As oil-producing countries and gas-consuming countries debate how to control oil prices, Philadelphia is looking for ways to cope with the potential for rising prices.
North Philadelphia is an area that has a lot of homes using oil heat, according to Mechanical Engineering professor Richard Cohen. Factoring in that an electricity provider like PECO uses oil to assist production, an energy crisis would be devastating in the winter.
“If we have a cold snap in the winter, there could be electric shortages if we don’t have the oil to use,” Cohen said.
Cohen referred to the major ice storms of the past decade that lead to greater demand for oil. At the time of the storms, officials had to consider rolling blackouts to compensate for the lack of oil.
Temple University, which uses oil that is heavier to burn than the oil used by the surrounding community, has a back-up supply intended to avoid any blackouts.
Philadelphia Gas Works (PGW) has come under increasing pressure keep gas prices that are passed on to consumers under control. PGW is considering a 30 percent or higher rate hike in the winter if the clamp for more heat arises.
City Councilman Jim Kenney has proposed legislation aimed at limiting PGW’s gas rate hike. City Councilwoman Marian B. Tasco has proposed legislation to curb PGW’s bureaucracy by reshaping its management system. The utility company has fallen under strict scrutiny in the past for its financial problems.
What Philadelphians and all Americans can expect in the price at the pump are greatly impacted by oil policy decisions.
President Clinton’s recent decision to release 30 million barrels of the United States’ strategic oil reserve has brought the spotlight to the energy crisis that has slowly begun to attract attention in the last few years.
Clinton’s move has been viewed by many sources, including member nations of the Organization of Petroleum Exporting Countries (OPEC), as a political act designed to boost the presidential campaign of Vice President Al Gore.
Regardless of the political motive behind Clinton’s move, the economic effects of it should become readily apparent.
`”The release should smooth out enough oil production,” said Cohen. Dispensing the reserve oil is intended to make up for the lack of necessary oil being released by OPEC.
The OPEC shortage has triggered record-high gas costs.
“Prices are set by bids on future production and are based on buying and selling and what the price might be at delivery,” Cohen said. According to Cohen, the bidders factor in whether there are shortages, and that leads to the price consumers see at the gas stations.
Concerning OPEC, Cohen said, “They don’t have that much oil”.
It is this shortage oil that caused President Clinton to release some of the oil reserves.
However, representatives of OPEC nations including Saudi Arabia, Iraq, and Venezuela have reacted negatively to the move.
One member of the Vienna-based cartel called the decision a “political ploy” and Gore’s opponent, Republican presidential nominee George W. Bush, has condemned the decision.
Bush, the governor of oil-rich Texas, has called for further exploration of oil in Alaska to combat rising prices.
However, despite the political conflict that the oil energy crisis has caused, Cohen said that Washington historically has been fairly united on dealing with OPEC.
“It doesn’t matter who the party in power is. They both try to get OPEC nations to keep prices down,” Cohen said.
By using the oil, the United States should be able to avoid a major heating crisis in the winter.
As the winter approaches, the issue arises as to the possibility of using alternative sources for heating. The rising gas prices are a sign of the true limitations of oil. It will all run out sometime and now might be the time to explore different sources.
“When Democrats were in the majority (in Congress), and were in the White House for a part of that time, there were many initiatives to use alternate sources like wind and solar power,” Cohen said. “The Democrats have said government should take a lead and Republicans have said to let the free market decide. We don’t have time to let the free market decide.”