Washington will act to keep US homes warm

Government plans to unveil initiatives to relieve the high price of heating oil.

When Fran Atanasio of Middle Island, N.Y., got her $400 heating-oil bill last Friday, she was stunned. She was charged $2.31 a gallon compared with $1.21 that she paid in early January.

"Now, we're cutting back - the baby and the three-year-old are getting less baths than normal, we have the thermostats lower, and we wash the dishes in lukewarm water," she says. "A bill like that really puts you in a tailspin."

As Ms. Atanasio discovered, last week was particularly rough on those getting their oil tanks filled. To fill an avalanche of orders because of the cold weather, fuel distributors sucked their inventories dry. Wholesale prices spurted 40 cents a gallon. Shortages became common, and some oil companies started rationing. Even when fuel oil was available, some barges got stuck in thick sheets of ice on frozen rivers.

Now, the Clinton administration plans to unveil a series of home-heating-oil initiatives designed to relieve the price pressures on consumers, such as Atanasio.

"What we have is a price problem, not a supply problem," says Energy Secretary Bill Richardson, in a statement to the Monitor. In addition, Mr. Richardson says the Clinton administration is making plans to expedite getting oil to people who need it.

What equals an emergency?

The administration move comes as political pressure is building for the Energy Department to tap the Strategic Petroleum Reserve (SPR), the nation's 565-million-barrel emergency oil supply. Although the oil could not be refined in time to help out this winter, proponents say that by releasing as much as 500,000 barrels of oil per day, the US will cause oil prices to fall.

"It's not too late to open up the spigot and release some of our reserves," says Sen. Charles Schumer (D) of New York.

Since last fall, Senator Schumer and other officials have been urging the Energy secretary to sell oil from the SPR to counteract a tightening of supply and demand. Schumer and Sen. Susan Collins (R) of Maine introduced legislation last fall to make it easier to sell the oil. So far, no hearings have been scheduled on the bill. In fact, Congress hasn't held any hearings on rising oil prices.

Until now, Richardson has resisted the pleas of elected officials in the Northeast. "In the current context we see using the SPR for national emergencies or supply emergencies. We don't manipulate prices, because oil prices should be dictated by the markets," says Richardson. At the end of this week, the government plans to report the results of an administration effort to deal with the heating-oil situation. The main thrust will be finding ways to get oil where it is needed by improving transportation and infrastructure.

Schumer says the Energy Department is considering a transaction in which the government would sell oil it is contracted to buy for the SPR, and then buy it back later, perhaps at a lower price. "That's fine with me. It would have the same effect as selling oil from the SPR," Schumer says.

The US, with its fast-paced economy, is importing an increasing amount of oil. Demand has surged overseas as the world economy has started to grow again. At the same time, the Organization of Petroleum Exporting Countries is sticking to production quotas that keep the price of oil near $30 per barrel.

Worldwide demand for oil has now reached 77 million barrels per day, compared with production of 74 million b.p.d., according to the American Petroleum Institute (API).

Plenty of oil

Although supplies are tight, the API maintains that there is plenty of heating oil available. John Felmy, a specialist on home heating oil, says the problem is transportation and weather. When the temperature drops below 20 degrees F., many large energy users are required to shift from natural gas to oil. This absorbed dealers' inventories. Then, he says, ice has blocked many harbors, so new barge supplies can't reach storage areas.

The fuel that does reach consumers is expensive. HEAT USA, a large fuel-buying group, reports it is getting more than 1,000 phone calls a day from people shocked by their fuel bills.

Many are from senior citizens, says Timothy Irving, head of the New York organization. "We had one last week from a man who said he couldn't decide whether to pay his fuel bill or his prescriptions - he couldn't do both."

(c) Copyright 2000. The Christian Science Publishing Society

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