WASHINGTON – U.S. motorists will not face shortages of gasoline because of BP Plc's shutdown of its giant Prudhoe Bay oil field in Alaska, even though pump prices may rise, the government's energy forecasting agency said Monday.
BP announced over the weekend it was shutting down its 400,000 barrel-a-day Alaskan oil field to repair corrosion in the transit pipeline that moves the crude.
U.S. crude oil prices jumped more than $2.50 a barrel at the New York Mercantile Exchange in response to BP's action, and oil accounts for more than half the cost of making gasoline. Travel club AAA said it expected average U.S. retail gasoline prices to eclipse last year's record.
The BP field accounts for 8 percent of U.S. crude oil production and more than half of Alaska's oil output. But its shutdown "certainly isn't going to create any shortages in gasoline, diesel fuel and other petroleum products," Tancred Lidderdale, an analyst with the federal Energy Information Administration, told Reuters.
Lidderdale said refiners on the West Coast, where most of Alaska's crude oil is shipped, have plenty of supply as the region's oil stocks are "above average" at 55 million barrels.
"They've certainly got some comfortable wiggle room" with available supplies, he said.
Still, Lidderdale said the loss of any crude supply is not good for prices. "It makes an already tight world market even tighter," he said. "Unexpected bad news will definitely have an impact on prices."
Because complex West Coast refineries are configured to process Alaska's more dirty, or sour, crude, they can easily process other types of crude that may be shipped from the U.S. Gulf Coast or other countries, Lidderdale said.
"Those California refiners are set up to process lousy crude ... they shouldn't have any problems processing crude that is lighter or sweet," he said.
Energy Secretary Sam Bodman said the government stood ready to make emergency oil loans to West Coast refineries from the nation's Strategic Petroleum Reserve to help offset the loss of Alaskan supplies.
Oil from the reserve, which now holds about 688 million barrels of crude, would take at least a week to get to the West Coast because the crude cannot be transported directly to the region by pipeline from the stockpile's four Gulf Coast sites in Texas and Louisiana, according to Lidderdale.
But he said oil on Venezuelan tankers bound for the U.S. Gulf Coast could be diverted to the West Coast and get to refiners there faster than crude from the emergency reserve. Any affected Gulf Coast refiners losing their Venezuelan oil shipments could then get oil loans from the SPR.
"It's not necessarily the barrel of oil that's in the SPR itself that has to make it to the West Coast. They can reroute a shipment that's on the water," Lidderdale said.
Venezuela is the fourth largest foreign oil supplier to the U.S. market, shipping an average 1.2 million barrels a day.
Because it will take so long to move SPR oil to the West Coast, Lidderdale said refineries in the region may have to request emergency oil loans from the government before their supplies from Alaska actually come close to running out.
He said it will take a while for the Alaskan oil supply to run dry, because BP will need several days to completely shut down its pipeline and the oil already moving through the pipeline and in transit on the sea will take more time to arrive by tankers to West Coast refineries.
He said the EIA will release Tuesday its regular monthly energy forecast, which will reflect the impact of BP's shutdown of its oil field on U.S. petroleum supplies and prices.
Lidderdale said the timing of the oil field shutdown was "somewhat fortunate" because it comes toward the end of the busy U.S. summer driving season, even though the Labor Day holiday weekend in early September has strong gasoline demand.
"Better now than the beginning of summer. Once we make it past Labor Day we'll start to breathe more easily," he said.