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Los Angeles Times: U.S. Adding to Its Oil Reserve

Los Angeles Times: U.S. Adding to Its Oil Reserve

Bush administration Friday awarded contracts to ChevronTexaco Corp. and Royal Dutch/Shell Group’s Shell Oil to replenish the U.S. emergency petroleum reserve” (ShellNews.net)

From Times Wire Services

7 August 04

The Bush administration Friday awarded contracts to ChevronTexaco Corp. and Royal Dutch/Shell Group’s Shell Oil to replenish the U.S. emergency petroleum reserve, despite record high crude prices and strong oil demand.

Oil prices hit record highs Friday, climbing close to $45 before settling back down, after a renewed threat to Russian oil major Yukos added to the strain on world supplies.

The price of crude for September delivery ended in New York at $43.95 a barrel, down 46 cents from Thursday’s record close of $44.41.

Oil has rallied more than 30% this year as rapidly growing demand, especially in the U.S. and China, has left little leeway for any supply disruptions. More recently, concern has grown about the ability of Russian oil giant Yukos to keep pumping crude.

The Interior Department awarded contracts to Chevron and Shell to deliver more than 100,000 barrels of crude a day to the Strategic Petroleum Reserve over a six-month period starting Oct. 1.

The crude that goes into the reserve comes from energy companies that turn over to the government a portion of the oil they drill on federal leases as royalties, instead of paying cash royalties.

The Bush administration has been criticized by energy experts and some politicians for taking oil off the market at a time of high fuel prices.

The campaign of Democratic presidential challenger Sen. John F. Kerry said Friday that it supported temporarily stopping shipments to the reserve while oil and gasoline prices are high.

“Filling the reserve to ensure that America has a ready supply of crude to prepare for any major supply disruption is vitally important,” an Energy Department spokeswoman said.

The stockpile, created by Congress in the mid-1970s after the Arab oil embargo, currently holds 665 million barrels of crude in caverns at four sites in Texas and Louisiana.

Associated Press and Reuters were used in compiling this report.

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