'70s Conservation Measures May Make a Comeback
If you were already worried about a looming energy crisis, yesterday's briefing on Hurricane Katrina by the American Petroleum Institute was enough to make you buy a bicycle and a wood-burning stove.
The petroleum industry trade group called the briefing "to review current energy market conditions," but what API President Red Cavaney didn't know about those conditions could fill the Strategic Petroleum Reserve.
Cavaney was asked about oil analysts' forecasts that crude oil prices could hit $100 a barrel. "I don't think anybody can really give an accurate assessment," he said.
He was asked if gasoline, in the wake of Hurricane Katrina, could reach $4 or $5 a gallon. "We just can't predict," Cavaney said.
Should consumers expect gasoline and jet fuel shortages? "It's really too hard for anybody to raise a conjecture," he said.
Could there be gas lines at service stations in the next couple of weeks? "There's not enough information to be able to say anything broadly," the petroleum expert said. "We just don't know."
What little he did know was almost all bad: A quarter of the nation's crude oil production, and nearly as much of its natural gas output, is out of service because of the storm. Refineries that produce 20 percent of the nation's gasoline have closed or reduced output. Pipelines supplying the Northeast and Midwest are in bad shape, a major offloading point for imported oil is submerged -- and gasoline prices were already at record highs.
"The impact of this devastating storm on oil and natural gas operations will be significant and protracted," Cavaney felt confident enough to say. "Let us understand: This is not an easy thing."
Anybody who remembers odd-even days and President Jimmy Carter in a sweater knows how an oil shock can throw economies into recession and politics into turmoil. The cautious Cavaney was careful to avoid scary phrases such as "energy crisis" and "oil shock" -- although he did say that "it's going to be a little difficult for us to be able to get through this unless everything goes the right way." And he was sufficiently concerned to devote much of his briefing to urging Americans to use less of his product.
"Right now would be a good time for everybody to sort of ramp up your energy conservation," he said, offering helpful suggestions: "No more jack-rabbit starts. Making sure your car is tuned. Making sure your tires are inflated." He even urged President Bush to launch a nationwide energy-saving plan -- tantamount to the tobacco industry calling on the White House to launch an anti-smoking plan. (Bush, in a later Rose Garden address, made no mention of conservation.)
API's periodic briefings are ordinarily sleepy affairs attracting the trade press, but yesterday's event was standing-room only and lured 11 television cameras to film Cavaney and his chief economist, John Felmy. "It's pretty intense," said Juan Palomo, a spokesman for the group, as the camera crews lined up their shots.
Cavaney opened with a line that would serve him throughout the hour-long briefing: "It's still too early." He thanked Bush for opening the petroleum reserves but said that despite the energy legislation finally enacted in July to cheers from the industry, "much remains to be done." And the storm, he said, "underscores the need for all drivers to take seriously common-sense energy conservation recommendations." API handed out a list of "fuel-saving tips" such as driving 55, "consider joining a carpool" and other hits from the '70s.
Felmy, sitting at Cavaney's side and looking equally unhappy, said Katrina "clearly is the biggest" natural disaster ever to befall the industry. The good news, he said, is that gasoline inventories are only a bit below average as the summer driving season ends; the bad news is that home-heating prices are about to go through the roof. The government, Felmy said, is "forecasting record bills for natural gas, heating-oil and propane consumers, and that's with price levels that are considerably lower than what we're experiencing right now." He added a warning: "Get ready for winter."
Cavaney used a creative simile to explain how the troubles would radiate north from the Gulf, "like spaghetti growing." He said almost all of the Midwest's fuel and a good part of the Northeast's fuel come from the stricken area. A lot of the eastern part of the United States is affected, he said, and because refineries had been running at full capacity before the storm, "any loss is really a hard blow to the system."
But those seeking a morsel of reassurance from the industry's spokesmen left hungry.
Any indication when facilities might get electrical power? "Not specifically."
How about when the water might be removed? "We're still trying to evaluate that."
Will there be gasoline rationing? "We have no reason to know yet until we look a bit further."
Cavaney knew he was not providing much reason for confidence. Asked about more fuel shortages, which have already caused gas station lines and closures in Atlanta, he did not rule them out. "I'm not trying to dodge the answer," he said. "It's just not there yet."