US House OKs emergency crude, heating oil reserves
WASHINGTON, (Reuters) - The U.S House of Representatives approved on Tuesday legislation extending the life of the Strategic Petroleum Reserve for three more years, and permanently establishing a separate reserve of heating oil for the Northeast.
The legislation makes it easier for the White House to
withdraw oil from the two stockpiles in an emergency.
Similar legislation was approved by the Senate last week and now the bill goes to President Bill Clinton, who is expected to sign it into law.
"By passing this legislation, we send a strong signal to the rest of the world that the United States once again has the full authority to use its petroleum reserve to deter any attempts to manipulate the world oil markets," said Democratic Rep. Edward Markey of Massachusetts.
Members of Congress have criticized OPEC for not pumping enough oil to bring down high crude prices.
The Northeast reserve, which the Clinton Administration recently set up on a temporary basis to ease tight heating oil supplies, holds 2 million barrels of heating oil, and the Strategic Petroleum Reserve contains about 570 million barrels of crude.
The legislation allows heating oil to be released from the Northeast reserve when either a regional supply shortage of "significant scope and duration" exists, or the difference between the price of crude oil and heating oil increases by more than 60 percent over the five-year average for the winter months (mid-October to March), for seven consecutive days.
The National Weather Service has forecast a colder winter than last year for the Northeast. At the same time, stocks of home heating oil in New England are down 70 percent from a year ago.
The Energy Department is predicting consumers could pay home heating bills that are 50 percent higher in some locations compared to last winter.
The Clinton Administration loaned 23 million barrels of crude oil from the Strategic Petroleum Reserve earlier this month to help refiners build inventories.
The Energy Department awarded another 7 million barrels of reserve oil on Tuesday.
The administration hopes the reserve crude will be refined into heating oil, avoiding supply disruptions and high fuel prices in the Northeast this winter.
However, Republican lawmakers critical of the administration's plan doubt the oil will make it into in the market and refined into heating oil before cold weather hits.
The legislation also gives the Energy Department the authority to purchase oil for the national petroleum reserve from small operators of so-called "stripper" wells when crude prices fall below $15 a barrel.
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