PG&E is warning customers that, even while their utility bills as much as double, the "rolling blackouts" that loom ahead may increase in duration from two hours a day to TWELVE, and no longer will hospitals, fire and police stations, and government offices --essential public services-- be exempted from having their power turned off too. The utility also announced that next week it might begin "rolling cut-offs" of natural gas -- meaning California citizens will lose their HEAT (during winter!) as well as light. Simultaneously, 10-20% of the gasoline that's piped into the state is under threat, since it takes electrical power to pump it through the pipelines. Combined with the OPEC ministers' decision to cut down on oil production, to keep their profits "stable," that means a GASOLINE shortage, and possibly the doubling gas prices per gallon, for drivers in California, who are already paying fifty cents more per gallon than Texans. Traffic lights go out, cars stall, even the airports have their flights grounded ... "Rationing" of electricity, heat, and gasoline .... What's next, a crisis in the clean water supply? Telephone service? Telecommunications? The producers of the "New Economy" in Silicon Valley and elsewhere, still reeling from the dot-com meltdown on Wall Street, are ready to pack up their bags and leave what's become "ground zero," California -- taking millions of the best-paying jobs with them -- resulting in high unemployment rates and lower wages for all the rest of us. From where I sit, it certainly looks like the "civil war" between the Right and Left evident during the 2000 election has begun in force, with the powerful corporate friends of the Bush administration surreptitiously firing the first shots in California, the nations's monolithic bastion of "liberalism" and "high tech" iconoclasm. A la the old "Cowboys vs Yankees" conflict present during the '60s, Bush's new "Confederated States of the Right-Wing Jee-zus" seems to have quietly unleashed, behind the scenes, ECONOMIC WARFARE against the great metropolitan areas that remain Democratic enclaves. That's a form of "bloodless" warfare last demonstrated in Yugoslavia, which, please note, last year had ts urban infrastructure (rather than its armies) specifically targeted for destruction, in order to undermine the population's everyday sense of security. California has already begun to feel like Eastern Europe. Will the people of New York, New England, and Chicago be next on the "hit" list? Valero Says California Crisis May Bring Fuel Shortage San Francisco, Jan. 19 (Bloomberg) -- Valero Energy Corp., which produces about 10 percent of California's gasoline, said the state may soon face shortages of the fuel because one the West Coast's biggest pipelines was disrupted by power cuts. Supplies of jet fuel to San Francisco International Airport ran low and some rural gasoline terminals went dry following the temporary shutdowns of Kinder Morgan Inc.'s California pipeline. It distributes almost 1 million barrels of gasoline, jet fuel and diesel a day. The pipeline has been idle 12 to 18 hours a day since Wednesday as California's grid operator ordered rolling blackouts to conserve electricity, Kinder Morgan spokesman Larry Pierce said. Further disruptions to the pipeline may force refiners to cut production, sending the state's already-high gasoline prices climbing, Valero spokeswoman Mary Rose Brown said. ``It doesn't do us any good to produce a bunch of diesel and jet fuel and gasoline if we can't pipe it anywhere,'' Brown said. ``We have about one or two days of storage.'' A refining halt might lead to fuel shortages lasting months, because of the time needed to restart and build up inventories, said Jay McKeeman, executive vice president of the California Independent Oil Marketers Association. The group's members distribute 80 percent of the state's diesel fuel. Valero shares fell 38 cents to $33.19. Houston-based Kinder Morgan fell 75 cents to $48.75. The units of its pipeline partnership, Kinder Morgan Energy Partners LP, rose $1.25 to $59.69. `Around Midnight' McKeeman said he is ``extremely concerned'' about the disruptions. Jet fuel reserves at San Francisco International dipped yesterday when the pipeline went down, airport spokesman Ron Wilson said. The airport's six-day reserve was down to two days, he said. ``We would have run out around midnight tonight,'' he said, had Kinder Morgan not started pumping fuel again after San Francisco Mayor Willie Brown intervened. The company must pay a penalty for running the pipeline during periods when power is being conserved, Wilson said. Restoring the airport's reserves will take about two weeks. In the state's rural southeastern corner, a terminal has been out of gasoline for two days, said Harlan Calhoun, controller of McNeece Brothers Oil in Imperial. His company, which sells gasoline to a dozen service stations, is sending tanker trucks 200 miles to Los Angeles find supplies. BP Amoco Plc, which runs a 225,000-barrel-a-day refinery outside Los Angeles, has been scrambling for spare tanker trucks to keep its service stations stocked. ``We don't foresee running out of gasoline at our stations, but if this continues to play out, who knows what will happen,'' spokesman Paul Langland said. Chevron Corp.'s 225,000-barrel-per-day refinery near San Francisco was affected by disruptions in Kinder Morgan's pipeline, but the company is using trucks to move fuel when necessary, spokesman Fred Gorell said. Supply to service stations wasn't affected, he said. Status Switch Valero may cut output in two or three days, said Rich Marcogliese, vice president of refining at the company's Benecia refinery near San Francisco. San Antonio-based Valero acquired the 165,000-barrel-a-day refinery from Exxon Mobil Corp. in May for $895 million. Valero spoke to the state Attorney General's office about Kinder Morgan's power cuts, and about a letter from PG&E Corp. notifying Valero that the Benecia refinery may be switched to ``interruptible'' status, Marcogliese said. The letter, sent to PG&E customers, didn't name the refiner. It said cuts might come with only a 10-minute warning, Marcogliese said. ``We need two or three days notice to have an orderly, controlled shutdown, and then two or three days to establish normal operation,'' he said. Exxon Mobil Corp. said its Torrance, California, refinery, was alerted to possible electricity outages, spokeswoman Susan Carter said. A rolling blackout would cause problems for the plant, which refines 160,000 barrels of crude oil a day, she said. Chevron's two California refineries have their own power supply and wouldn't be affected by a power outage, Gorell said. Kinder Morgan has been an interruptible customer of utilities for years, meaning it agrees to service disruptions during electricity shortages in exchange for reduced rates. Past shutdowns lasted four hours at most, Pierce said. California's two biggest utilities, PG&E's Pacific Gas & Electric and Edison International's Southern California Edison, are facing bankruptcy. They have lost billions of dollars on power purchases because they aren't allowed to pass soaring costs on to customers. El Paso Energy Corp., the operator of the biggest U.S. natural-gas pipeline system and a supplier to PG&E, said its pipeline operations haven't been affected by the power crunch. They run on gas-fired compressors fueled by the pipeline itself, spokeswoman Kim Wallace said. Valero is the second-largest U.S. refiner that doesn't explore for oil. The company owns five other refineries, in Texas, Louisiana and New Jersey, and can process about 950,000 barrels of oil a day. Jan/19/2001 19:02 ET For more stories from Bloomberg News, click here. (C) Copyright 2001 Bloomberg L.P.
