Modest proposals from Clinton, 'quiet diplomacy' at work

Posted: Sunday, March 19, 2000

WASHINGTON (AP) -- Americans hoping for quick relief from high fuel prices should be patient, President Clinton said Saturday as he cautioned against ''shortsighted and risky steps'' to address the problem.

''There's no overnight solution,'' the president said in his weekly radio address as he announced a series of modest proposals.

None directly addresses the current oil shortages or eases gasoline prices approaching $2 a gallon -- with the prospect of higher pump prices during the peak summer driving season. For now, Clinton refused to tap the government's emergency oil stockpile, despite appeals from lawmakers from both parties.

The president said that, while the nation is being squeezed by high prices, it still doesn't make sense to drill in ''the protected and treasured natural habitats of Alaska,'' meaning the Arctic National Wildlife Refuge.

ANWR drilling is favored by most Alaskans, but it is vigorously opposed by environmental groups across the country.

Alaska Sen. Frank Murkowski is pushing a bill to open the refuge to oil exploration as being in the national interest. ANWR drilling passed Congress a few years ago as part of a budget bill, but it was vetoed by Clinton.

White House officials were relying on ''quiet diplomacy'' to persuade oil exporting countries to increase production and erase a 2-million-barrel-a-day global supply shortfall when they meet March 27 in Vienna, Austria.

To that end, Energy Secretary Bill Richardson was embarking on another round of diplomatic missions Sunday, meeting with oil ministers from Nigeria, Indonesia, Algeria and the United Arab Emirates as well as other officials involved in the oil markets.

Clinton lamented that expensive oil and gasoline ''are causing hardship for many Americans.'' But he added that ''we also need to take a longer view'' and he said he was optimistic more oil soon will be made available.

Congress, he said, should approve proposals to:

--Create an emergency 2-million barrel heating oil reserve in the Northeast where supply disruptions caused prices to soar this winter.

--Offer tax incentives to promote energy conservation, alternative fuels and more energy efficient automobiles and homes.

--Provide modest tax breaks to support increased domestic production. His approach is far short of what Republicans and the oil industry have sought.

The administration will not decide until after the OPEC meeting whether to draw some of the nearly 570 million barrels of oil in the Strategic Petroleum Reserve. The reserve, created in 1975 after the Arab oil embargo, is intended to provide a stopgap in case of disruptions in oil imports. It has been used only once, during the Gulf War in 1991.

In response to Clinton's package, GOP Rep. J.C. Watts of Oklahoma welcomed the goal of improved technology. But, he said, tax credits for research and development ''do nothing for families who would like to pack up the station wagon and drive to Yellowstone this summer.''

Sen. Charles Schumer, D-N.Y., tempered his praise of a new heating oil stockpile in the Northeast with concern that the president's was failing to avert a potential gasoline crisis this summer.

The United States, Schumer said, must make clear to the Organization of Petroleum Exporting Countries ''that we stand ready to immediately release'' oil from the reserve unless OPEC members agree to swift and substantial production increases.

''We cannot let OPEC set the rules any longer,'' Schumer said.

Senior White House officials advised caution.

''What will probably be most effective at this point is effective, quiet diplomacy,'' said Gene Sperling, the president's chief economic adviser.

The White House chief of staff, John Podesta, said ''we have not rejected'' use of the emergency reserve but that ''at this point we don't think it would be a helpful step.''

Senior administration officials privately have expressed concern that tapping the reserve would interfere with the markets, sending an unwanted signal to the OPEC ministers and hampering efforts at significant production increases.

Podesta alluded to those concerns Saturday when he said, ''Our goal ought to be ... that we get as much of a production increase as is reasonable'' from OPEC and other oil exporting nations when they meet later this month.

That is Richardson's goal as he begins another round of discussions with oil ministers.

The OPEC countries -- joined by non-OPEC producers such as Mexico and Norway -- curtailed oil production by some 4.3 million barrels a day in early 1998 to boost prices that had dropped below $10 a barrel. Since then prices have more than tripled and oil inventories have fallen to precarious levels.

The high prices and supply shortages caused heating oil prices to soar last winter as well as gasoline prices to jump dramatically in recent weeks. Last week, average gasoline prices nationwide reached $1.57 a gallon, an increase of 11 cents in two weeks. In some regions prices have jumped even more rapidly, approaching nearly $2 a gallon.


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