The New York Times: U.S. Adding More Oil to Emergency Reserve: “Royal Dutch/Shell Group's Shell Oil to deliver more than 100,000 barrels of crude a day to the nation's Strategic Petroleum Reserve.” (ShellNews.net)
By REUTERS
Posted 7 August 04
WASHINGTON (Reuters) - The Bush administration said on Friday it was adding more oil to the U.S. emergency petroleum reserve, despite record high crude prices and strong oil demand.
The U.S. Interior Department said it awarded contracts to ChevronTexaco Corp. and Royal Dutch/Shell Group's Shell Oil to deliver more than 100,000 barrels of crude a day to the nation's Strategic Petroleum Reserve.
The oil will be delivered over a six-month period beginning on Oct. 1.
The administration is not buying the oil going into the reserve. The crude is coming from energy companies that turn over to the government a portion of the oil they drill on federal leases as royalties, instead of paying cash royalties.
The Bush administration has been criticized by energy experts and some politicians for taking oil off the market to put in the reserve at a time of high fuel prices and strong petroleum demand.
The campaign of Democratic presidential challenger John Kerry said on Friday it supports temporarily stopping oil shipments to the reserve while oil and gasoline prices are high.
``We believe we should suspend the fill of the reserve'' at current prices, a Kerry spokeswoman said.
U.S. oil prices topped a record $44 a barrel this week at the New York Mercantile Exchange.
Higher energy costs raise expenses for U.S. businesses and cut into the money consumers have to buy goods and services that help the economy grow.
The Bush administration said it was better to have a large stockpile of oil on hand to respond to any major supply disruption and the amount of crude going into the reserve will not have a big effect on prices anyway.
``Filling the reserve to ensure that America has a ready supply of crude to prepare for any major supply disruption is vitally important,'' said an Energy Department spokeswoman.
``Current deliveries to the SPR are a tiny fraction, only 0.15 percent, of global oil demand, and have very little impact on oil prices,'' she said.
The Interior Department said it was on track to fill the emergency reserve to its 700-million-barrel capacity by the middle of next year.
The stockpile, created by Congress in the mid 1970s after the Arab oil embargo, currently holds 665 million barrels of crude in underground caverns at four sites in Texas and Louisiana.
http://www.nytimes.com/reuters/news/news-energy-oil-reserves.html