Richardson To Delay Oil Deliveries to Strategic Petroleum Reserve

Announces Stepped up Monitoring of Home Heating Oil Markets, Meeting with Home Heating Oil Industry, and Weatherization Funds

U.S. Energy Secretary Bill Richardson today directed the Department of Energy's Strategic Petroleum Reserve Office to renegotiate oil delivery contracts for the Reserve's royalty-in-kind program.

"Given today's market conditions, it simply makes sense to renegotiate these deliveries," Richardson said. "The companies have indicated a willingness to discuss putting additional oil into the SPR if we postpone delivery dates. This would mean more oil supply, greater energy security and a better deal for the American taxpayer."

The Energy Department has contracted for 28 million barrels of federal royalty oil from the Gulf of Mexico to be delivered to the Strategic Petroleum Reserve's storage facilities in Texas and Louisiana. About 10 million barrels of this oil have already been delivered. The Strategic Petroleum Reserve's delivery contracts for the remaining oil in the SPR's Royalty-in-Kind program are with Equiva and Vitol, marketing arms for several major Gulf Coast producers. SPR contractors have expressed a willingness to renegotiate deliveries of up to approximately 5 million barrels of oil, and to deliver greater amounts of oil in the future over current contracted-for levels, when conditions are more favorable for putting oil into the SPR.

Secretary Richardson also announced that he has directed the Energy Information Administration (EIA) to step up its monitoring of home heating oil markets. EIA currently publishes data on retail home heating oil every two weeks. Richardson asked EIA to publish this data on a weekly basis until the home heating oil crisis on the East Coast subsides.

"The Administration is concerned about high oil prices and, in particular, home heating oil prices in the Northeast and New England. The EIA information is the simple, fundamental stuff of market economics, but is of the utmost importance. We need to make certain we have the tools available to match consumers with suppliers. This increased reporting will help make certain that Gulf Coast and European oil product suppliers can move heating oil to those who need it most," Richardson said. "Knowledge is power, and power means heat for those fighting the cold in New England."

Richardson expressed concern about the spike in home heating oil prices with wholesale prices having tripled in the past year. Richardson announced that he intends to hold a summit meeting with refiners and major distributors of home heating oil in February to discuss the reasons for the recent problems in home heating oil markets and how the government and industry can work together to better meet the needs of consumers in the Northeast and New England. The meeting will be held in Boston and will also include the National Association of State Energy Officials.

Richardson said that in addition to providing an additional $45 million in emergency Low Income Home Energy Assistance Program (LIHEAP) funds to Alaska and ten Northeastern and Middle Atlantic states, the Administration will be seeking $154 million for low-income weatherization assistance in the 2001 budget. Additionally, the Energy Department today announced regulatory changes to give local nonprofit organizations that administer the program more flexibility in providing weatherization assistance to achieve more energy savings.

"Besides helping citizens save money on their bills, the Department of Energy's weatherization assistance program can make the difference for people who might otherwise have to choose between buying groceries or medicine and heating their homes during the winter," Richardson said. "We want to work with Congress to ensure full funding for this important effort in 2001."

In 1996, Congress cut funding for the Energy Department's weatherization program almost in half. Through the 2001 budget request, the Administration is working to restore weatherization assistance. The Energy Department's weatherization assistance program is the nation's premier initiative to deliver energy efficiency services to low-income households and communities, especially seniors, the disabled and low-income families with children. Nationwide, DOE has retrofitted almost five million homes, on average cutting heating costs today by 25 percent. The weatherization program includes such energy efficient measures as attic and wall insulation, air sealing, and the repair of heating systems, doors and windows.

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