Bush expanding Strategic Petroleum Reserve
By John King
WASHINGTON (CNN) -- President Bush said Tuesday he has decided to expand the U.S. Strategic Petroleum Reserve to "maximize long-tern protection against oil supply disruptions."
The president directed Energy Secretary Spencer Abraham to increase the reserve from its current level of approximately 545 million barrels to its 700 million barrel capacity, calling the reserve "an important element of our nation's energy security."
"Our current oil inventories and those of our allies who hold strategic stocks are sufficient to meet any potential near-term disruption in supplies," Bush said in a statement. "Filling the Strategic Petroleum Reserve up to capacity will strengthen the long-term energy security of the United States." Abraham said the move was a "precautionary" step and not linked to any immediate concerns of oil disruptions due to the military campaign against Afghanistan.
"We noted that the reserve was substantially lower today than it was in 1993, and we felt that that was one area where we should begin taking some action as a contingency, as a long-term precautionary set of policies but it is not based on any immediate threat," Abraham told reporters following a meeting with industry representatives at the White House. "There's not any linkage to any kind of specific disruption threat, but we think it's wise policy for the long-term," Abraham said.
Abraham said there was no set "time frame" for filling up the reserve, adding it wouldn't be done "overnight."
The reserve will mainly be filled up through "royalty-in-kind transfers." Currently, the private sector must give the federal government one out of eight barrels of oil that is obtained from federal lands. The government had been accepting cash in lieu of the oil, but now will take possession of the oil itself.
"We take a royalty if they drill on federal lands," said Claire Buchan, White House deputy press secretary. "We had been taking cash, but now we'll be taking the oil."
So far, oil prices have fallen since the September 11 attacks, but administration officials said Bush was accepting as a precaution the recommendation which came from Abraham.
The Department of Energy told CNN that the Strategic Petroleum Reserve contains 545 million barrels, with another 47 million already contracted for delivery. That means it will need an additional 108 million barrels to bring it to a full 700 million barrel capacity.
Abraham and Interior Secretary Gale Norton also called on Congress to finish work on an energy bill, which calls for boosting the domestic production of oil, including drilling in Alaska's Arctic National Wildlife Refuge. Bush advisers say such steps would reduce the U.S. dependence on oil coming from overseas.
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