The U.S. oil industry should have minimal Year 2000 computer problems Jan. 1, with no disruption of normal petroleum supplies, according to key industry surveys.
However, oil analysts are worried that public fears about product shortages could become a self-fulfilling prophecy.
If consumers begin hoarding gasoline, then a supply problem could develop, as it did during the 1979 crude oil price spike.
The classic example of such a public panic occurred in December 1973, when Tonight Show host Johnny Carson joked that toilet paper was "disappearing" off grocery store shelves. The next day, television viewers bought up all the toilet paper in stores, causing a bona fide shortage that lasted 3 weeks.
John Koskinen, chairman of the President's Council on Year 2000 Conversion, said, "Our concern is that there will be overreaction by the public, and a couple of hundred million Americans will decide to line up at their gas stations on Dec. 31."
In its Y2K advisory, the American Red Cross already is telling consumers: "As you would in preparation for a winter storm, keep your automobile gas tank above half full."
But if American consumers buy an extra 5-6 gal of gasoline for more than 125 million vehicles in late December, the supply system would be strained.
And thousands of companies and government agencies have drafted Y2K contingency plans that call for them to top off tanks beforehand.
Thus, Larry Goldstein, president of the Petroleum Industry Research Foundation, expects the products market to tighten in the late fall.
"You can have a problem well before Jan. 1, because many rational people are going to regard stocking up on heating oil and gasoline as a cheap insurance policy against Y2K. You don't need panic to create a problem."
Ron Quiggins, chairman of the American Petroleum Institute's Y2K task force, also is director of Shell Services International Co.'s Y2K program.
He thinks the industry will be able to manage the surge in demand: "We are not a real-time industry. We have a great deal of inventory. We have a time gap that is quite substantial, so we will have time to react and redirect supplies."
API Pres. Red Cavaney said major oil companies are planning to boost refinery runs to meet the extra demand.
Oil economist Philip Verleger, of PKVerleger LLC, said, "Absolutely the best solution would be for oil companies to flood the market with products. And it wouldn't hurt for them to cut the price a little on Jan. 1, too."
Verleger said the worst-case scenario would be if an extreme cold snap "froze up" several refineries in December.
Quiggins said API is developing a communications plan aimed at reassuring the public about the adequacy of supplies.
Quiggins said, "The one thing we can't do is tell the public not to fill their tanks. Instead, many gasoline stations will have stickers on their pumps reassuring the public the station is 'OK for Y2K.'"
Although Y2K could be a no-win situation for the industry, one observer said, "This is bound to be a great year for gasoline can manufacturers."