'Energy Crisis' Blamed on Clinton-Gore Administration

By Cheryl K. Chumley | July 7, 2008 | 8:26 PM EDT

Washington (CNSNews.com) - America faces an energy crisis and the Clinton Administration is to blame, according to statements and testimonies given during a Senate hearing in Washington Thursday.

Ernest Moniz, the Under-Secretary for Energy, Science, and Environment, rejected those claims by saying, "Americans are significantly more protected today from a possible energy shortfall this winter than they were a month ago."

Both Moniz and Senator Charles Schumer (D-NY) credited the administration for its success in "achieving its intended goal," following the release of oil from the Strategic Petroleum Reserve, which Republicans say is the largest draw-down in the history of the SPR.

Their statements stood in sharp contrast to the repeated accusations from members of the Committee on Energy and Natural Resources - that political motives drove Democratic presidential candidate Al Gore to call for the release of the reserve oil during a September campaign gathering.

Two days after Gore's request, Senator Don Nickles (R-OK) said, President Bill Clinton authorized the "swap of 30 million barrels" from the SPR for a promise from the eleven companies receiving the reserves to return an estimated 31 million barrels by the spring of 2001.

That decision was not only shortsighted, one committee member said, but the main cause of the current energy predicament.
"We have the highest oil prices since 1990 during the Gulf War," Senator Larry Craig (R-ID) said, referring to the recent $37 per barrel price for crude oil. "I'm going to call this an energy crisis. Anytime a product doubles in price in a 12-month period ... that's a problem."

The Senate hearing, led by Chairman Frank Murkowski (R-AK), was held to determine whether the administration's approval of the release of 30 million barrels of Strategic Petroleum Reserve oil yielded favorable results and whether the bidding process for the refining and marketing of that oil was handled in an fair manner.

Committee members questioned whether all the companies awarded contracts were reputable, financially solvent, and capable of performing the terms of the agreement by the allotted times.

Testimony indicated that two of the initial bidders could not secure the necessary letters-of-credit by the deadline date and were ultimately left out of the deal, while a third business had to arrange a title transfer to another energy company during last-minute negotiations. That latter company was awarded a contract for three million barrels of SPR oil, Moniz said.

Only 23 million barrels of the oil have been contracted for production, Moniz reported, with the remaining seven to be bid Oct. 23.

According to information released during the hearing, it takes between one and two months to prepare crude oil for consumer use - for heat, gasoline, and diesel fuel.

"The question we have for the administration," Murkowski asked, "is we want to know if the logic used to make that decision [to release SPR oil], has it resulted in the situation being alleviated or has it gotten worse?"

America's oil situation has worsened, according to the former energy secretary under President Jimmy Carter, James Schlesinger, who called the recent decision to release portions of the reserves incompatible with the original premise for maintaining an SPR.

"Thirty million barrels constitute considerably less than two days of usage in the United States," he said. "While the small release from the reserve led U.S. officials to congratulate themselves that they had succeeded where OPEC had failed in reducing prices, subsequent evidence suggests otherwise."

Residents of the northeast U.S. will likely see no heating cost reductions this winter, Schlesinger continued, and could even experience more price increases because of the possibility of supply disruptions. With refinery operations at "96 percent capacity" since September, maintenance checks have been placed on hold, he said, which raises the risks of production failures - leading to lowered supply and increased demand and prices.

"Moreover," Schlesinger continued, "American policy is based upon free international trade. Heating oil, too, can be exported. Prices have been higher in Rotterdam [and] thus, some heating oil has been going oversees. The administration has been forced to urge, appeal, or beg refiners not to export heating oil, given our domestic situation."

No addendum was added to the SPR contracts awarded earlier this month requiring the winners of the bids to provide oil to the northeast, or even to the U.S., Murkowski said. This lack of pre-qualifiers has led to a security risk, he continued, as even the extra 30 million barrels approved for release - as minimal a supply as it was - could be sold overseas, thereby placing the U.S. further at the mercy of foreign oil providers.

"I'm going to conclude," he said, "that at some risk to national security, the administration did release the oil, did send a message to the Middle East of our vulnerability, and all for one day's oil supply at the most."