By OGJ editors
WASHINGTON, DC, Mar. 21 -- Even with the temporary halt of United Nations-sanctioned oil exports from Iraq, senior Bush administration officials said world energy supplies are now "more than adequate." But the White House did not rule out a release from the 599 million bbl Strategic Petroleum Reserve at some future date if market conditions change.
"I am confident that increased supplies already on the water, the response by (the Organization of Petroleum Exporting Countries) and major producers like Saudi Arabia, and—if needed—our large strategic stockpiles, will ensure that our economy will have the ample supply of energy it needs," Sec. of Energy Spencer Abraham said Thursday.
The White House has run into criticism by some in Congress who say the administration should have already used the SPR as a way to calm markets and to soften the impact higher energy prices have had on a faltering US economy. DOE has declined to detail the specific conditions that need to be met for it to consider an SPR release.
DOE's independent statistical branch, the Energy Information Administration, said that "for the time being," it is assuming that the flow of legal Iraqi oil exports (not counting illegal oil "smuggling"), with the exception of a small amount of oil still to be loaded from the Turkish port of Ceyhan, has been stopped.
The UN is expected to soon consider a measure that would effectively restart the oil-for-aid program without the participation of Baghdad. UN and US officials both have said they want money from Iraqi oil sales to be used for humanitarian assistance to the Iraqi people and war refugees.
According to an EIA estimate, the world (excluding Iraq and Venezuela) holds 1.5-2 million b/d of excess oil production capacity that could be brought on line. Nearly all of this "excess capacity" is located in OPEC member countries, primarily Saudi Arabia.
IEA, OPEC statements
DOE's comments follow reassuring statements on the state of world oil supplies by the International Energy Agency and OPEC (OGJ Online, Mar. 20, 2003).
IEA and OPEC said that energy-producing and energy-consuming countries are working together to prevent supply shortages and stabilize world oil markets as US military action against Iraq continues to unfold.DOE said the US and IEA collectively hold 1.2 billion bbl of oil in strategic and commercial stocks.
Oil well damage
Responding to White House and Pentagon reports that several oil wells might be on fire near the southern Iraq city of Basra, Abraham said the US anticipated that Iraqi President Saddam Hussein might attempt to sabotage his country's oil wells. But he noted that such an act would only hurt his own people because other oil producers, most notably Saudi Arabia, have pledged to make up the difference in lost production.
"The United States and its international partners anticipate that Saddam Hussein's regime might attempt acts of sabotage against oil wells. By doing so, Saddam is destroying the wealth of his own people.
"World energy supplies are more than adequate to compensate for any disruption these acts may cause. Saudi Arabia and other major energy suppliers are producing normally. At this time, we do not know the extent of the damage to Iraqi wells or how many wells are currently affected by the regime's orders.
"As the president has said, those responsible for acts of sabotage will be held to account for their crimes. Anyone who receives an order of sabotage from the Iraqi regime should not follow those orders."
In a separate action, DOE and the Department of Homeland Security emphasized they are working with various industry segments on monitoring vulnerabilities to the most critical US energy infrastructures such as pipelines, refineries, and offshore platforms. Several trade associations also share information with each other and local law enforcement under a cooperative effort organized with the help of DOE.
Treasury actions
Looking beyond energy concerns associated with the war against Iraq, the Department of Treasury took what it called a "financial offensive" to wrestle "blood money" from Saddam Hussein and to return Iraqi funds to its people.
Sec. of Treasury John Snow said President George W. Bush issued an executive order Thursday confiscating the $1.4 billion in nondiplomatic Iraqi government assets that have been frozen in the US for over a decade. The order authorizes Treasury to marshal the assets and "to use the funds for the benefit and welfare of the Iraqi people."
Snow called on US allies to follow suit and "to identify and freeze all assets of Saddam Hussein, the Iraqi regime, and their agents pursuant to established international obligations." US officials estimate there is about $600 million in funds already frozen in overseas accounts since the end of the 1991 Persian Gulf War. But US officials suspect there could be literally billions of dollars in hidden accounts that have escaped international sanction watchers.
Snow said his department would be directing the worldwide hunt for the "blood money that Hussein and his cronies have stolen from the Iraqi people."
He said, "The world must find, freeze, and return Iraqi money for the Iraqi people and their future. This effort will ensure that the assets and funds belonging to the Iraqi people are dedicated to the well-being and benefit of their nation."
