The air strikes on Iraq initiated Wednesday by coalition forces should have little impact on California consumers, according to William J. Keese, chairman of the California Energy Commission.
Keese said oil experts generally conclude that there are sufficient supplies of oil on the market to replace any Iraqi production decreases should they occur. He noted that the $1.00 per barrel increase in oil prices today represents market uncertainty and not economic fundamentals of the market. It is expected that the price of crude oil will stabilize quickly as alternative supplies become available should the need arise, according to Keese.
Under United Nations Resolutions, Iraq has been allowed to sell a certain dollar amount of oil every 180 days. This amount has ranged from $2 billion to over $5 billion. Due to the low price of crude oil recently, and the fluctuating dollar amounts, Iraq's volume of sales has increased from about 800,000 barrels per day in 1996 to as high as 2.5 million barrels per day this year.
California has recently imported around 40,000 barrels per day of crude oil from Iraq, which is about two percent of the two million barrels per day refined in California. The United States imports nearly 710,000 barrels per day from Iraq, or five percent of the nearly 15 million barrels per day of total crude oil input into U.S. refineries.
Energy Commission analysts say U.S. inventories of crude oil, distillates and gasoline are at higher levels than the same time last year and higher than the average from 1993 to 1997. The analysts said the fact that these inventories are higher than normal should have a calming effect on the U.S. market.
California inventories for crude oil, distillates and gasoline, while lower than last year, are still higher than average and more than adequate to meet current demand. California consumers should not feel a significant impact at the retail level.
The Energy Commission will continue to monitor the events in the Middle East to determine their impact on production and price of petroleum products.
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