Bush prepared to tap heating oil reserve

Oct 03, 2005 02:00 AM

President Bush is ready "to do whatever it takes" including, if necessary, tapping government stocks of heating oil to counter supply shortages this winter, his energy secretary said.
Samuel Bodman said the twin hurricanes Katrina and Rita have dealt "a very significant blow" to the country's energy infrastructure" with almost all of the Gulf Coast's oil production, nearly 80 % of the region's natural gas supplies, and a fifth of the country's refining capacity still shut down.

Bodman said that a decision to release additional government stocks of crude oil, or for the first time tap the government's Northeast heating oil reserve, will be considered by Bush.
"We are prepared to do what is necessary with regards to the strategic reserves," Bodman said, adding that the president has indicated "he is prepared to do whatever it takes" to meet supply needs.
"We've had a very severe pair of episodes, they have damaged the (energy) infrastructure," Bodman said at a news conference held withthe Alliance to Save Energy, a private energy conservation group.

Bodman said the country can be expected to face high heating oil and natural gas prices this winter. But he added, with conservation "we can be successful in minimizing the pain caused by high energy prices this winter."
Congress five years ago created a 2-mm-barrel Northeast heating oil reserve that is to be used in case of supply shortages or delivery problems in nine states from Maine to Pennsylvania. Fuel oil is widely used in the Northeast to heat homes and businesses.

The government stockpile of heating fuel, which is rotated regularly while held at private terminals in New York Harbour and Connecticut, has never been used. The Energy Department has forecast sharp increases in heating costs this winter because of the disruption of natural gas supplies and refining capacity in the aftermath of Hurricanes Katrina and Rita.
In response to Katrina, the Energy Department sold 11 mm barrels of crude from its Strategic Petroleum Reserve -- which holds crude oil but no refined products -- and loaned another 13 mm barrels to specific refineries. The department has not ruled out providing additional crude, but so far has had no requests.

The department, meanwhile, distributed a pamphlet on tips to save energy, including installing more insulation in homes and lowering the thermostat a few degrees. It also plans along with the Alliance an advertising campaign promoting energy conservation.
Earlier, Bush urged people to drive less because of high gasoline costs, which in many parts of the country again have exceeded $ 3 a gallon after receding somewhat after Hurricane Katrina. Congressional Democrats pounced on the initiative, calling it a "toothless energy saving program with no commitment by the federal government to reduce its own (energy) consumption."

In a letter to Bush, 18 Senate Democrats, including Democratic Leader Harry Reid of Nevada, said the government in the last five years had made virtually no progress in cutting energy use despite a commitment in 2000 to cut federal energy consumption 20 % by 2005.
Asked if the administration's approach to dealing with high energy costs is similar to when President Carter in the 1970s went on television, wearing a sweater and urging energy conservation, Bodman sidestepped the question.

"The situation we are facing is a very different one than we faced in the past... in the Carter administration," said Bodman. "This is in response to significant damage that has been done to the country's energy infrastructure."
The country faced soaring energy prices in the late 1970s because of a disruption of oil shipments as a result of the Iran hostage crisis.

Source: Dow Jones
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