WASHINGTON -- Oil state senators and industry representatives called on the Clinton administration and Congress to intervene Thursday and help the oil industry survive the most severe economic downturn in decades.

"If we do nothing, things are going to get worse," Sen. Frank Murkowski, R-Alaska, declared at the opening of a hearing by his Energy and Natural Resources Committee on the oil industry's economic woes -- what some have called a severe depression.

The committee members expressed support for legislation that would give modest tax relief to small oil operators.

Some witnesses at the hearing suggested the Energy Department should buy oil for its emergency reserve in hopes of giving prices a nudge upward.

Legislation introduced Thursday by Sen. Kay Bailey Hutchison, R-Texas, would give a tax credit to operators of marginal oil wells and tax relief to those willing to restart some of the thousands of wells that have been shut down because they're not profitable with the currently depressed prices.

Sen. Don Nickles, R-Okla., joined Hutchison in the legislation.

Murkowski and some industry witnesses chided the Clinton administration for not buying oil for the Strategic Petroleum Reserve at a time when prices are the lowest since 1986, and some say the lowest in 50 years, adjusted for inflation.

Federal oil purchases for the reserve likely would raise worldwide oil prices only slightly, said John Lichtblau, an analyst for the Petroleum Industry Research Foundation.

The Strategic Petroleum Reserve contains 563 million barrels, purchased over two decades for use in case of a sudden oil shortage. But no oil has been bought since 1993.

While the Energy Department has acknowledged it might be prudent to buy oil for the reserve now that prices are the lowest in 12 years, no decision to do so has been made.

But the industry's problems, stemming from a 55 percent decline in crude prices over the past two years, have seen thousands of workers lose their jobs, with no improvement in sight.

Small companies are threatened with bankruptcy, while larger ones such as Exxon and Mobil are pushing toward consolidation to reduce costs.

The price of a barrel of benchmark West Texas Intermediate was at just over $11 a barrel last month, compared to $25 a barrel in December 1996.

And some lesser grades have been sold for less than $6 a barrel, said Jay Hakes, head of the federal Energy Information Administration.

And, he added, "the recovery may take some time," with prices not likely to rebound to the $20 a barrel level until 2000 or 2001.

Lichtblau attributed the collapse to an oversupply and unexpected drop in worldwide demand, largely because of the Asia economic crisis and warmer winter weather.

"The single most important reason was, and still is, the Asia-Pacific economic recession," said Lichtblau.

This region had accounted for 80 percent of the annual growth in worldwide oil demand.

Nickles said Iraq also was to blame for problems in America's oil patch.
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