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US Steps To Ease Shortage Of Home Heating Oil


September 23, 2000

President Clinton today will direct the Department of Health and Human Services (HHS) to release $400 million in Low Income Home Energy Assistance Program (LIHEAP) emergency funds. The President also announced a series of other steps that will reduce the likelihood of high heating oil prices and price spikes this winter. Today's announcement builds on yesterday's announcement that the Department of Energy (DOE) will initiate an exchange of crude oil from the Strategic Petroleum Reserve (SPR) and on the President's July decision to establish a home heating oil reserve in the Northeast. The President will renew his call on Congress to enact key parts of his comprehensive energy strategy, including his energy tax and investment packages; to reauthorize the Energy Policy and Conservation Act, which authorizes operation of the SPR; and, to authorize the establishment and operation of a permanent heating oil reserve in the Northeast.


President Clinton today will direct the Department of Health and Human Services (HHS) to release $400 million in Low Income Home Energy Assistance Program (LIHEAP) emergency funds to all States to assist low-income households facing significant increases for heating oil, natural gas, and propane prices this coming winter. This is the largest release of LIHEAP emergency funds ever. By acting early, this action will encourage States to take steps now to help low-income households cope with high fuel prices this coming winter. States can raise benefit levels, adopt the maximum income limit(strikethrough: s) under Federal guidelines or expand outreach to assist more families.

-- These funds also will enable consumers to take steps to secure their supply of heating fuel for the winter, including filling their heating oil tanks before it gets cold, and entering into fixed price heating oil contracts or contracts that include a price cap where available and appropriate.

-- By preparing in advance, consumers can reduce the risk that they will be burdened by higher heating fuel costs later this winter.

-- Today's LIHEAP release will provide funds to all States to cover the increase in fuel prices over last year. Funding allocations factor in states' reliance on heating oil, natural gas and propane.


Distillate inventories, which include both home heating oil and diesel fuel, are at unusually low levels as we head into the Fall. In the New England and Mid-Atlantic, where heating oil is an important residential heating fuel, inventories are currently more than 60 percent and 50 percent below last year's inventory levels, suggesting an increased risk of high heating oil prices and shortages this winter. To reduce the likelihood and severity of heating oil shortages, the President today directed:

1. Federal agencies to use all available means to fill their storage tanks and contract for the purchase of distillate this winter as early as possible.

-- Filling storage tanks in advance of the heating season means that additional heating oil supplies will not be required when colder weather first returns later this Fall.

-- By entering into long-term contracts with heating oil suppliers, uncertainty currently affecting the industry will be reduced, providing for a more stable heating oil market.

2. DOE to meet with representatives of state and local governments to encourage them to follow the Federal government's lead and fill their storage tanks and contract for the purchase of distillate this winter as early as possible.

3. DOE to work with state utility commissions to ensure that factories and businesses with interruptible contracts for natural gas that use heating oil as a backup fuel keep adequate heating oil reserves on hand. Natural gas customers with interruptible contracts obtain cheaper natural gas in exchange for service interruptions when the weather is cold and natural gas demand peaks. Many rely on heating oil as a backup fuel when their natural gas is cut off. Encouraging them to maintain backup fuel on hand will keep them from entering the heating oil market all at once when their natural gas service is interrupted. Therefore, it will reduce the risk of demand spikes that affect the prices paid by all heating oil customers. 4. The Environmental Protection Agency to work with States to review their air quality implementation plans, and to create flexibility to adjust State sulfur content restrictions on home heating oil in a manner that safeguards the environment. This will make it easier to build heating oil inventories this winter. Refineries that produce the lowest sulfur heating oil are currently operating near capacity. By creating flexibility in how States meet their sulfur standards, domestic and foreign refineries would have the ability to produce more heating oil and help build stocks faster; 5. The Secretary of Energy to meet with representatives of the National Petroleum Council to discuss heating oil production this winter and fall, to encourage the industry to take measure to maximize heating oil production.

PRESIDENT CLINTON WILL CALL ON CONGRESS TO ENACT KEY PARTS OF HIS ENERGY POLICY: President Clinton will renew his call for Congress to authorize permanently a home heating oil reserve with an appropriate trigger. The release of heating oil from the regional reserve that the President established in July using existing administrative authority is governed by current law. The President believes, however, that a permanent home heating oil reserve in the Northeast needs a trigger for its use that is more appropriate to possible regional shortages than current law permits. Congress must also pass the President's energy tax package and budget initiatives, which would help families and businesses buy fuel-saving cars, energy efficient homes, buildings, and appliances, and would accelerate the research and development of cleaner, more efficient energy technology in order to ensure that America has a secure energy future for the 21st century.


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