Strategic Oil Sale Driven By Politics, Not Policy
September 27, 2000
On September 22, President Clinton announced plans to sell a small amount of oil from the Strategic Petroleum Reserve to help elect Al Gore. He didn't put it that way, according to the NCPA's Bruce Bartlett, but the move will do nothing to relieve the shortage of home heating oil in the Northeast and establishes a dangerous precedent of using the petroleum reserve to manipulate prices.
- The target voters are those in the Northeast, which is heavily dependent on home heating oil.
- The problem is that 85 percent to 90 percent of the oil being released from the SPR will not be converted to heating oil, but to gasoline, kerosene and a variety of other products that are refined from crude oil because only so much heating oil can be refined from a barrel of crude.
- Since U.S. refineries across the country are already operating at peak capacity, their ability to produce heating oil isn't limited by a lack of crude oil, but by refining capacity.
Finally, because of the heavily liberal orientation of most Northeast politicians, there are neither refineries in that region nor pipelines to carry heating oil there if it were available, thanks to state environmental laws and regulations. Politicians from these states have also been in the forefront of national environmental laws that have closed most of the nation's prime oil-bearing land to drilling and exploration.
Treasury Secretary Lawrence Summers strenuously opposed releasing oil from the SPR, saying in an internal memo reported by the Wall Street Journal on Sept. 21 that such action would "set a dangerous precedent" by using the SPR to "manipulate prices" rather than adhering to its original purpose of alleviating an oil cutoff. Since every person who joins the Clinton Administration checks his principles at the door, Mr. Summers quickly reversed himself and praised using the SPR to drive down the price of oil between now and the election.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, September 27, 2000.
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