Bad News from the Bush White House:
White House accused of stoking oil prices by filling reserve
By H. Josef Hebert, Associated Press, 8/6/2003
WASHINGTON -- The Bush administration's decision to buy oil for the government's emergency reserve is contributing to tight supplies and higher energy prices, some economists and congressional Democrats contend.
The Energy Department discounts the impact of the purchases, nearly 11 million barrels since the beginning of May, while a number of oil traders say other factors have had more of an impact.
Senator Carl Levin, a Michigan Democrat, urged Energy Secretary Spencer Abraham yesterday to immediately suspend the oil shipments into the Strategic Petroleum Reserve, or SPR, ''until the price of oil falls from its current high levels and the private sector inventories increase.''
''This administration's actions to fill the SPR regardless of the price of oil or the amount of oil available to the commercial sector is a major reason for these high prices,'' Levin, the ranking member of the Senate Governmental Affairs investigations subcommittee, wrote to Abraham.
Energy Department spokesman Joe Davis responded: ''The vast majority of Americans realize that insuring the SPR is key to our energy and national security. That's why there is bipartisan support to fill the reserve'' to its 700 million-barrel capacity.
But commercial US oil stocks have been at low levels all year, putting pressure on prices.
Light sweet crude sold for $32.22 per barrel yesterday on the New York Mercantile Exchange. Crude stood at more than $30 a barrel into December on the futures markets; it is expected to decline in 2004.John Lichtblau, chairman of the nonprofit, New York-based Petroleum Industry Research Foundation, dismissed suggestions that shipments for the petroleum reserve had a measurable impact on the global markets. ''It's a very small amount, 80,000 to 100,000 barrels a day out of total crude imports of nearly 10 million barrels a day,'' he said.
But others disagree.
Energy consultant Phil Verleger, an economist, said that because commercial inventories are so low, any oil taken out of the market has an impact on price. ''If inventories get lower, each barrel counts more,'' said Verleger.
White House accused of stoking oil prices by filling reserve
By H. Josef Hebert, Associated Press, 8/6/2003
WASHINGTON -- The Bush administration's decision to buy oil for the government's emergency reserve is contributing to tight supplies and higher energy prices, some economists and congressional Democrats contend.
The Energy Department discounts the impact of the purchases, nearly 11 million barrels since the beginning of May, while a number of oil traders say other factors have had more of an impact.
Senator Carl Levin, a Michigan Democrat, urged Energy Secretary Spencer Abraham yesterday to immediately suspend the oil shipments into the Strategic Petroleum Reserve, or SPR, ''until the price of oil falls from its current high levels and the private sector inventories increase.''
''This administration's actions to fill the SPR regardless of the price of oil or the amount of oil available to the commercial sector is a major reason for these high prices,'' Levin, the ranking member of the Senate Governmental Affairs investigations subcommittee, wrote to Abraham.
Energy Department spokesman Joe Davis responded: ''The vast majority of Americans realize that insuring the SPR is key to our energy and national security. That's why there is bipartisan support to fill the reserve'' to its 700 million-barrel capacity.
But commercial US oil stocks have been at low levels all year, putting pressure on prices.
Light sweet crude sold for $32.22 per barrel yesterday on the New York Mercantile Exchange. Crude stood at more than $30 a barrel into December on the futures markets; it is expected to decline in 2004.John Lichtblau, chairman of the nonprofit, New York-based Petroleum Industry Research Foundation, dismissed suggestions that shipments for the petroleum reserve had a measurable impact on the global markets. ''It's a very small amount, 80,000 to 100,000 barrels a day out of total crude imports of nearly 10 million barrels a day,'' he said.
But others disagree.
Energy consultant Phil Verleger, an economist, said that because commercial inventories are so low, any oil taken out of the market has an impact on price. ''If inventories get lower, each barrel counts more,'' said Verleger.
posted by Pamela J. Leavey at 12:06 AM
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