Oil Suppliers Declare Hoarding Unwarranted in Anticipation of Y2K

Oil suppliers say they are ready for the Year 2000, so consumers who fear a shortage associated with the Millennium Bug need not worry nor hoard oil in the days leading up to the turn of the century.

The American Petroleum Institute published results of a survey conducted earlier this summer that found 94% of its members will be Y2K compliant by the end of September and supplies should be steady during the Y2K rollover. A follow-up survey is scheduled for release in October.

“America’s oil and natural gas industry has invested over $2 billion during the past five years to make certain its customers will have . . . all the oil and gas products they rely on,” API said. Petroleum industry “business systems will be ready, their embedded systems will be ready, their supply chains will be ready and their contingency plans all will have been tested before the end of 1999.”

Despite such statements, the industry has not inoculated itself against all potential problems. API acknowledged in its Y2K readiness disclosure statement that some potential for failures exists. Among them are: the failure of customers, suppliers and government entities to achieve compliance, the failure to identify all critical Y2K issues and the failure to implement contingency plans in a timely manner.

What’s more, the General Accounting Office reported in May that the petroleum industry might not have enough time to address unexpected problems.

“The oil and gas industries are dependent on control and embedded systems that are subject to Year 2000 failures,” GAO noted. “These systems are present in all phases of the petroleum production cycle — oil and gas extraction, refining, transportation and delivery.”

James Hamilton, assistant director of civil agencies information systems at GAO, said since the watchdog agency’s report was released, the oil industry “seems to be reacting to our recommendations.” He said the industry is doing risk assessments, developing contingency plans and evaluating strategic use of petroleum reserves.

But Hamilton added that his agency has not received information that the oil industry has completed implementation of GAO recommendations.

API said its members have contingency plans to prevent oil shortages, noting inventories are ample and the nation’s strategic petroleum reserve holds 572 million barrels in salt domes in the Southwest.

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