Yahoo- Hong Kong News Wednesday, January 24 4:54 AM SGT

California energy crisis may affect fuel supplies

SAN FRANCISCO, Jan 23 (AFP) -

For fair use/educational purposes only!

The crisis that has forced electricity blackouts in California could hit the state's consumers at the gasoline pumps and imperil natural gas distribution, industry executives are warning.

"This has been covered as an electrical crisis, but it's really an energy crisis," said David Fogerty, a spokesman with the Western States Petroleum Association, a California-based oil industry trade organization.

Electrical outages last week shut down the pipeline that pushes gasoline, diesel and jet fuel from refineries to airports. It also halted supplies to fuel depots that supply trucks which bring fuel to gas stations.

Wholesale suppliers of natural gas are cutting off Pacific Gas and Electric, one of the state's two major public utilities, because it is teetering on the edge of bankruptcy.

Kinder Morgan Energy Partners of Houston, Texas, which operates much of the state's fuel pipelines, warns that the company is operating at "impaired inventory" due to outages that shut down pumping capacity to airports and gas depots.

"We were down 50 hours last week because of outages," said spokesman Larry Pierce. "That has impacted our capacity."

After the outages raised public concerns, the state's utilities exempted Kinder from further blackouts.

Pierce said the system should be running at full speed by Friday. However, by midnight Friday (0800 GMT Saturday), Kinder Morgan's exemption from outages expires.

"Then what happens, well, we have no idea," said Pierce. The interruptions could be felt at the state's gas pumps, said David Langley, a consumer advocate with the Utility Consumer Action Network of San Diego, California.

"Any interruption ends up costing drivers more," said Langley.

Pacific Gas and Electric warned last week that six natural gas suppliers were shutting off supplies to the utility by midnight Tuesday (0800 GMT Wednesday) because the utility could not guarantee payment.

Those cuts would eliminate 36 percent of PGE's natural gas supplies. Suppliers for another 30 percent of the PGE's natural gas inventories are considering withholding sales to PGE, the utility said in a statement.

"The withdrawal of gas deliveries brings northern and central California close to the brink of natural gas shortages in the middle of winter, which could threaten the health and safety of millions of Californians," PGE said in a statement.

PGE supplies natural gas as well as electricity to homes and businesses.

California's energy crisis has been blamed on half-hearted attempts to deregulate the state's energy markets. That effort allowed electrical wholesalers to charge market rates for electricity, but restricted what utilities could charge end users.

Last week, the state was hit with blackouts because of electrical shortages. The crisis prompted California Governor Gray Davis to declare a state of emergency.

-- Swissrose (cellier@azstarnet.com), January 24, 2001