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Fuel shortage hits airline industry California, Nevada airports affected

By Sean Holstege and Michele R. Marcucci

STAFF WRITERS

Motorists and air travelers face unforeseen hits in their wallets, as ripples from California's snowballing power crisis continued to reverberate here and in bordering states Friday.

The energy crisis broadened as major fuel pipelines intermittently powered-down this week, creating fuel supply shortages throughout California, Nevada and Arizona.

When jet fuel reserves at San Francisco International fell to two days' supply Thursday, nervous airlines began spending as much as $100,000 a day to ensure a steady fuel supply for their planes.

Emergency measures

Meanwhile, deliveries from Southern California to Las Vegas halted completely, forcing the area to tap its three-day reserves of unleaded regular gas and jet fuel. Nevada Gov. Kenny Guinn sent a letter to California Gov. Gray Davis asking for relief.

Airlines were forced to carry extra fuel from other airports, even as fuel reserves dwindled at airports throughout California and the southwest.

Oakland International Airport trucked in jet fuel from Chevron's Richmond refinery for the first time in years, as a result of a pipeline shutdown on Tuesday.

Other western airports took similar precautions.

Airline and gas industry experts warned that if California's energy crisis lingers, gas prices and airline tickets will climb. Prices at the pump could be felt as soon as next week.

"It can't help but affect gas prices," said Dennis DeCota, who represents 300 Northern California gas and service station owners.

Price increases

Interestingly, gas prices dropped between 10 and 15 cents per gallon over the last month, according to the California State Automobile Association.

SFO Assistant Deputy Director Mike McCarron said airline tickets won't climb yet, but "they're not going to take that cost indefinitely."

Amid California's quickly-shifting energy drama, it remained unclear if stop-gap legislation and an expected weekend lull in blackouts will check further problems.

"Everybody's cautiously optimistic. With the weekend coming up, there's less use on the (power) grid, and we can keep up and catch a breath here," said Tosco Corp. spokesman Paul Oves said, urging the public not to panic.

Origins

The fuel supply problem stems from old agreements inked between major out-of-state pipeline operators and the power companies. In return for lowered power bills, the pipeline operators agreed to be subject to occasional blackouts. Companies accustomed to pumping around the clock, have been operating for less than 6 hours a day this week.

Houston-based Kinder Morgan Inc., which owns 70 percent of California's fuel delivery network, pumps 1 million barrels (42 gallons each) a day and supplies all of the Bay Area's major airports.

Chicago-based GATX Corp. owns the CalNev Pipe -- the sole source of fuel for Las Vegas, which halted delivery. Corporate Vice President George Loman said GATX agreed to interruptible service, "less for the discount than because power companies and local officials said it was for the good of the public."

"We never anticipated these kinds of problems," he added.

Kinder Morgan sticks it out

Kinder Morgan officials did not return calls Friday. They told airline and airport officials that they would have to pay $7 rather than 7 cents for each kilowatt hour of power if the company used power during Stage 2 alerts.

The company has sought relief from the California Public Utilities Commission. Pacific Gas & Electric Co. spokeswoman Staci Homrig said that Kinder Morgan was one of only a few petroleum companies to remain in the company's power-cutting program during its most recent opt-out period in November.

The program saves participating companies 15 percent a year on their bills, Homrig said, in exchange for allowing PG&E to interrupt service up to 30 times a year or for 100 hours, whichever comes first.

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-- Martin Thompson (mthom1927@aol.com), January 20, 2001