Oil won't solve energy 'crisis' Production unable to keep up with voracious U.S. demand, analysts say By Dina Temple-Raston USA TODAY

President-elect Bush arrived in Washington this week warning of a ''looming energy crisis'' and vowed to provide relief by asking members of the Organization of Petroleum Exporting Countries to ''open the spigots.''

If only it were that simple. More crude oil won't fix the latest energy debacle in the USA. Only such longer-term solutions as building more refineries, beefing up production capacity and construction of natural gas pipelines will, analysts say.

''Talking up OPEC is meaningless. The crude oil crisis is past,'' says Bill O'Grady, oil analyst at A.G. Edwards & Sons. He notes that oil has dropped almost $10 from $35 a barrel in the past several weeks. ''Bush is focusing on crude oil because politics is all about the art of the possible. The more immediate problem is natural gas and refining capacity, and that's not something he can fix in the short term.''

Ask consumers, and they'll tell you the energy crisis isn't just looming, it has arrived. In the Northeast, some customers are paying twice as much for heating oil this year than last. Californians, caught in a utility deregulation experiment that appears to have gone wrong, are fretting about whether the state's two utilities will provide electricity next week.

''The basic problem is one of supply and demand,'' says John Fishburn, a retired stockbroker in Santa Rosa, Calif. His electricity bill has risen between 15%-20% this winter. ''I'm one of the lucky ones. There are people in San Diego who have seen their bills go up 100% or so.''

California utilities Pacific Gas & Electric and Edison International, struggling with $8.1 billion in debt from surging power costs, said Thursday that they may run out of cash unless California regulators allow them to raise electricity rates. The rising cost of natural gas needed to fire their plants has hobbled their operations.

California's energy woes are only the latest in a string of problems that have cropped up this year as the nation's fragile energy distribution system has started to fray.

While jawboning OPEC into producing more oil used to be enough to bring down energy prices, it doesn't work anymore because what is driving up prices is limited domestic refining capacity and a voracious appetite for fuel. That's not something President-elect Bush can fix quickly.

The numbers tell the story: U.S. refineries produce nearly 15.7 million barrels a day of gasoline, heating oil, diesel and jet fuel. Consumers are gobbling it up at the rate of about 18.6 million barrels a day.

What's more, a shift in the energy industry has made a delicate situation even more fragile. Oil companies have been trying their hand at the just-in-time inventory that made the auto industry more efficient. That leaves less room for error should the weather turn or supply problems arise, analysts say.

Where the new administration can help is in helping avoid these problems in the future. That's why Bush is focused on opening new supply frontiers and building pipelines that can transport natural gas from the arctic to the lower 48 states, says Tom Robinson, managing director at Cambridge Energy Research Associates.

''There's not a lot President Bush can do right away,'' he says.

''The only thing he can really do now is promise help for people who can't afford to pay their heating bills.''

Bush aides say they are concerned the country will slip into a recession because of the latest rash of energy-related headaches. That's unlikely, analysts say, because the worst of it may already be over.

''You're getting a massive slowdown in world growth,'' O'Grady says. ''It is starting in Asia, and that's going to provide some relief as the appetite for oil dries up. The world economy is shifting into a lower gear, and the oil markets are beginning to anticipate that, and it is showing up in lower prices. That's not something Bush can control, but he can take credit for it when prices go down.''

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-- Martin Thompson (mthom1927@aol.com), December 22, 2000