US fuel crunch shows energy independence need-API

www.alertnet.org 19 Feb 2003 19:00

NEW YORK, Feb 19 (Reuters) - An energy crunch that is dealing a blow to fuel consumers' pocketbooks proves the need for the United States to become more independent from unreliable foreign oil supplies, the American Petroleum Institute (API) said on Wednesday.

The Bush Administration has been attempting since 2001 to push through controversial aspects of the White House energy program that would increase domestic oil drilling, but it has met resistance from Democrats claiming the need for more petroleum does not justify the environmental costs.

"We're in the same fix we were in two years ago, and nothing's been done to fix the problems that existed then." said John Felmy, director of policy analysis and statistics at the API, which represents members of the oil industry.

"Our energy infrastructure is straining to meet the ever-growing demand, and when problems occur, like the ones we're seeing, we experience this volatility," he told Reuters.

Oil prices have spiked to within reach of two-year highs near $38 a a barrel, as a national strike in Venezuela cripples exports from the OPEC nation and the United States is hit with strong heating demand and fears over war on Iraq.

Retail gasoline prices have surged above record highs for February at $1.66 a gallon on average, while heating oil prices have hit three-year highs at $1.71 a gallon, leading to calls from petroleum distributors for a release from the nation's Strategic Petroleum Reserve (SPR).

The Bush administration said last week it was monitoring a drop in U.S. crude oil inventories, now the lowest in 27 years, but indicated there would be no release of oil from the SPR, which is used only in cases of severe disruption.

Against this backdrop, the Senate is expected to vote in mid-March on whether to open the Arctic National Wildlife Refuge (ANWR) to oil drilling -- the most controversial aspect of Bush's energy plan -- with supporters hoping to reverse last year's defeat and stressing the need for energy independence.

The Bush administration is pushing to open the refuge and tap its potential 16 billion barrels of oil to reduce U.S. dependence on crude imports, particularly as fears mount that a possible war with Iraq could disrupt supplies from the oil-rich Middle East.

But most Democrats and environmentalists oppose drilling in ANWR and want to protect the reserve's wildlife. They say there is not enough oil in the refuge to justify disturbing the area's wildlife, and argue the government should raise fuel mileage standards for sport utility vehicles.