US reaction to the decision by the Organization of Petroleum Exporting Countries to increase oil production has ranged from a guarded welcome to yet another call for wielding the Strategic Petroleum Reserve as a market weapon and thus reduce gasoline prices.
US Energy Sec. Bill Richardson says the OPEC decision to raise production by more than 700,000 b/d is "a positive, though modest, step that we hope will lead to more-stable oil markets and lower [fuel] prices at the pump."
Richardson said Mexico's announcement that it also would increase production 75,000 b/d through the third quarter would help US consumers.
But Sen. Charles Schumer (D-NY) said OPEC's action "is a disappointment that amounts to little more than a drop in the bucket. At best, this small increase in production could keep prices at the pump from rising higher, but it certainly will not reduce gasoline prices this summer or heating oil prices next winter."
Schumer said a year of tight oil supplies has left US oil inventories "dangerously low" and the government should replenish stocks by releasing SPR crude.
The US energy secretary in recent weeks has been under heavy political fire over a snafu over US nuclear weapons secrets only a few months after being lionized as a possible running mate to presidential aspirant and Vice-Pres. Al Gore for his role in pressuring OPEC to boost output in April.
Richardson took the opportunity after the OPEC meeting to remind the US public of his earlier pressure on OPEC ministers to jack up oil production: "Over the last few months, we have been asking OPEC governments to keep an open mind about production increases and have stayed in close touch with the government of Mexico.
"High demand and low production levels have contributed to tight crude supplies, and worldwide stock levels have not been increasing as rapidly as they should to ensure continued supplies throughout the remainder of the year."
Richardson said that, although there is more oil on the market now than prior to OPEC's March meeting, "We remain concerned that supply be sufficient to meet demand and build stocks, both worldwide and here [in the US], so that the market can operate with a comfortable margin of safety for the remainder of the year.
"Domestically, we are facing very high demand levels for gasoline, and our refineries are operating at 96% utilization rates."
US Energy Sec. Bill Richardson
Although there is more oil on the market now than prior to OPEC's March meeting, we remain concerned that supply be sufficient to meet demand and build stocks, both worldwide and here in the US, so that the market can operate with a comfortable margin of safety for the remainder of the year.