State Warned of Mideast Fallout

The California Legislature was told Tuesday that although the state imports no crude oil from the Middle East, it is hardly immune to the economic consequences of Iraq’s invasion of Kuwait.

Together, Iraq and Kuwait produce 8% of the world’s total oil supply--and if this amount is not available, “that’s a heck of a big shock to the worldwide market,” state Energy Commission member Richard A. Bilas testified.

Because the worldwide pool of oil is bought and sold on the changing global market as a commodity, Bilas said, California or any other state or nation cannot “lock up” a chunk of the supply for its own uses.

As a result, Bilas told a special hearing of the State Senate Energy Committee, the ripples of Middle East oil economics affect the pocketbooks of Californians to some extent even though California does not import oil from the Arab world.

At a hearing called to take a preliminary look at the impact of the Persian Gulf crisis on California, Bilas said the state produces 47% of the crude oil it uses and imports 46% from Alaska. The other 7% comes from Indonesia.

“The fact that California imports (little) of its oil from foreign countries does not mean that we are independent from supply disruptions in other areas of the world,” he told the committee. “Oil is sold in a worldwide market. So disruptions any place will, of necessity, affect the state of California.”