Senator Dodd: Will Y2K Bring Back the Gas Lines?

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FINALLY oil imports, foreign ports and maritime shipping are getting a lot of attention. Here is another article:

STATEMENT OF SENATOR CHRISOPHER J. DODD

HEARING ON YEAR 2000 AND OIL IMPORTS:

WILL Y2K BRING BACK THE GAS LINES? Mr. Chairman, thank you for holding this hearing today.

The world oil supply faces a series of Y2K risks from the well in the ground to the gas station in your neighborhood. In addition to the immediate Y2K problems that oil companies face, the readiness of the shipping industry and international ports presents an even more difficult challenge. A breakdown in the international shipping industry could have a crippling effect on the oil industry. More than 80,000 visits are made to U.S. ports by over 7,000 foreign vessels in any given year. And yet we have little information on the readiness of these ships and foreign ports.

Like other global sectors the Committee has examined, we find that the oil industry is highly dependent upon maritime shipping. Oil tankers for example depend on reliable on-board navigation, communication and safety systems, all of which are vulnerable to Y2K problems. In 1998, Shell Oil examined one of its crude carriers, which was built in 1996. Y2K testing revealed failures in seven areas, including radar system mapping, ballast monitoring and ship performance monitoring. According to Shell, "Not one of these failures would stop the ship, but they might if they all happened together." Overall, when Shell assessed their fleet, it found approximately 3,000 embedded chips on its 50 vessels. Embedded microchips play an important economic role in modern shipping because they allow even the largest tankers to operate with very small crews. The highly automated functions make it difficult for a small crew to manually operate the ship in an emergency.

Even if oil tanker crews can "work around" their Y2K problems, the crews could quickly become overworked, compromising safety. Passenger cruise and container ships are more reliant on technology than oil tankers. Y2K failures on these ships would be even more difficult to correct.

Ships that experience Y2K-related failures could begin to clog ports, denying accessibility to other ships and creating serious logistical problems.

With the exception of North America and Northern Europe, the actual Y2K readiness of the international ports remains a virtual unknown. When a ship arrives in port, Y2K related failures could prevent cargo from being unloaded and oil from being pumped out of tankers. Y2K difficulties in ports could include the failure of the giant cranes used to offload containers from ships and could also create congestion. According to the International Energy Agency, one oil company found that a dockside crane refused to operate because an embedded chip determined that it was overdue for a technical inspection.

Some companies, such as British Petroleum (BP), are taking a very proactive approach to Y2K. BP is very influential in the shipping business and is the world's third largest user of oil carrying vessels. In May 1998, BP surveyed 650 companies from which it chartered tankers. BP made it clear that failing to respond to the questionnaire would result in termination of charters with the oil company. The response was disappointing. Half of the companies that BP had used in the previous two years were unable or unwilling to disclose the Y2K readiness of their vessels. Beginning in January 1999, BP started refusing to employ vessels that could not offer an assurance of Y2K readiness. The shipping companies' failure to prepare for Y2K has put not only their individual businesses at risk but also the livelihood of their employees. We have seen evidence of this "flight to quality" in other industries and it will likely continue into the Year 2000. But while BP and other companies might be able to obtai n Y2K ready charter vessels, they cannot make international ports compliant. This will take a concerted worldwide outreach to raise awareness and promote realistic contingency plans.

In the event there were to be a problem, the U.S. has over 540 million barrels of oil in reserve. In 1975, the Strategic Petroleum Reserve was created as a buffer to ensure that Americans do not suffer the inconvenience and disruption that the oil crisis of the 1970's caused. So, despite the fact that we rely on imported oil for over 50% of our oil usage, the strategic oil reserve can replace imports for up to 60 days. Should Y2K spark an interruption in the oil supply, the Strategic Petroleum Reserve could be used to stabilize markets, reduce sudden price spikes and buy time to resolve any lingering problems. The oil industry is working hard to solve its Y2K problems and is trying to achieve Y2K readiness by September of 1999. However, Y2K failures in maritime shipping and foreign ports still pose serious threats to the flow of oil and our economic well being.

Link

-- Gayla Dunbar (privacy@please.com), April 25, 1999

Answers

In a recent discussion it was pointed out that 60% of our crude was imported which amounted to 10.4 million barrels per day. And that the crude reserves were about 561 million barrels. However, it was also stated that only 4 million barrels of the reserves would be used per day. Dodd's statement that "the strategic oil reserve can replace imports for up to 60 days" is either very optimistic or slightly misleading. Optimistic in that only 4 million barrels/day would need to be replaced... assuming that 6.4 million barrels/day would be delivered. Misleading in that a 1 million barrels/day deficit can have substantial impact, i.e. the recent price hikes.

just food for thought...

I couldn't find that recent thread... if you know the address please provide a link... thanks

-- WebRNot (webrnot@ncap13k.com), April 25, 1999.


I am willing to go out on a limb and say that I can absolutely GUARANTEE that we will be told that are severe supply problems and shortages, and that there will be drastic price increases, and incredible lines for gasoline. Whether or not supply problems actually occur, oil corporations will seize this opportunity to make tremendous profits. It's the nature of the business. Just as we do not know what REALLY caused the refinery fires which are supposedly responsible for the recent drastic price increases, we will also not know whether or not countries like Venezuela are actually having problems. After all, everyone has their price, and the ruthless oil corporations will captitalize on this situation to create the most "profitable" outcome. Simple economics - the most profitable situation for them is the least profitable, (or most costly) situation for John Q. Consumer. You won't be able to believe a word of what you hear through the media, but one thing is guaranteed; those who still have jobs will be paying an outrageous price to drive. But if Americans hadn't been so lazy to start with, they wouldn't be forced to make these corporations even richer. There ARE alternatives folks, you just need to ACT on them!

-- @ (@@@.@), April 25, 1999.

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