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American Morning
More Rolling Blackouts Ahead for California
Aired May 08, 2001 - 11:36 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: A spring heat wave in California is our top story, among our top stories this morning. It's what California does not need right now. But that's what the state is getting. And the hot weather is getting some of the blame for more rolling blackouts.
Those blackouts affected several parts of California yesterday. Now, California's gasoline refineries have been put on notice that they, too, could be subject to rolling blackouts. Sounds like a mess.
CNN's Rusty Dornin joining us now from a refinery in Benecia, California, with the latest. Rusty, that just does not sound like a good combination, rolling blackout that could hit oil refineries?
RUSTY DORNIN, CNN CORRESPONDENT: That's right, Daryn. Volero and 16 other refineries were exempt from rolling blackouts until April when the Public Utilities Commission informed them they could get the lights turned out just like everyone else.
But it's difficult because for a plant like this, it usually takes two or three days to power down safely. And if the power is shut off immediately, it could cause some real problems not only for the refinery but it could end up rippling through California's already pretty fragile economy.
And here with us to tell us a little bit more about how it could affect us is Rich Marcogliese, who is vice president and general manager here at Volero. What happens when the power is cut off immediately here? What kind of problems does it cause the refinery?
RICH MARCOGLIESE, VICE PRESIDENT AND GENERAL MANAGER, VOLERO: Well, in a refinery it's much more complicated than simply shutting the power off and turning it back on. We're a continuous operation. High temperatures, high pressures, and loss of power represents adverse community impacts and shuts us down for a number of days if there is no equipment damage.
DORNIN: Now, I understand this provides about 10 percent of California's clean burning fuel in northern California. If you are shut down for an extended period of time and other refiners also end up being shut down, what happens then? What happens to the...
MARCOGLIESE: Well, in that situation, first of all, our production of 10 percent in the state is all concentrated in northern California. So our impact on this region is much more significant.
The state has a very delicate supply-demand balance for California cleaner burning gasoline. And we have seen before when there is refinery construction there is a retail price reaction associated with that.
DORNIN: So if it's $3.00 in the rest of the nation, California could see even bigger hikes is what you are saying?
MARCOGLIESE: Well, we have seen in the past when refineries have been curtailed in some fashion that retail prices do move in accordance with that.
DORNIN: Now, hospitals and emergency agencies are exempt. And the Public Utilities Commission is saying that the refineries, it's an economic hardship, and that doesn't apply. What is your argument on that?
MARCOGLIESE: Well, we don't agree with that, of course. And also, the California Energy Commission does not agree with that.
The California Energy Commission has recommended to the Public Utilities Commission that refineries be defined as an essential use. And basically, that relates to the fact that we supply transportation fuel to emergency services. And we've seen the situation before during pipeline curtailments that we've nearly run airports out of jet fuel. It presents a significant public policy issue.
DORNIN: But California legislators may be addressing that, I understand?
MARCOGLIESE: There is a bill moving through the legislature currently -- it was passed unanimously by the state assembly -- which would place refineries in priority just next to emergency services.
DORNIN: Now, just hearing Vice President Dick Cheney talk about the energy issues, he did bring up more refining capacity. I understand this plant was of one of the last built in the country. Is that correct?
MARCOGLIESE: That is correct. We were commissioned in 1969. We're one of the most modern plants in the U.S. Our company Volero is interested in growing our refinery's capacity in line with the growth in the California economy.
DORNIN: OK, thank you very much for joining us. Rich Marcogliese, he's from the Volero Oil Refinery.
Things begin heating up later this afternoon. Volero could be on the blackout list. They haven't been told which block they are in. But if the blackouts begin to hit again, they will begin rotating through the state. And this refinery could possibly be hit, Daryn.
KAGAN: Rusty Dornin, thank you. We will check back with you.
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