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Breaking News

President Clinton Expected to Approve Limited Use of U.S. Petroleum Reserve

Aired September 22, 2000 - 3:37 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU WATERS, CNN ANCHOR: As we reported a moment ago, Energy Secretary Bill Richardson is about to weigh in on whether or not to tap into the strategic oil reserves in this nation.

John King over at the White House has more on this breaking story --John.

JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: When he weighs in, Lou, it is sure to cause a controversy: both a policy controversy and a political controversy.

CNN told by several sources the energy secretary will announce several steps designed to push down energy prices, home heating oil prices, as well as gasoline prices, and that those steps will include some tapping of the United States government's strategic petroleum reserve. Now, that's a 571 million barrel emergency stockpile created for national security reasons: so the government would have a supply in the case of a national emergency.

Some say it's inappropriate to tap it just because prices are on the rise. But we are told the secretary will announce a significant tapping of the strategic petroleum reserve. We don't have the exact numbers yet, although we do know this much: He had proposed to the president tapping as much as 60 million barrels, more than 10 percent of the reserve. We are told the figure is smaller than that, but significantly higher than the approach advocated by the vice president.

The vice president had said: Try a few test sells, five million barrels at a time, to see if that would drive down the prices: the idea here being because supplies are so low, you would sell money out of the government's emergency reserves, put more oil in the market. That crude oil would have to be refined: some obviously to gasoline, some to home heating oil -- the idea being that would drive down prices a little bit.

Most of all, though, they hope the psychology here kicks in, that if the government shows it is willing to intervene, put more crude oil in the market that the oil companies will respond by trying to lower prices and that OPEC, most importantly, will perhaps respond by keeping its past promises to increase production, something the administration says it has not done. Again, we are trying to get the exact details. This can be very complicated. How they sell the oil into the market, whether -- when they sell it, the companies are required to return it. It's called a swap. We are told to believe that is what we will see in the announcement: a swap where the oil companies would get access to this oil now.

And when prices fell, they would have to replenish the emergency reserve -- the announcement coming up at the top of the hour from the energy secretary -- some Republicans already saying it's election-year politics, designed to appease the voters by lowering energy costs -- Lou.

WATERS: Politics also complicated within the administration, wouldn't you say, John? Alan Greenspan and the Treasury secretary both said it would be a mistake to release oil from the strategic reserve just a couple of days ago.

KING: Well, Lou, the Treasury secretary saying he said that about 10 days ago when prices were considerably lower. And he said that he was against any major tapping of the strategic petroleum reserve, against the 60-million-barrel approach advocated by Mr. Richardson. He did say yesterday, the Treasury secretary, Larry Summers, that perhaps a more modest tapping might be prudent now given that prices have continued to go up.

The White House has tried to get a consensus among the president's senior advisers. Mr. Clinton signed off on tapping the strategic reserve just a few hours ago here at the White House -- Lou.

WATERS: OK, John King at the White House.

We will wait for the announcement. And then we'll go from there -- Energy Secretary Bill Richardson expected to deliver that announcement at any time. And we will be prepared to pass along what we know about it.

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