News: Analysis & Commentary: WASHINGTON
BUY HIGH, SELL LOW
President Clinton's move to sell off 12 million barrels of government-stockpiled oil may be a political winner, but for taxpayers it's a bum deal. That's because the bulk of Uncle Sam's vast petroleum reserves was bought after the 1970s oil crisis, when prices were much higher. So Washington is unloading oil bought at an average cost of $27.14 per barrel for about $19 per barrel.
In all, Congress paid about $326 million for oil it now is selling for $228 million. That's a loss to taxpayers of nearly $100 million--plus about $40 million more or so in storage costs paid during the past decade. And for what? Experts believe the extra supply won't have any affect on oil prices. All told, it's "less than a day's worth of U.S. consumption," says economist Philip K. Verleger. Ironically, the sell-off was authorized by GOP lawmakers looking for new revenue. Run the numbers, though, and this idea is a money-loser.By Dean Foust in Washington