With the Jan. 15 deadline at hand for Iraq to withdraw from Kuwait, the House energy committee last week sought to determine if the U.S. is ready for an oil supply disruption.
And as so often happens at congressional hearings, participants often lost sight of the central question.
Rep. John Dingell (D-Mich.), committee chairman, said, "While we all hope any armed conflict will be quick and successful, I am concerned that the administration has not planned for the possibility it will not be. A prolonged conflict could cause serious energy disruptions. In addition, there is always the risk of terrorism."
DOE'S VIEW
John Easton, assistant energy secretary for international affairs and energy emergencies, said, "DOE believes currently available strategic and commercial stocks, as well as oil in floating storage, would be sufficient to offset any plausible further disruption in supplies."
He said surge production worldwide has, since November, completely offset the loss of 4.3 million b/d of Kuwaiti and Iraqi oil production. And worldwide, commercial stocks are the highest in 4 years by about 150 million bbl.
Easton urged Congress to reauthorize Defense Production Act provisions, which expired last year, giving the Defense Department priority access to petroleum products.
Meanwhile, last week President Bush used a Selective Service Act provision as the basis for an executive order permitting Defense to acquire fuel and other supplies for the military before civilian needs are met. And Bush ordered the Federal Emergency Management Authority to coordinate any mobilization efforts the Middle East crisis might require.
Charles DiBona, American Petroleum Institute president, said in the event of a crisis the government should rely on market forces to efficiently balance supply and demand. "it is vitally important that we avoid the mistakes of the past where federal and state government intervention through price and allocations controls exacerbated the supply shortfalls and their economic impact."
DiBona said advice from industry executives would be of great help to the government in an energy emergency, but current law does not give them sufficient immunity from antitrust and conflict of interest prohibitions.
Phillip Chisholm, executive vice-president of the Petroleum Marketers Association of America, said, "The president should be given additional authority to trigger standby price and allocation controls for a short time to deal with a major crisis where demand would far exceed supply.
"Inaction by the federal government would lead to a patchwork of state programs to regulate price and supply of petroleum products. This would create an absolute nightmare in petroleum distribution and lead to chaos as the industry attempts to sort out what is legal in each of the states."
A CALL FOR LEADERSHIP
Rep. Phil Sharp (D-Ind.) and other congressmen begged the administration for leadership on energy policy.
For one thing, Sharp said, the White House should stop dillydallying on making a firm decision to use the Strategic Petroleum Reserve in a crisis.
And he said it should expedite the National Energy Strategy. Energy committee members "want to move legislation while the public, the media, and everyone else understand the need for better preparedness on energy."
Copyright 1991 Oil & Gas Journal. All Rights Reserved.
