Gas price spike could lie ahead as oil industry struggles with Y2K
07/09/99 - The Dallas Morning News
WASHINGTON - A brief, sharp increase in
gasoline prices later this year could signal the
beginning of Year 2000 computer problems in the
international oil market, industry and government
analysts warn.
Oil industry buyers anticipate problems with
computer programs in such oil-producing countries
as Russia, China and Nigeria. They also expect
failures in crude oil tankers equipped with embedded
microchips used for navigation and cargo control.
"To the degree the industry anticipates these
problems, we could see some early buying for
inventory. Then consumers are probably going to
think the same way," said Larry Goldstein, president
of the Petroleum Industry Research Foundation in
New York.
"A couple of extra gallons in every car on the road
could drain the system," he said. "It doesn't take a lot
of buying to have an impact on spot prices, and
we're very concerned about that issue."
John Koskinen, chairman of the White House Year
2000 Conversion Council, has also expressed
concern about panic buying pushing up gasoline
prices "if everybody waits until Dec. 31 to show up
at the gas station to fill their tanks." ...
The U.S. Coast Guard is worried that Y2K failures
could disable navigation systems aboard some oil
tankers. Shell Oil Co. in London discovered two
years ago that its fleet of 50 tankers had 3,000
embedded microchips that needed to be tested for
Y2K compliance. Tests showed chips controlling
radar mapping, ballast and cargo monitoring would
fail.
Shell and BP Amoco have both announced they will
not use tankers that cannot demonstrate Year 2000
readiness.
The Coast Guard has sent questionnaires to ship
owners worldwide asking about their Year 2000
readiness. Depending on how well the vessels score,
ships could be required to come into U.S. ports
under warning flags or even in a dead tow, said Lt.
Sanford Sears.
"We don't want to close U.S. ports," he said.
The Coast Guard successfully tested the system in
the California ports of Los Angeles and Long Beach
last month with tankers chartered by Arco, Lt. Sears
said.
Shipping problems remain a concern for oil supplies,
however, because it's not certain in many countries
that computer systems controlling loading and
customs formalities will work, Mr. Miller said.
Mr. Goldstein said a recent anti-dumping petition
filed by U.S. independent oil producers could prove
a wild card in the Year 2000 situation.
The petition filed with the U.S. International Trade
Commission seeks to impose tariffs on oil imports
from Mexico, Saudi Arabia, Venezuela and Iraq
because those countries were allegedly selling oil at
prices below the cost of production.
Mr. Goldstein said the suit could make those
countries hesitant about raising production to offset
any Y2K losses.
"I take it very seriously, not because I think the case
has merit, but because the rules set out a very low
threshold to prove your case," he said.
dallasnews.com
Most crude oil consumed in the United States is
imported. The Energy Department reports that the
top four U.S. suppliers - Saudi Arabia, Venezuela,
Mexico and Canada - seem to have the Year 2000
problem in hand.
Saudi Aramco and Mexico's Pemex reported that
they had substantially completed their Year 2000
repairs and testing on June 30.
Petroleos de Venezuela has said it will finish its
repairs and testing well ahead of the end of the year.
What the CIA says about these countries:
msnbc.com
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