War won't affect Hawai'i oil supply, panel says
By Will Hoover
Advertiser Staff Writer
Hawai'i will not run out of gas if there's a war with Iraq, but motorists should expect the prices to jump at the pump.
Bruce Asato • The Honolulu Advertiser
That was the unanimous conclusion of oil and energy executives who appeared yesterday before the State House Select Committee on War Preparedness.
Faye Kurren, Tesoro president, who also sits on the state House Select Committee on War Preparedness, says Hawai'i gets little petroleum from the Middle East but relies more on Asia and Alaska.
"I don't think that any of us anticipate that we will have a shortage," said Faye Kurren, president of Tesoro Corp., who also sits on the 10-member select committee made up of government, business and military leaders.
"These are situations that the petroleum industry deals with on a regular basis. This is not unusual for us," Kurren said.
Coming on the heels of soaring world crude oil prices — which topped $35 a barrel Friday — Hawai'i lawmakers were ready to consider the possible effects the war could have on energy in a state with gasoline prices that consistently rank among the highest in the nation.
Kurren said Hawai'i gets most of its petroleum from Asia and Alaska, so the war would not affect supply very much.
Although there was agreement among the energy executives that war should not cause an energy crunch in Hawai'i, none of them would speculate how much more motorists here might expect to pay if war breaks out.
The reluctance to discuss prices was due to what was delicately referred to as "competitive concerns" in discussing gas prices at a table filled with energy competitors.
"It would be irresponsible to quote any kind of range right now just because we really don't know where the prices will go," said Kurren.
Committee member Rep. Brian Schatz, D-25th (Makiki, Tantalus), wanted to know: "What factors influence the price of crude, and to what extent are we in any position to do anything about that?"
"At Chevron we don't speculate on the price," said Marty Gilles, Hawai'i refinery manager for Chevron, the largest gasoline producer in the state. "That's out of our control. The one thing we can control is the supply."
Although Gilles said she didn't anticipate any shortage of crude, she said there could conceivably be disruptions should war cause delays in shipping such things as chemicals or machine parts necessary for gasoline production.
Robert Maynard, chief financial officer of Aloha Petroleum Ltd., stated the obvious: When oil prices go up, gas prices tend to go up as well. He added that such spikes have traditionally been short-lived.
Jim Yates, vice president and general manager of The Gas Company, said propane supplies in Hawai'i are "very much constrained by the Jones Act, which prevents us from bringing in any U.S. propane."
The Jones Act, designed to protect domestic shipping, requires that all cargo moved between two U.S. seaports be shipped on a vessel owned by a U.S. citizen or corporation, built in a U.S. shipyard and manned by a U.S. crew.
All Hawai'i's propane comes in on foreign ships, Yates said. Because of that, Hawai'i is vulnerable when it comes to propane because of the extra weeks it takes to receive foreign shipments. Yates said the state could help by seeking a "blanket exemption from the Jones Act."
John Tantlinger, manager of the Strategic Technology Industry Development Branch of the Department of Business, Economic Development & Tourism, addressed concerns of committee member Rep. Kirk Caldwell, D-24th (Manoa), who asked if "the military could trump civilian" needs for oil if the situation got desperate enough.
Tantlinger said the military's supply of millions of gallons of petroleum stored in wells beneath Red Hill should be adequate to prevent that.
