SPR release should occur only with big loss of supply

SPR release should occur only with big loss of supply: Cheney

Washington (Platts)--25Aug2004


The US should only release oil from the Strategic Petroleum Reserve if there
is a severe supply emergency--such as a loss of 5-6-mil bbl of supply or if
exports from a major supplier were halted, US Vice President Dick Cheney said.
"The reason we set up the (SPR) back in the '70s, and maintain it since, is to
deal with the emergency that would arise if...something were to suddenly
happen to one of the major nations supplying petroleum to the US...(and) we
were dealing with a situation (in which) we lost 5- or 6-mil b/d...out of the
20-mil bbl a day that we currently consume," he told a town-hall meeting in
Iowa Tuesday, according to a transcript of his remarks released Wednesday.
"That would be the kind of national crisis that would drive prices so high and
probably bring large parts of our economy to a halt...we keep the (SPR) to
deal with exactly that kind of contingency."

The Bush administration has rejected calls over the past few months from
Democrats and some business groups to use the 660-mil bbl emergency crude oil
stockpile--either to release from the reserve or to suspend deliveries into
the reserve--to drive down soaring oil prices, saying the SPR should be used
only in supply emergencies and not to lower prices. The US airline industry
made such call Wednesday. "It's been our belief that we ought to save (the
SPR) for true emergencies, and those kinds of emergencies would arise, as I
say, if Saudi Arabia or Nigeria or one of the other major foreign suppliers to
the US wasn't able to continue to fulfill (its) commitment to us...," Cheney
said. He added that releasing from the SPR to bring down prices would act as a
short-term fix, but that it would leave less crude in the reserve available
and the nation more vulnerable to a true supply disruption. Democratic
Presidential candidate John Kerry has said he supports suspending the SPR
fill, but that he does not believe oil should be released from the reserve.

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