In Letter to President Clinton, Senators Applaud Administration's Examination of Oil Swap to Lower Prices and Ease Shortages in the Northeast

In a letter yesterday to President Clinton, US Senator Charles Schumer and Republican Senator Susan Collins of Maine, reiterated their concern over the astronomical costs of home heating oil and other petroleum products, and urged the Administration to take action to lower the artificially high prices and ease shortages.

The letter was prompted by a Sunday morning television appearance by White House Chief of Staff John Podesta in which he stated that the Clinton Administration is "trying to take some of the pressure off of oil prices" by increasing the supply of oil in commercial markets, possibly by releasing oil from the Strategic Petroleum Reserve.

"As you know, we strongly support any responsible plan that seeks to use the [Strategic Petroleum Reserve] to address OPEC's anticompetitive behavior and the resulting economic harm to the United States economy," wrote Schumer and Collins in their letter to the President.

Since September 1999, Schumer has been calling on the Administration to release oil from the SPR to bring relief from high home heating oil and gasoline prices. In a letter to President Clinton dated September 21 st, Schumer first warned that cuts instituted last March by the Organization of Petroleum Exporting Countries (OPEC) would lead to steady and sustained price hikes at the pump and for heating oil customers. In that letter he urged President Clinton to release several hundred thousand barrels a day from the federal government's 570 millionplus barrel SPR to increase supply. In November, Schumer and Collins introduced legislation which makes it easier for the Administration to release some of the SPR in order to limit the economic impact of high oil prices.

In recent weeks, the Department of Energy has reportedly been considering an oil "swap," which would authorize a temporary drawdown of the Strategic Petroleum Reserve in order to increase the oil supply and break OPEC's resolve to maintain the low production quotas they have enforced since March, 1999.

"For months I have been warning that the rising price of crude oil would cease being a nuisance and would become a crisis. We have reached that crisis point. The price of heating oil is now astronomically high, and parts of New York are beginning to experience shortages. It's time for the Administration to face down OPEC and release part of the Strategic Petroleum Reserve," said Schumer. "In the short term, releasing part of the reserve will reduce the price of gas and home heating oil prices. In the long term it is certain to break OPEC's resolve and lead to greater oil production."

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