![](media/image1.jpeg){width="8.5in" height="3.5027777777777778in"}U.S.
DEPARTMENT OF ENERGY

**Office of Energy Assurance**

**ENERGY ASSURANCE DAILY**

###### March 30, 2004

**Highlights / Major Developments**

**California ISO Calls Stage One Electricity Emergency Monday**

High temperatures, higher-than-expected loads and unexpected loss of 770
MW of generation prompted the California Independent System Operator to
call a Stage One Emergency at 13:50 pm (PST). This is the first Stage
One Emergency it has called since May 2003. Stage One is called when the
state has less than 7% operating reserves. The ISO asked the entire
state, and especially customers in Southern California, to conserve
energy, an ISO spokesman said. If reserves drop below 5%, the ISO would
call a Stage Two emergency and begin to curtail interruptible load.
Higher temperatures contributed to the problem but did not account for
all the increased demand, officials said. \"Probably what we\'re seeing
is an increase in growth due to the economy rebounding,\" said Stephanie
McCorkle, a spokeswoman for the California Independent System Operator.
The agency announced a Stage 1 emergency, the least serious of three
levels used to classify electrical problems. Stage 2 involves
interruption of service to selected utility customers. Stage 3 requires
rolling blackouts to keep the system from collapse. No blackouts were
expected, but Southern California Edison urged its 12 million customers
to conserve by setting thermostats to 78 degrees, turning off
unnecessary lights and avoiding using washers and other appliances until
evening.

[http://www.platts.com/Electric%20Power/News/5132788.xml?S=n](http://www.platts.com/Electric Power/News/5132788.xml?S=n)

<http://biz.yahoo.com/rm/040329/utilities_california_alert_2.html>

<http://www.newsday.com/news/nationworld/wire/sns-ap-california-heat,0,7449721.story?coll=sns-ap-nationworld-headlines>

Reuters, 1907 March 29, 2004

**Electricity**

**AEP Sees Mich. Cook Nukes Back Soon**\
American Electric Power Co Inc. said Tuesday it expects both units at
the Cook nuclear station to return to service shortly. At about noon
Eastern time on Monday, AEP started a planned power reduction at its
1,035 megawatt unit 1 to repair a minor reactor coolant leak, a company
spokesman, Bill Schalk said. Later Monday at about 2 p.m., Schalk said
the 1,090 MW unit 2 tripped during a surveillance test on the reactor
protection system. He said there did not appear to be any relation
between the two events. This morning, he said unit 2 was still shut and
the company was performing normal post trip system and operational
tests. Moreover, the company has not found any barriers to return unit 2
to service, and expects the unit to be back on line shortly, Schalk
said. In addition, he said AEP identified the source of the leak in unit
1 and will need to cool the reactor to make the repairs. The company
also hopes to return unit 1 to service shortly. Schalk could not be more
specific than \"shortly\" as to when the units would return to service.
Early Monday, both units were operating at full power. The Cook station
is located Bridgman, Michigan, about 80 miles east of Chicago.
<http://biz.yahoo.com/rm/040330/utilities_aep_cook_2.html>

**Petroleum**

**BP Shuts Aromatics Unit at 460,000 BPD Texas City refinery on Glitch**

BP shut an aromatics recovery unit at its 460,000 barrel per day (bpd)
refinery in Texas City, Texas, after a power failure late Monday,
regulators said. The unit was shut in an emergency shutdown procedure,
according to the Texas Natural Resource Conservation Commission Web
site. Aromatics recovery units crack high aromatic naphtha, for
components used for gasoline blending and in making plastics. The
refinery has a total aromatics recovery capacity of 42,800 bpd. Reuters
0911 March 30, 2004 Bloomberg 1441 March 30, 2004

**Flint Hills Rosemount Minn Refinery Shuts Units on Weekend Fire**

Flint Hills Resources 286,000 barrels per day (bpd) refinery in Pine
Bend, Minnesota shut some units after a fire on Saturday, according to
local media reports on Tuesday. The reports say some units were shut as
a result of the fire, but others were operating. Flint Hills did not
immediately return calls for comment. Reuters 1319 March 30, 2004

**EPA Says Denver/Boulder Now Required to Sell Low RVP Gasoline this
Summer**\
Refiners and marketers supplying the Denver/Boulder, Colo., market have
just over two months to get a low RVP gasoline to gas pumps. A March 25
letter from EPA to the Colorado Petroleum Marketers and\
Convenience Store Association noted that the area will not qualify for a
waiver from 7.8 lb RVP gasoline this summer, as it has in previous
years. In the past, the low RVP gasoline was not needed because the area
passed one-hour ozone tests with no problem. Results from the new
eight-hour ozone tests are not so sunny. Though the majority of refiners
should be able to supply the low RVP blend by June 1, EPA didn\'t give
them much notice, sources said. Colorado had recently submitted an
\"Early Action Compact\" to EPA that outlined its intent to sell an 8.1
lb RVP gasoline in the region. But the EAC, which has to be signed by
the legislature won\'t get it off the hook for this summer. \"EPA seemed
to be pretty happy with the 8.1 RVP; then they went ahead and blindsided
everybody,\" said Roy Turner of CPMCSA. Valero and Suncor are among the
refiners expected to supply the 7.8 lb RVP gasoline. OPIS Price Watch
Alert, March 26, 2004

**Several Major Airlines Rescind Fuel Charge Increase** American
Airlines on Tuesday said it rolled back a \$5 increase imposed last week
on its fuel surcharge for one-way travel on domestic markets and flights
to Canada, following similar moves by competitors. American said the
current rise in fuel prices warranted the move, but world\'s largest
carrier had to rescind the increase to stay competitive, a spokeswoman
said. American followed other carriers last week in raising its fuel
surcharge for one-way travel by \$5 to \$15 and by \$10 to \$30 for
round-trip travel. On Monday, United Airlines, which had matched a fare
increase on some tickets by Continental Airlines last week, rescinded
its \$5 surcharge each way after some rivals failed to match it.
Continental on Friday increased its \$10 fuel surcharge on some tickets
to \$15 for travel in the United States and between the United States
and Canada. The \$10 surcharge had been in effect since February 2003 in
some markets where Continental competes with low-cost carriers that have
similar surcharges. Airlines have been trying for months to pass on
higher fuel costs to consumers by using surcharges, but most of these
efforts have failed because some carriers refuse to match the higher
ticket prices.

[*http://biz.yahoo.com/rc/040330/airlines_american_fuel_2.html*](http://biz.yahoo.com/rc/040330/airlines_american_fuel_2.html)

[*http://biz.yahoo.com/rc/040329/airlines_fuel_1.html*](http://biz.yahoo.com/rc/040329/airlines_fuel_1.html)

**EIA Says Gasoline Price Hits Record High**\
The average price U.S. consumers pay for gasoline hit a record high on
Monday, increasing 1.5 cents over the last week to \$1.758 a gallon, the
government said. The latest national pump price, which is up 11 cents
from a year ago, broke the old record of \$1.747 a gallon for regular
unleaded gasoline set last Aug. 25, according to the U.S. Energy
Information Administration\'s weekly survey of service stations. The
weekly gasoline price is not adjusted for inflation. When adjusted for
inflation in 2004 dollars, the highest price was \$2.99 a gallon in
March 1981, EIA says. The Energy Department\'s analytical arm has said
it expects gasoline prices to climb higher during the upcoming driving
season, reaching a monthly average of \$1.83 a gallon in April. The
record gasoline prices reflect strong motor fuel demand and high crude
oil costs, which account for almost half the price of gasoline. The
United States is the biggest customer of OPEC, which will meet on
Wednesday to decide whether to proceed with a planned output cut of 1
million barrels a day. When President George W. Bush was sworn into
office in January 2001, the weekly retail price stood at \$1.47. White
House spokesman Trent Duffy said the president is \"not happy with
rising gas prices\" and the government is making sure consumers are not
illegally being charged at the pump. \"The Energy Department is alerted
and is monitoring to ensure there is no gouging and any proof of gouging
will be dealt with through the appropriate authorities,\" Duffy said.
Democratic Rep. Edward Markey of Massachusetts sent a letter on Monday
to Bush urging him to suspend shipments to the U.S. emergency crude oil
stockpile and keep those supplies in the market to bring down pump
prices. The White House has repeatedly rejected such an action, saying
that it would have little impact. Markey also said Bush should demand
that OPEC immediately increase its oil production. In a related matter,
a group of 30 Democratic and Republican lawmakers on Monday asked Bush
to file a case against OPEC with the World Trade Organization for
illegally restricting global oil supplies and raising crude prices.
<http://biz.yahoo.com/rm/040329/energy_gasoline_price_2.html>

**Interior Secretary Norton Comments on Oil Prices, U.S. Reserve**

Gale Norton, the U.S. interior secretary, comments on oil prices and
policies governing the use of oil stored in the nation\'s strategic
petroleum reserve. Norton talked to reporters while touring the Statue
of Liberty in New York Harbor. On whether gasoline prices at an all-time
high might justify opening the strategic reserve: \`\`The petroleum
reserve is primarily designed for major disruptions to the supply. What
we\'re seeing right now are high prices. It is something more in line
with usual supply and demand. We are currently still filling the
strategic petroleum reserve so that next year it should reach its full
capacity.\'\' On whether there is a price at which tapping the reserve
would be considered. \`\`We continue monitoring what\'s going on with
oil availability. There is not any specific point at which we decide
that the petroleum reserve would be opened. \`\`Obviously the strategic
petroleum reserve is a tool that can be used to make sure that our
economy is able to adjust to any disruptions in supply. We are
continuing to monitor that

situation.\'\'

Bloomberg News 1451, March 30, 2004

#### Natural Gas 

**U.S. West Gas Prices Rise as California Heat Stokes Demand**

Wholesale gas in the U.S. West rose after an early season heat wave in
California stoked air

conditioning use, leading to increased demand at gas-fired power plants.
Unusual heat yesterday in Southern California prompted the state\'s grid
operator to warn utilities they may have to cut power to some customers.
People were \`\`cranking up those air conditioners,\'\' said Tom Langan,
chief executive of WTL Trading Inc. in Cypress, California, near Long
Beach. \`\`The gas-fired generators, being the last line of defense,
kicked up the cash price.\'\' The price for gas sold to local utilities
off PG&E Corp.\'s

California pipeline climbed 17 cents, or 3.3 percent, to \$5.28 per
million Btu on the Intercontinental Exchange, an electronic energy
market. It\'s up 6.7 percent this week.

Bloomberg News 1335 March 30, 2004

####### 

####### Other

**Saudi Faces Gulf Showdown on OPEC Oil Cut**\
Leading OPEC producer Saudi Arabia on Tuesday faced opposition from its
two main Gulf allies in the oil cartel for plans to forge ahead with
April supply curbs. Saudi Oil Minister Ali al-Naimi made a strong case
ahead of Wednesday\'s meeting of the Organization of the Petroleum
Exporting Countries to push through output cuts, agreed in February for
implementation from April 1. But he faces an unexpectedly robust
challenge from the United Arab Emirates and Kuwait, fellow Gulf Arab
producers who normally share Riyadh\'s line on oil policy. Kuwaiti Oil
Minister Sheik Ahmad al-Fahd al-Sabah told reporters he backed a UAE
proposal for postponing the April reductions. Analysts said the rare
split across OPEC\'s core Gulf Arab membership suggests the United
States, having failed to budge Saudi, is focusing diplomatic efforts
aimed at securing lower prices on Kuwait and the UAE. \"The UAE and
Kuwait are the guys that the U.S. can count on now,\" said Roger Diwan
of Washington consultancy PFC Energy. Oil dealers read the Saudi's
remarks as evidence of Naimi\'s determination to go ahead with the
reduction. U.S. crude ended the day up 75 cents at \$36.20 a barrel.
<http://biz.yahoo.com/rb/040330/energy_opec_5.html>

**Energy Prices**

+-------------------------------+-----------+-----------+------------+
|                               | **Latest  | **Week    | **Year     |
|                               | (3        | Ago**     | Ago**      |
|                               | /30/04)** |           |            |
+-------------------------------+-----------+-----------+------------+
| **CRUDE OIL**                 | 36.15     | 37.81     | 30.21      |
|                               |           |           |            |
| **West Texas Intermediate     |           |           |            |
| US**                          |           |           |            |
|                               |           |           |            |
| \$/Barrel                     |           |           |            |
+-------------------------------+-----------+-----------+------------+
| **NATURAL GAS**               | 5.40      | 5.36      | 5.06       |
|                               |           |           |            |
| **Henry Hub**                 |           |           |            |
|                               |           |           |            |
| \$/Million Btu                |           |           |            |
+-------------------------------+-----------+-----------+------------+

> Source: Reuters

**This Week in Petroleum** from the Energy Information Administration
(EIA)

[*http://tonto.eia.doe.gov/oog/info/twip/twip.asp*](http://tonto.eia.doe.gov/oog/info/twip/twip.asp)

Updated on Wednesdays

**Weekly Petroleum Status Report** from EIA**\
**[*http://www.eia.doe.gov/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/wpsr.html*](http://www.eia.doe.gov/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/wpsr.html)

Updated after 1:00pm (Eastern time) on Wednesdays

**Natural Gas Weekly Update** from EIA

[*http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp*](http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp)

Updated after 2:00 pm (Eastern time) on Thursdays