Controlling Oil Prices
Gore says the price crisis merits opening the strategic reserve.
Bush says that's bad policy. Who's right, and who has the better
plan for the future?
GORE'S SHORT-TERM FIX
The oil that Gore urged be released is not sold but "swapped":
companies who win bids for it can sell it at current market
prices, but they will have to return the same value of crude to
the reserve next summer or fall. Prices will probably be lower
then, so the companies will actually have to return more oil than
they have taken out. Gore also proposes to ease the coming pain
by giving a temporary tax credit for distributors who build up
their oil stocks before winter and by asking Congress to spend
$400 million to help low-income families pay for heating oil.
HOW IT MIGHT WORK Most experts say tapping the reserve is likely
to drive down the price of oil--which is determined as much by
speculation as by supply--in the short term. (By the end of last
week the price had already dropped to $32.65 per bbl., from
$37.20 last Wednesday.) The tax credits should help lower the
price of heating oil this winter, and the low-income funds will
ease the burden on some families.
THE BUSH CRITIQUE
Pumping more crude oil into the system won't help since
refineries are already operating at 95% capacity, and not enough
crude can be turned into heating oil to make a real difference by
winter. Besides, if oil-producing countries cut back supply in
response to the U.S. release, they will wipe out its impact. Bush
maintains the reserve should be used only in a true crisis. He
agrees that the government should help low-income elderly with
their heating bills, but he proposes no other short-term way of
bringing down prices, other than to argue that he would be more
effective than Clinton or Gore at persuading "our friends
overseas" to lower oil prices.
GORE'S LONG-TERM STRATEGIES
Gore plans to devote about 3% of the budget surplus over the next
10 years--$171 billion--to reducing America's reliance on oil and
gas (and to clean up the environment). His program includes tax
breaks to companies that use renewable energy sources such as
wind and solar power, federal investments in light rail systems
and high-speed trains, grants to small businesses to develop new
energy-efficient technologies and tax breaks to families that
purchase energy-saving cars, homes and appliances. Gore opposes
drilling in the Arctic National Wildlife Refuge.
BUSH'S LONG-TERM STRATEGIES
Bush's budget plan does not include a detailed energy policy.
Last week he said he would try to persuade OPEC to increase the
supply of oil by reminding "the folks over there who sent the
troops on the ground." He proposes to increase oil exploration at
home, expand refining capacity and drill in the Arctic refuge.
--By Andrew Goldstein
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