Clinton announces $400 million heating oil relief program

President defends tapping of strategic oil reserve

In this story: Highest prices in a decade Largest fund release of its kind Bush: 'Political fix' Reserve created after Arab embargo Three other Clinton measures RELATED STORIES, SITES

WASHINGTON (CNN) -- U.S. President Bill Clinton announced an unprecedented $400 million aid program today designed to help low-income families afford the rising cost of home heating oil this winter.

VIDEO CNN's Bob Franken looks at how tapping the oil reserves will work Play video (QuickTime, Real or Windows Media) Watch Clinton's statement Play video (QuickTime, Real or Windows Media)     ALSO Tapping oil reserve causes stir on campaign trail

The move came a day after Clinton ordered U.S. Secretary of Energy Bill Richardson to release 30 million barrels of crude oil from the nation's Strategic Petroleum Reserve in an attempt to force oil prices downward.

Clinton called the oil to be released a "swap" that would be more than replenished in the spring, when fuel supplies are expected to be higher and prices lower.

"I think it's plainly a prudent thing to do," Clinton said, "to increase stocks for the winter, and to try to make sure it has a moderating effect on prices, basically to deal with the supply issue and normally in a market situation the price will follow. That's what I hope will happen here."

"Families shouldn't have to drain their wallets to drive their cars or heat their homes," he said.

A recent $7 per barrel oil price hike has pushed the cost of oil to its highest level in 10 years, peaking at nearly $38 per barrel.

"As it stands, overall heating oil reserves are more than 20 percent lower than they were last year," Clinton said. "Fifty percent lower on the East Coast, more than 60 percent lower in New England. The underlying cause of low inventories is the high price of crude oil."

Clinton's home heating oil initiative was dominated by his ordered release of $400 million in emergency assistance funds by the Department of Health and Human Services.

Clinton called it "the largest-ever emergency funding release of its kind."

On Friday, the oil industry announced its opposition to Clinton's decision to release the reserve. The American Petroleum Institute warned that the reserve was not intended to be used to manipulate oil prices.

The institute said the move would prove to be "a major and substantial policy mistake" that would lead to a return of shortages and long lines at gas stations that were so prevalent during the Arab oil embargo of the 1970s.

At a campaign rally Saturday at Orlando International Airport, GOP presidential candidate George W. Bush accused the Clinton administration of having "no planning, no foresight" in dealing with the energy problem.

"It's time to have a leader who's able to stand up to big foreign oil, and understand that dependence on foreign oil is the problem we face," he said.

On Friday, Bush criticized the reserve release as a "short term political fix" designed to help boost his Democratic opponent, Vice President Al Gore.

The Clinton administration denied Bush's allegation, although Secretary Richardson announced the release of oil reserves after Gore called for such a move.

The 571-million-barrel stockpile was created to guard against a repeat of the 1973 Arab oil embargo of the United States, which resulted in skyrocketing prices and severe shortages of gasoline and other oil products. Only once before has the United States released oil from the reserve -- during the 1991 Persian Gulf War.

The reserve was released to prevent Baghdad from using oil as an economic weapon against a U.S.-led alliance aimed at forcing invading Iraqi troops out of neighboring Kuwait.

The president also announced on Saturday three additional measures aimed at reducing oil prices this winter.

"I've asked the Environmental Protection Agency to help states identify ways to use more and different kinds of heating oil while minimizing environmental consequences," Clinton said.

He also announced that federal agencies would make early contractual commitments to purchase heating oil throughout the winter, in an attempt to bolster confidence among oil wholesalers to increase inventories in advance.

Clinton said he would ask state public utility commissions to ensure that factories and businesses using heating oil as a back-up fuel keep adequate reserves.

"Taken together these steps will enhance our nation's energy security and help to cushion working families from high heating bills."

Finally, Clinton also called on Congress to support his energy budget initiatives and tax incentives, which he said would promote development of clean, new energy technology.

CNN Senior White House Correspondent John King contributed to this report, written by CNN.com Writer Thom Patterson.

Congress, Clinton administration point fingers over high price of oil
September 21, 2000
New England congressmen turn up pressure on heating oil
September 20, 2000
Bipartisan congressional group urges presidential action on home heating oil crisis
September 19, 2000
Burton summons Richardson to testify over oil prices
September 11, 2000

U.S. Department of Energy
  • Strategic Petroleum Reserve
U.S. Department of Health & Human Services
The American Petroleum Institute
United States Environmental Protection Agency

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