Bush, citing low oil prices, wants U.S. emergency petroleum stockpile filled
Tuesday, November 13th 2001, 12:00 am
By: News On 6
WASHINGTON AP) _ President Bush, taking advantage of low oil prices and abundant supplies, ordered the government Tuesday to put more oil into America's emergency stockpile and for the first time fill the reserve to full capacity.
The move came a day before oil ministers from the Organization of Petroleum Exporting Countries are to meet in Vienna, Austria, to grapple over possible production cuts and try to stem the slide of oil prices.
The first deliveries of about 60,000 barrels a day are to begin in April with the transfers growing to 130,000 barrels a day by October, according to the Interior Department.
The Strategic Petroleum Reserve, which currently has 544 million barrels of oil, is to be filled ``in a deliberate and cost-effective manner'' up to its full capacity of 700 million barrels, Bush said in a statement.
Currently the reserve, to be used in a supply emergency, has enough oil to offset 54 days of imports. The United States consumes about 19 million barrels of oil a day, a little over half of it imported.
The decision to add oil to the reserve was viewed by oil experts as a prudent move at a time when oil prices have been falling and when the world supplies are plentiful because of the global economic decline.
Administration officials dismissed any connection to the boosting of emergency reserves to the war on terrorism or concern about possible near-term supply disruptions.
``Our current oil inventories, and those of our allies who hold strategic stocks, are sufficient to met any potential near-term disruption in supplies,'' said the president in his statement.
He said that filling the reserve to its full capacity ``will strengthen the long-term energy security of the United States.''
Robert Ebel, an oil expert at the Center for Strategic and International Studies, called it prudent planning for any future oil disruptions. ``We've been lax in our attention to the Strategic Petroleum Reserve,'' said Ebel.
Last month, the Energy Department recommended funneling additional crude into the government's Strategic Petroleum Reserve, a string of salt caverns along the Gulf Coast at the Texas-Louisiana border. An additional 48 million barrels is expected to be put into the reserve by the end of next year under existing arrangements.
Under Bush's order to Energy Secretary Spencer Abraham, most _ if not all _ of the oil will be provided by oil companies in lieu of federal royalty payments.
Abraham denied that potential terrorism or the military strikes in Afghanistan were factors in Bush's decision, saying administration officials noticed the reserve was substantially lower than it was eight years ago and wanted to restore it as a precaution.
``There's not any linkage to any kind of specific disruption threat, but we think it's a wise policy,'' Abraham said.
Private economists have said the move, in addition to boosting emergency reserves, will signal U.S. intentions to help stabilize world oil prices at a time when OPEC producers _ including Saudi Arabia _ have been worried about the sharp drop in global demand.
Congress created the Strategic Petroleum Reserve in 1975 as a response to the 1973 OPEC oil embargo. It originally was to have enough oil to replace 90 days of imports, but that goal has never been achieved. Authorized by Congress to store 1 billion barrels, its current capacity is no more than 700 million.
About 48 million barrels are scheduled to be put into the reserve over the next two years under existing agreements with oil companies. That includes replacing 30 million barrels that was withdrawn under a ``swap'' arrangement in 2000.