Strategic reserves safe for now

vh80299.vh8.infi.net John Sullivan January 8, 2003 The Associated Press

An oil leak is seen Monday near a pump in Maracaibo Lake in western Maracaibo, Venezuela. According to members of the opposition in a news conference, new workers who were trying to resume oil production had an accident, resulting in the leakage.

LAFAYETTE - A spokesman for a Louisiana congressman said Tuesday the United States will not tap into its energy savings. The administration is instead hedging its reserves in the event of a war in the Middle East.

Last week, U.S. Rep. Billy Tauzin, R-Chackbay, had requested the U.S. Department of Energy open the Strategic Oil Reserves to offset the loss of oil coming from Venezuela.

Venezuela is the fifth-largest producer of oil in the world, and during 2002, the country imported an average of 1.2 million barrels of oil in the United States each day.

"The administration is caught between a rock and a hard place right now," said Ken Johnson, a spokesman for Tauzin. "On one hand, the White House wants to do whatever is necessary to keep the price of gasoline down for consumers.

"On the other hand, though, they want to keep their reserves in the event of a war with Iraq and the Middle East oil lines are disrupted."

With the loss of oil to American refineries because of the Venezuelan shutdown, Tauzin had requested the Department of Energy open the strategic reserves.

"The administration has continued to assure us that they are monitoring the market," Johnson said. "The congressman has continued to say he is worried that the continuing shortage will eventually begin hurting consumers in the form of higher prices at the gas pumps."

Tauzin had requested the Strategic Petroleum Reserves be tapped because the stoppage of oil coming from Venezuela has affected five refineries in the United States.

The refineries are: Citgo in Lake Charles; Murphy Oil in Meraux; Exxon Mobile in Chalmette; the Lyondell-Citgo Refining joint venture near Houston; and the Farmland Industries refinery near Coffeyville, Kan.

"None of these refineries have reported they are going to stop operations," Johnson said. "But all have indicated they are scaling back."

He said a large shipment of oil from Russia has been delivered to the Lake Charles refinery, which boosted its inventory up. Russian officials have said they will continue to increase

"The wild card will be what happens in the Middle East," Johnson said. "If the United States goes to war and the oil lines from the Mideast are cut, then the president has the reserves to fall back on."

He said that the Strategic Petroleum Reserves are similar to a savings account.

"It's obvious the administration is using the reserves as a rainy day fund," Johnson said. "Use them too early and a major disruption of the oil fields and oil supply happens, then we won't have the reserves and we will see severe shortages."

The Strategic Petroleum Reserves consists of four large underground storage sites in Louisiana and Texas that contain about 570 million barrels of oil. In Louisiana, the sites are at West Hackberry near Lake Charles and Bayou Choctaw near Baton Rouge.

The two Texas sites are Bryan Mound near Freeport and Big Hill near Winnie.

The Strategic Petroleum Reserves were ordered developed after the Arab Oil Embargo of the United States in the late 1970s because of the nation's support of Israel.