State of vulnerability

State of vulnerability

Californians' thirst for gas is up to 43 million gallons every day. Nearly half of the state's imported oil comes from two Mideast countries.

By Tarek El-Tablawy
ASSOCIATED PRESS

June 23, 2006


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Between 2001 and 2005, Saudi Arabia and Iraq provided an average of 49.6 percent of California's imported oil, according to California Energy Commission figures. That reliance takes on a particular urgency in a market jittery over Iran's nuclear program and uncertain output from war-ravaged Iraq. Those two nations accounted for an average of almost two out of 10 barrels of all crude refined in California, which itself produces an average of about 700,000 barrels a day. In the U.S. Gulf Coast, where import sources are more diverse, Saudi and Iraqi imports accounted for a five-year average of 25.3 percent of the region's imports.

“If you were to have a supply disruption in the Middle East, the West Coast system would have to go through some hard adjustments,” said Eric Wei, a Los Angeles-based principal analyst at the energy consultancy Purvin & Gertz. “Although it would not lead to a complete breakdown in the supply system, you could have some decline in crude runs and an increase in costs at the gas pumps in the short run.”

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Although it is the fourth-largest domestic producer of crude in the United States, California fields have been declining at a rate of 2 to 4 percent per year. Imports account for roughly 751,000 barrels per day, or 40 percent of total use. Alaskan crude rounds out the remaining 20 percent of the state's needs, according to California Energy Commission figures. The factors that place California at risk – such as constrained refinery capacity, an inadequate oil and refining infrastructure and largely declining domestic production – are reflected on the national level.

Nationwide, imports accounted for about two-thirds of the roughly 15 million barrels of oil per day processed in U.S. refineries, according to the U.S. Energy Information Administration. The amount of imports is expected to climb, as domestic crude production has fallen. The Energy Information Administration projects a modest increase next year with the startup of new fields in the Gulf of Mexico, but those gains will only temporarily offset an otherwise steady fall. But Californians are also at the mercy of other factors not present elsewhere in the country, such as a more limited list of crude suppliers, higher gasoline standards and geographic isolation from the pipelines that connect the rest of the country.

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For example, only one pipeline brings in refined products such as gasoline and jet fuel from Texas to Arizona, which relies on California refiners for roughly 60 percent of its petroleum needs, said Rob Schlichting, a California Energy Commission spokesman. “Since 1998, our refineries have not been able to supply all the needs of the states in the (West Coast) region,” said Schlichting, adding that Nevada and Oregon also depend on California for nearly 100 percent and 35 percent of their fuel needs, respectively. To meet the needs of California drivers who, according to the American Petroleum Institute, used 43 million gallons of gas per day in 2005, the biggest gas-consuming state has had to turn to imports.

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