4/22/99 -- 3:43 PM

US has reserves to withstand shortages, experts say

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WASHINGTON (AP) - Despite concerns about some foreign oil suppliers, the United States has the reserves needed to withstand some shortages caused by Year 2000 computer breakdowns, oil experts told a Senate hearing Thursday.

Meanwhile, on the Senate floor, lawmakers began debate on a bill aimed at curbing what many fear could be an economically disastrous flood of lawsuits arising out of computer problems that might occur on or after Jan. 1.

``We would urge prudency in planning but certainly not panic,'' said Robert Kripowicz, the Energy Department's principal deputy assistant for fossil energy, told a special Senate panel on the so-called Y2K problem.

Kripowicz expressed ``cautious optimism,'' citing the oil industry's built-in flexibility because of its experiences in handling natural disasters, its financial incentive to keep oil flowing and the nation's Strategic Petroleum Reserve, which now holds an inventory of 561 million barrels of crude oil.

The United States imports some 10.4 million barrels a day, 56 percent of the nation's consumption. Kripowicz said up to 4.1 million barrels a day could be withdrawn from the reserve.

Oil supply has been one of the biggest worries of those studying the Y2K problem because of the high reliance on imports and the possibilities for disruptions in shipping, docking and unloading, and refining.

Sen. Robert Bennett, R-Utah, head of the Y2K panel with Sen. Christopher Dodd, D-Conn., noted that even the slight reduction in OPEC production recently has resulted in a 20 percent increase in gas prices. ``Clearly a minimal reduction in world supply can have disproportionate effects on price.''

Kripowicz said the four largest suppliers of oil to the United States - Venezuela, Canada, Saudi Arabia and Mexico - are making serious efforts to fix their computers and expect to be prepared by the end of the year.

But less is known about other suppliers, and there is concern that infrastructure problems in some countries, such as electric power or telecommunications shutdowns, could disrupt oil supplies.

He cited estimates that gas prices would jump seven to 12 cents a gallon at the pump if supplies drop 1 million barrels a day.

Red Cavaney, president and CEO of the American Petroleum Institute, said oil companies were moving well in preparing for the millenium bug and that one of their big worries was the ``unintended consequences'' of people overreacting and hoarding gasoline.

The litigation bill introduced on the Senate floor is aimed at staving off what many predict could be $1 trillion in lawsuits filed by those claiming damages from computer breakdowns.

The bill, sponsored by Sen. John McCain, R-Ariz., would establish a grace period allowing companies to fix computers before suits could go forward, encourage mediation and cap punitive damages at three times compensatory damages or $250,000, whichever is greater, or, in the case of a small business, whichever is less.

Most Democrats and the White House opposed the bill as it came out of McCain's Commerce Committee, saying it was an effort by businesses to avoid responsibility and change tort law.

But Sen. Ron Wyden, D-Ore., said he and McCain had made changes to ensure that consumer interests would continue to be protected and that punitive damages would still apply in egregious cases.

Dodd said negotiations on language in the bill were still going on but there was a need to stop the ``unwarranted litigation which could destroy some small companies that don't have the campacity to take on the kind of predator lawsuits that too often have done more damage than good.''

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Snip:

"Sen. Robert Bennett, R-Utah, head of the Y2K panel with Sen. Christopher Dodd, D-Conn., noted that even the slight reduction in OPEC production recently has resulted in a 20 percent increase in gas prices. ``Clearly a minimal reduction in world supply can have disproportionate effects on price.'' "

i think maybe someone should enlighten the good Senator as to the fact that in MOST places prices have gone up MORE than 20%.

Ray

-- Ray (ray@totacc.com), April 22, 1999

Answers

"Kripowicz said the four largest suppliers of oil to the United States - Venezuela, Canada, Saudi Arabia and Mexico - are making serious efforts to fix their computers and expect to be prepared by the end of the year."

The FCC's NRIC committee recently showed Venezuela and Saudi Arabia in the high risk category for telecommunications disruptions. Kuwait was also on the NRIC high risk list --Can we surmise that Kuwait does not fall within the set of countries making "serious efforts" and therefore failed to make Kripowicz's happy list.

-- Puddintame (achillesg@hotmail.com), April 22, 1999.

I am confused: About three months ago, Venezuela announced that two of its three refineries would not be compliant because of EMBEDDED CHIPS. And it takes two years to build a new refinery About the same time, Shell said, I thought....maybe I got it wrong...that they might not make it, and that they would be passing all their expenses along to us as costs, anyhow.

I do so wish somebody, somewhere would get all the facts together in one place!

-- Mary (CAgdma@homefakeaddress.com), April 22, 1999.

Mary commented:

"I do so wish somebody, somewhere would get all the facts together in one place! "

Mary, wishful thinking! Without the sorely needed LEADERSHIP, y2k has be relegated to PR and media flaks for now.

Ray

-- Ray (ray@totacc.com), April 22, 1999.

The report says the Strategic Petroleum Reserve now holds 561 million barrels of crude oil. Kropwicz said up to (UP TO) 4.1m barrels/day could be withdrawn from the reserve. If the maximum is withdrawn, that means we have about 140 days (4.5 months) at that rate before the reserve runs out.

The report further says, "The United States imports some 10.4 million barrels a day, 56 percent of the nation's consumption." If we pretend optimism and say oh, only half of that will be unavailable to us, then we're still short 5.2m barrles/day, or 28% of the daily supply. If, as Kropwicz says, oil prices go up about 7-12c/gall at the pump for every million barrels/day lost, well. . . And you know it'll be the max end of that rise in prices--if not even higher. So you're looking at an increase of 60c/gallon on up. Now go back to the first paragraph. You know that the amount of oil withdrawn daily from reserves won't be the maximum amount, if any. It may be kept for use by hospitals and emergency services. Gas is going to become VERY expensive. Don't put off getting that bike!

-- Old Git (anon@spamproblems.com), April 22, 1999.

You got it Old Git. If the reserves go to essentials like food and medical delivery we might actually pull through this.

-- Shimrod (shimrod@lycosmail.com), April 22, 1999.

HOLD IT!! PAUSE!! The strategic reserves are NOT CAPABLE of being "reserved for ..." due to the fact that they are NOT REFINED. THe Strat Reserves are reserves of crude oil in some salt caverns. They still need to be refined.

The translation of the above article is that with a decrease of 60% of the imported oil (which looks like 28% of the total) we will see gas at a VERY HIGH price. If the PTB want to restrict the production to emergency services/hospitals/etc., they will need to institute rationing. NOT a stretch, btw.

Chuck

-- chuck, a Night Driver (rienzoo@en.com), April 22, 1999.

Having oil is one thing, refining it an entirely different story.

-- Mike Lang (webflier@erols.com), April 22, 1999.

Pssst.

Whispers. You need refineries able to refine it also, and shipping/piping networks to move after its refined/before its refined. Don't tell Washington - they haven't noticed yet. By the way, why are they so "Confident" that Mexico and Venezula will be ready by Jan next year?

-- Robert A. Cook, PE (Kennesaw, GA) (cook.r@csaatl.com), April 22, 1999.

Bloody hell.

-- Old Git (anon@spamproblems.com), April 22, 1999.

When was it ? mid-late 70's when we were sitting in gas lines and could only buy gas on certain days ?? can you say gas coupon.
BTW Is there any info available on the effect this could have on heating oil availability ? could be Bloody Cold Old Git !

-- WebRNot (webrnot@ncap13k.com), April 23, 1999.

Germany has similar concerns:

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=000kCH

"Germany fears oil impact of Y2K-report"

-- Kevin (mixesmusic@worldnet.att.net), April 23, 1999.

Also see this Wired article:

http://www.wired.com/news/news/business/story/19277.html

[snip]

US: Stockpile Oil for Y2K

Reuters

2:30 p.m. 22.Apr.99.PDT

WASHINGTON -- Homeowners should fill their heating-oil tanks sometime before New Year's Day, just in case computer problems disrupt petroleum supplies, a US government energy official said on Thursday.

Robert Kripowicz, deputy assistant for fossil fuels at the Department of Energy, told a Senate committee that he was cautiously optimistic there won't be any disruptions in the nation's oil supplies because of the millennium bug. Still, he said households and businesses ought to have a backup fuel plan, just in case. [snip]

-- Kevin (mixesmusic@worldnet.att.net), April 23, 1999.