Dishonor Among Thieves

The recent gas crisis should inspire reform

The canceled pipelines would have doubled the amount of gas reaching Southern California.

Prices soared in California, which pushed up prices in Arizona.

Without that extra pipeline, California will continue to need more natural gas from the pipelines that also serve Arizona. Compounding the danger to Arizona was another little-publicized decision this summer by the Federal Energy Regulatory Commission to cease Arizona's status as a "full-requirement customer" of El Paso's. In effect, as of September 1, El Paso will no longer be required to provide all the natural gas asked for by Arizona customers. The measure was pushed by California officials to better secure their state's supply.

Rand Carlson

"We will no longer have the safety and luxury of knowing that if we have greater demand in Arizona, that El Paso must provide it to us," says Randy Dietrich, manager of fuels for SRP. "All of a sudden, we're in a new game with new rules. And we're not completely sure how it will affect us."

Arizona has no major natural gas storage facilities that could be used to stockpile gas to mitigate a shortage. A major pipeline project designed to bring natural gas from the north has been scrapped. Another pipeline project is years off if it ever gets built.

"Arizona is still in a pretty bad position," says Lance Astrella, the lead attorney in several natural-gas-related lawsuits across the West. "That's why some sort of north-south line is so important. It's all about competition."

Thanks to El Paso executives and California officials, we could soon see a much more precarious and expensive market for natural gas and electricity.

I imagine a day when I'll be unable to open the electric garage door to let out the car I can no longer afford to drive.

In our conversation, Terry Goddard suggested Arizona and other western states should all agree to use the same type of cleaner-burning gasoline. Currently, each state has its own requirements, which makes each state dependent on just a few producers that make their blend.

Goddard's staff is already working on anti-price-gouging legislation to present to Arizona legislators. Sixteen states have similar legislation, but similar proposals in Arizona have always fizzled in committee.

"I think the political will is there this year," he says.

We'll see. In the past, Arizonans and their political leaders have quickly forgotten once an energy crisis has passed.

And they certainly haven't been very creative, or forceful, in addressing these critical infrastructure problems.

For a heavy dose of both brains and balls, Arizona leaders should consult with the authors of the FTCR report.

The California report suggests much stronger antitrust legislation at the state and federal levels.

And the report authors suggest the most novel solution to California and Arizona's problems, a solution that has yet to be considered by Arizona policymakers.

Their idea: Sell only one grade of gasoline.

"When studying the low inventory levels maintained by the (oil companies), FTCR determined that the three octane grade gasoline offering of regular, midgrade and premium results in under-utilization of the existing tanks, many of which sit partially filled with slower selling high octane gasolines."

The researchers found that approximately 50 percent of the storage dedicated to higher octane gas is never used effectively.

The report suggests that state legislation mandating the sale of a single grade of gasoline in a state "would greatly reduce the ability of oil companies to create price spikes at the pump by increasing the use of existing storage tanks as means to combat the low inventory practices responsible for the spikes."

Basically, we use the existing tanks below every gas station in the Valley as our strategic reserve against price manipulation.

The report's authors argue that, contrary to oil industry marketing, only 5 percent of vehicles on the road in 2003 still need higher octane gas. Owners of those vehicles, mostly high-performance luxury cars or vintage cars, could easily boost their octane by occasionally pouring a small bottle of octane-boost additives into their tank. Such additives, the report's authors argue, are considerably cheaper to buy in bottle form than at the pump and are identical to the additives used to turn normal gas into premium.

The FTCR report offers numerous other solutions and supporting documentation for all its claims and suggestions. This must-read for Arizona policymakers can be accessed at www.consumerwatchdog.org.

But like so many other brilliant policy papers, the FTCR report will only sit collecting dust if the political will doesn't exist to fight for needed changes.

Instead of smart, inexpensive policy changes like the ones proposed by FTCR, expect a bevy of industry-supported plans that use taxpayer dollars to purchase refineries or additional storage. State policy leaders are already beginning to propose projects that are little more than government handouts to the same people who have made massive profits off the people of Arizona while paying few taxes to state coffers.

Oil and gas executives are looters. We now know why they loot, how they loot and what it feels like to have them robbing our store.

The trick now is to hold this nasty thought until the next legislative session.

Then it's payback time, a time for Arizonans to do a little looting of their own.

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