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Administration studies whether to tap oil reserves to help reduce price Effort under way to persuade major producers to increase production; reserve, established in 1975, has only been used once William C. Mann Associated Press Writer
The Clinton administration is trying to decide whether to dip into the nation’s Strategic Petroleum Reserve for only the second time to drive down soaring oil prices.
Key to that decision could be whether Energy Secretary Bill Richardson is able to persuade major oil producers to back off a 2-year-old production hold-down.
Ideally, “the market ought to set the price, but we’re taking a look at what options we have under the authorities and under the laws of the United States,” White House chief of staff John Podesta said on “Fox News Sunday.”
Podesta said Richardson’s contacts with oil ministers of producing countries — several already, with visits scheduled to Saudi Arabia, Venezuela and Mexico planned — are a major part of the administration’s effort to force prices down from current levels close to $30 a barrel.
Ministers of the Organization of Petroleum Exporting Countries will meet next month to consider whether to extend the production cutbacks of 5 million barrels per day, which began in 1998 and expires March 31. Some other producers are holding down their production as well.
$45 million to help with heating bills President Clinton released $45 million last week to help low-income people in the frigid Northeast with their heating bills. Podesta said that besides such stopgap measures, “We’re also trying to see what we can do to see if we can take some of the pressure off of oil prices” through raising market supplies, possibly by tapping the strategic reserve.
Richardson has said repeatedly he does not intend to release any of the 580 million barrels of oil in the reserve to do that.
To the suggestion the U.S. reserve was created only to compensate for disruptions in supply, not control prices, Podesta said it “was put in place with its name in mind, to have a strategic reserve to make sure that we had an adequate supply of oil, and that’s what it’s used for.”
But he also said: “There are certain authorities under the law that are available, and we’re taking a look at those.”
The reserve, first suggested during World War II, was established in 1975. Its only use so far was a partial drawdown in 1991 at the beginning of the Persian Gulf War. That move by President Bush and production increases internationally maintained market stability and kept down oil price increases during the six-week war.
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