Gore would tap U.S. reserves to stabilize oil price, aid poor

Amid high fuel costs, candidate reverses course in Md. speech

September 22, 2000|By Thomas W. Waldron and Jonathan Weisman | Thomas W. Waldron and Jonathan Weisman,SUN NATIONAL STAFF

HOLLYWOOD - Bringing his populist message to Southern Maryland, Democratic presidential nominee Al Gore called on the president yesterday to release millions of barrels from the nation's Strategic Petroleum Reserve to bring down the highest fuel prices in a decade.

The vice president said releasing some of the government's reserves - 570 million barrels stored in salt domes in Texas and Louisiana - could stabilize prices and help poor and working families, particularly those who use heating oil in their homes.

"We cannot just wait around," Gore said in remarks at a family-owned heating oil business. "Families need action now."

Campaigning in Cleveland, Texas Gov. George W. Bush decried what he called a shortsighted proposal that would tap "an insurance policy" against supply disruptions or in case of war.

Speaking earlier on Regis Philbin's morning talk show, Bush said the nation, instead of tapping its reserves, should use its "strong hand in the diplomatic circles" to persuade oil-producing countries to increase their output.

Both candidates have been forced in recent months to respond to rising fuel costs that have angered drivers and will soon be felt again in households that rely on heating oil.

Oil prices this week hit their highest mark since the Persian Gulf war nearly a decade ago, before easing slightly yesterday at $34.75 a barrel.

Democratic and Republican members of Congress - particularly those from Northeast states where heating oil is used heavily - have pressed President Clinton in recent weeks to release some of the nation's reserves.

"The president is weighing his options," said White House spokesman Jake Siewert. "We haven't ruled any of them out."

Some experts said it was unclear whether carrying out Gore's proposal would have much impact on gasoline and heating oil prices.

"It can have some psychological effect, I suppose," said Douglas R. Bohi, a Washington-based consultant who has written extensively on oil policy issues. "It helps, but it's probably not enough to restore inventories [of fuel] to where they need to be."

Clinton's top advisers have been split on the issue. Treasury Secretary Lawrence Summers recently urged the president not to release any crude, saying it would be "a major and substantial policy mistake." Federal Reserve Board Chairman Alan Greenspan also opposes such a release.

In February, Gore had expressed skepticism that a sale of oil from the nation's reserves would have much of an impact on prices.

But as oil prices become more of a political issue, opinions change. Gore said oil prices were $29.13 a barrel in February, when he voiced opposition to tapping the reserve. The price this week reached $36.81, a 26 percent increase.

Summers also appeared to be changing his mind.

"There are a number of approaches for prudent use of the [reserve] that are now on the table, including those the vice president has proposed, which could be appropriate in current circumstances," said Summers' spokeswoman, Michelle Smith, speaking on his behalf.

Smith said Summers' opposition was to a specific proposal to release 60 million barrels from the reserve - more than Gore is proposing.

The Strategic Petroleum Reserve was created after the Arab oil embargo in 1973, which doubled U.S. gasoline prices and stifled economic growth.

The reserve was last tapped in response to an emergency in 1991 during the Persian Gulf war.

Speaking in front of five fuel-storage tanks, Gore called yesterday for the release from the reserve of "several" increments of 5 million barrels of crude to see if that helped drive down prices. He did not set a target for how many barrels should be released altogether.

Under the plan, the oil would be "swapped" with energy companies, who would have to restock the reserve in the future when prices are lower.

Gore also called for building a permanent home heating oil reserve for the Northeast and proposed a temporary tax credit for oil distributors to help build up their oil stocks. Republicans were quick to criticize Gore, noting that the nation is using a higher proportion of foreign oil now than when Clinton took office.

Assuming the traditional role of the vice presidential candidate, Republican Dick Cheney went on the attack, reciting a litany of energy woes he said were afflicting the country, from rolling brownouts in California to soaring gas prices to environmental regulations that are strangling oil supplies.

"We are already living with Al Gore's energy policy," Cheney said.

Gore campaign aides fired back that the "Big Oil" ticket of Bush and Cheney do not want to bring down the price of oil because it boosts the profits of their friends in the energy industry in which both worked.

Gore spoke for about 15 minutes at Burch Oil Co., a heating oil distributor owned by third-generation members of the Burch family.

He contrasted the family owned firm with Big Oil, which he accused of "profiteering" during the recent rise in fuel prices.

Gore, who in the past has trumpeted higher fuel costs as a way to bring down consumption and improve air quality, sounded decidedly more populist yesterday.

"You ought to have the choice to get in your car, turn on your engine and go where you want, all at a reasonable price," he said.

Gore called on oil-producing countries to live up to their recent commitment to increase output. OPEC, the oil cartel that controls about 60 percent of world oil exports, recently agreed to increase production by 800,000 barrels per day beginning Oct. 1.

World oil production is about 78 million barrels per day. OPEC President Ali Rodriguez said yesterday that that was about 2 million barrels per day more than world demand.

"I insist there is no shortage of crude oil," he said in Venezuela yesterday. "There is a shortage of refined products, and that is a result of the serious refining problem."

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