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Gore Seeks to Tap Oil Reserve; White House Is Cautious

Energy: Vice president proposes opening of strategic stores for only the second time in history. Bush calls it a political ploy. Greenspan, Treasury chief are wary of move.


WASHINGTON — Democratic presidential nominee Al Gore called Thursday for the release of millions of barrels of oil from the Strategic Petroleum Reserve as a divided administration struggled to respond to rising global anxiety over energy costs.

"At this very moment, a decision is imminent" on whether to use the reserve, Energy Secretary Bill Richardson told lawmakers in an appearance on Capitol Hill. President Clinton, who said earlier this week that he is considering whether to draw down the reserve, is expected to announce his decision as early as today.

The drama over opening up the nation's petroleum reserve for only the second time in its history comes as a surge in energy prices has cast a sudden shadow over the powerful U.S. economic expansion and flared into a heated issue on the presidential campaign trail and throughout Europe. Economists predicted Thursday that the U.S. and global economies are strong enough to withstand the shock of soaring fuel costs.

While long-term effects may prove to be limited, the pain already being felt by consumers and small businesses has ignited a political furor involving the White House, Treasury Department, Congress and the campaigns of Gore and his GOP rival, Texas Gov. George W. Bush. Like rolling thunder on a clear day, the sudden effect of rising fuel costs has taken many analysts by surprise and altered a political debate in which the U.S. economy had seemed to have few major problems.

The vice president's proposals seemed to have an instant effect on the oil market, where futures prices tumbled $1.24 a barrel to $34. In New York trading, the price of U.S. light crude scheduled for November delivery fell $1.01 to $34.23 a barrel--a day after the previous contract spiked at one point to a 10-year high of $37.80.

Campaigning in southern Maryland, Gore blasted "profiteering" by energy firms and urged the government to make perhaps 5 million barrels available at first, and more later if needed. In addition, he proposed $400 million in energy assistance to needy families, tax credits to enable heating oil distributors to build up their stocks, tax credits for the purchase of fuel-efficient cars and greater public investment in light rail and other forms of energy-saving mass transit.

"One of the central choices we face in this election is whether we will have a president who's willing to stand up to the big oil interests and fight for our families," Gore declared on a visit to a family-owned oil distributor. "That's the kind of president I intend to be."

Bush's campaign, meanwhile, quickly attacked Gore's proposal as an election-year abuse of the oil reservoir that would reduce its future effectiveness as a bulwark against supply cutoffs.

"Reserves should not be used in an attempt to drive down oil prices right before an election," Bush told an audience in Cleveland. "They should not be used for short-term political gain at the cost of long-term national security."

The question of dipping into the strategic reserve on an emergency basis, for the first time since the 1991 Persian Gulf War, also opened up an awkward divide within the Clinton administration, where proponents, including Gore and Richardson, argued that it would calm a panicky marketplace and lead to more stable oil prices.

But opponents of using the stockpile maintain that it was created in 1975 to protect the nation against disruption in the flow of oil to the United States from foreign producers, not as a tool for manipulating energy prices.

Powerful Voices Against Release

In an embarrassing note for the White House, it was disclosed Thursday that both Treasury Secretary Lawrence Summers and U.S. Federal Reserve Chairman Alan Greenspan are among those wary about opening the reserve.

Summers said last week in a memo to Clinton--first reported Thursday in the Wall Street Journal--that it would be "a major and substantial policy mistake" to use the reserve beyond a limited test. Much broader use, as recommended by the Energy Department, would "set a dangerous precedent," compromising the reserve's future influence on the psychology of oil traders. Summers pointed out that his view is shared by Greenspan.

Thursday, the Treasury secretary scrambled to sound more open-minded about the vice president's approach. "We always recognized that this would be, and indeed has been, a rapidly evolving situation," he said in a statement. "There are a number of approaches for prudent use of the Strategic Petroleum Reserve that are now on the table, including those the vice president has proposed."

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