertapped SPR releases to manipulate crude prices and should not do sonow,” Murkowski wrote to Clinton last Wednesday. The SPR is thenation’s emergency oil stockpile.
The “economy is healthy and the recent price rise is notparticularly extraordinary. Left alone, higher prices will triggernew supply and conservation, which will in turn pressure [the]price back downward,” he said. Any action by the administration tomoderate oil prices would force domestic producers to cut back ontheir production of oil, and natural gas as well.
Murkowski fired off the letter after Energy Secretary BillRichardson said the administration was prepared to take “whateversteps are necessary” to deal with U.S. oil prices, which he saidwere at “dangerously high levels.”
The Independent Petroleum Association of America (IPAA), whichrepresents independent producers, accused the administration ofalso trying to “jawbone” foreign oil producers into increasingtheir production to bring down domestic prices. This method wouldbe “devastating” for domestic producers who still are recoveringfrom the “disastrously low prices of 1998 and early 1999,” saidIPAA President Gil Thurm.
Raymond Plank, chairman and CEO of Houston-based Apache Corp.,called for Richardson’s resignation. “He is out of line, out oforder and should be fired,” Plank told reporters. He referred tohim as a “just another horse’s…..”
Following reports of Richardson’s remarks, the price of WestTexas crude for January delivery dived by about 65 cents but hassince risen. It was listed at $26.83 last Thursday. The same crudehad been priced at $11.03 a year ago.
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