Administration to Establish Heating Oil Component of Strategic Oil Reserve

Protection of Americans This Winter Must Take Precedence, Energy Secretary Richardson Says

Washington, DC - President Clinton announced today that he has directed Secretary of Energy Bill Richardson to establish a heating oil component of the Strategic Petroleum Reserve in the Northeast to help protect Americans from possible fuel shortages this winter.

"A home heating oil reserve in the Northeast will serve as a much needed insurance policy so that consumers won't be left literally out in the cold this winter," said Secretary of Energy Bill Richardson. "While it might be difficult to focus the nation's attention on sub-freezing temperatures during the middle of July, it is important we set up this reserve now so that there will be adequate supplies of heating fuel come this winter."

After conferring with the President, Richardson directed the Energy Department to offer an exchange of crude oil from the nation's Strategic Petroleum Reserve to companies willing to provide up to 2 million barrels of emergency heating oil stocks and the necessary storage facilities in time for this winter's heating season.

The Energy Department will offer the crude oil exchange through the Defense Energy Supply Center, an arm of the Department of Defense that routinely procures petroleum products for the nation's military. The Center will issue a solicitation within the next two weeks which will specify the terms and deadlines for receiving industry offers.

Companies wanting to participate in the exchange must provide for both the heating oil and sufficient storage tank capacity in the Northeast. The Energy Department said it would prefer to have the heating oil stocks in place in October or as soon thereafter as possible. The exact date will depend on market conditions.

"Even on an accelerated timetable, it will take several weeks before winning companies will be able to arrange for storage facilities and acquire the heating oil," Richardson said. "That meant we had to act before the end of this month or put many Americans at risk of running short of heating oil again this winter."

Agreements will be awarded to those companies that offer the best exchange value for the Strategic Reserve crude oil. The crude oil would come from the Reserve's West Hackberry site in Louisiana.

The Administration decision to act came after the Energy Department's General Counsel determined that there are authorities to establish the new component of the Strategic Petroleum Reserve. Although the organic authority for the Reserve is contained in the Energy Policy and Conservation Act, which expired on March 31 and has not yet been renewed by Congress, legal counsel determined that Congressional enactment of the Department of the Interior and Related Agencies Appropriations Act for FY 2000, which funds the Strategic Petroleum Reserve, was sufficient to enter into exchange agreements and obtain interim storage for the heating oil stocks.

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