By
The Associated Press
WASHINGTON - Amid growing global worries about the economic impact of high oil prices, President Clinton said Saturday that tapping the U.S. emergency oil reserve was "plainly the prudent thing to do." He denied he was motivated by politics.
"Families shouldn't have to drain their wallets to drive their cars or heat their homes," he said at the White House before leaving on a trip to California.
Clinton said he acted to cushion Americans against a likely sharp jump in heating costs this winter because of tight supplies.
The government will start taking bids today for 30 million barrels of oil - about 5 percent of the 571 million barrel reserve - for delivery in November.
Although the price has moderated in recent days, crude oil remains above $34 a barrel. High prices have led to demonstrations in France and England and unease in the United States, where gas stations charged more than $2 a gallon in some areas this summer.
Rising energy costs are becoming an issue in the presidential campaign as winter bills are expected to be as much as 50 percent higher than 1999's.
Despite incremental production increases by the Organization of the Petroleum Exporting Counties, worldwide supplies remain extremely tight, largely because of a strong U.S. economy and a quicker than expected economic rebound in Asia, analysts say.
Economists cited energy costs as one reason for Europe's currency problem that on Friday prompted a dramatic attempt to prop up the euro. A meeting of the world's top finance ministers, which began Saturday in the Czech Republic, has taken on additional urgency because of concern that oil prices could hamstring the world economy if not contained.
Treasury Secretary Lawrence Summers, in private discussions with other ministers Saturday, explained Clinton's use of the emergency oil reserve. More broadly, he characterized the high cost of oil "the biggest cloud in the relatively blue sky" of a fundamentally sound global economy.
The ministers, in a communique, welcomed the U.S. decision to use the oil to deal with what Japan's minister, Kiichi Miyazawa, said was "the most serious problem" facing the ministers' conference.
"We welcome the U.S. action to release a limited quantity of it's oil reserves in the form of swap transactions," the Communique said in a brief section on energy issues.
Senior U.S. officials quickly cited the endorsement as evidence that the oil release was not viewed around the world as a political decision.
At the White House, the president dismissed suggestions by Republicans - including George W. Bush, Vice President Al Gore's GOP rival for the White House - that tapping the reserve would not in the national interest or that he was acting to aid Gore's candidacy.
"It's plainly the prudent thing to do. ... This is the right thing to do. It's good energy policy. It's good national security policy and good family policy," Clinton said.
He also said the Republican-controlled Congress had "chopped, blocked and ignored" administration proposals aimed at promoting energy efficiency and renewable energy sources.
In response, a House GOP leader, Oklahoma Rep. J.C. Watts, said the administration "has done nothing over the past seven and a half years to put in place a comprehensive energy policy."
Campaigning in Florida, Bush said Saturday that Gore is using the Strategic Petroleum Reserve "as if it's the strategic political reserve." Gore on Thursday proposed tapping the reserve; Clinton's announcement came Friday.
The government oil is to be released as part of a "swap" that will require recipients of the crude to return a like amount of oil - plus a negotiated "premium" amount - next year when prices are expected to be lower. First deliveries are expected in November.
Clinton also announced that states will share $400 million "to help families that can least bear the burden of high energy prices" He said it was the largest such release ever of low-income energy assistance funds.
Gene Sperling, Clinton's top economic adviser, said that despite reservations in the spring about using the reserve, all of the president's economic advisers supported his decision.
This time, Sperling said, "We felt there was a serious enough risk of a supply shortage."
Analysts and others were uncertain about the impact of the drawdown.
"Down the line it could help some. It won't help instantly," said Wilfrid L. Kohl of Johns Hopkins School of Advanced International Studies. But he said a "perception" often plays a role in dictating future oil prices.
"Prices will fall, but the effect will be temporary," said Venezuela oil minister Ali Rodriquez, the current OPEC president.
Some energy experts said the action shows the administration may intervene again if oil prices do not decline. Others raised the possibility that OPEC might retaliate by holding back production.
Saudi Arabia, the closest U.S. ally among OPEC members, criticized Clinton's decision, but U.S. officials said the Saudis had assured them they were not too upset. Saudi Arabia has said oil prices are too high and should be in the $25 to $28 a barrel range.
It is only the second time since the emergency reserve was created after the 1973-74 Arab oil embargo that oil has been ordered taken to deal with supply problems. The other was in 1991 when 21 million barrels was drawn just before and during the Persian Gulf War.
