Newspaper article THE JOURNAL RECORD

Energy Department Won't Speed Up Purchases Unless Prices Fall / for Strategic Reserve

Newspaper article THE JOURNAL RECORD

Energy Department Won't Speed Up Purchases Unless Prices Fall / for Strategic Reserve

Article excerpt

WASHINGTON (AP) - The Energy Department won't speed up purchase of crude oil for the Strategic Petroleum Reserve unless prices fall, Secretary John S. Herrington said Tuesday.

And while the department is soliciting bids from domestic producers, it is still discussing terms with Mexico, the most recent supplier to the 505-million-barrel reserve in salt domes on the Gulf coasts of Texas and Louisiana, Herrington said.

He told reporters he would like to be adding to the reserve at 100,000 barrels a day, the practical limit of intake capacity, but ""the price may be a little high to go to that large a purchase.''

The current congressionally authorized limit, which took effect Sept. 1, is 35,000 barrels a day. Mexican shipments had been running at 50,000 barrels a day until the end of August.

Current crude oil prices run around $16 a barrel compared with about $28 late last year. Herrington did not say how far the price would have to fall to make him buy faster. But he did say, ""It didnot make sense to me to see oil at $9 and $10 and not be buying 100,000 barrels a day'' earlier in the year.

At Herrington's urging, President Reagan last month reversed his stand against further purchases and told the secretary he could buy more than 35,000 barrels a day if the price were right.

Reagan endorsed the congressional goal of a 750-million-barrel reserve, a goal set in the late 1970s aimed at supplying about 120 days worth of crude imports.

Until August, the administration argued against further purchases on the grounds that a 500-million-barrel stockpile provided about 120 days worth of supply when imports were running at a reduced 4.2 million barrels a day - which they did for much of 1985.

But the world oil price collapse has drawn more and more imports into the United States, and the current stockpile would last only a little over 80 days at the current import rates, about 6 millionbarrels a day. …

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