Governor Napolitano’s Essential Services Task Force split into two groups to examine the gas shortages that occurred last month after a Kinder Morgan pipeline from Tucson ruptured July 30 and was shut down for two weeks.

At the end of the task force’s first meeting Sept. 8, the governor said one group will review what happened “and how we got to where we were,” and the other group will look at “where we go forward.”

Chaired by retired Tosco Energy Co. president and CEO Robert Lavinia, the task force is expected to take at least six months to complete its work. A lot of that work will involve analyzing all facets of the August gas shortages in the Valley, as well as coming up with a plan to prevent such a thing from happening again.

About the gasoline shortages, Mr. Lavinia said, the task force needs to answer two questions: “How much [of the problem] was supply, and how much was overreaction [by consumers]≠

In an interview before the meeting, Mr. Lavinia said the gas shortage “wasn’t catastrophic. It’s going to get solved, and we have to make sure it doesn’t happen in the future. But what else can we do≠ That’s what this is all about.”

In the meeting, Steve Owens, director of the Arizona Department of Environmental Quality, said the line break precipitated a shortage because of a “lack of backup plans.”

The task force also is expected to look into a proposal for a stand-alone refinery, expansion of a Kinder Morgan pipeline, contingencies in case of another pipeline shutdown and ways to conserve gasoline.

In her weekly news briefing Sept. 9, Ms. Napolitano said, “A refinery is a very large pollution emitter, so it has to be done right.”

DEQ is waiting for permit applications from Arizona Clean Fuels, a group of investors proposing a $2.5 billion refinery near Mobile, southwest of Phoenix, the governor said.

Mr. Lavinia, who said he heard about the gas shortages on a newscast he watched while vacationing off the coast of Greece, said “the free marketplace” would decide whether a refinery is built in Arizona.

He said he has not seen any Kinder Morgan pipeline maintenance records, which Ms. Napolitano said were “not readily available.”

“We have to pry it [information] out” of the pipeline company, she said.

Sen. Jay Tibshraeny, R-Dist. 21, who was recently added to the task force, said he wants to know why Kinder Morgan did not build a bypass around its ruptured line until two weeks after the break. He also said it would help to know what contingency plans other fuel-importing states have for interruption of their fuel supplies.

Why Only 1 Pipeline Supplier≠

At her briefing, Governor Napolitano said she did not ask a Kinder Morgan representative to sit on the task force “precisely because we wanted to look at the whole system and how we ended up with one pipeline supplier in our state. There are a lot of folks involved in the gasoline business . . . they are not all represented on the commission, but they all will be consulted as the commission does its work, and that’s what’s important.”

Ms. Napolitano said that while Arizona consumers need to reduce gasoline consumption, state tax incentives for the purchase of alternate fuel vehicles are not the way to go.

“It may be that the price of gasoline forces consumers to look at vehicles that get better miles per gallon to don’t use gasoline at all,” she said.

Gouging Issues

The task force might also look into gasoline price gouging, although the Attorney General’s Office said Sept. 7 that of the 600 complaints it has received about gas prices, fewer than 10 would meet the definition of gouging used by states with anti-gouging statutes. Asked by task force member Rep. Phil Lopes, D-Dist. 27, whether the group should look at gouging issues, Mr. Lavinia said, “I think it’s open to that.”

Eventually the task force also will study the state’s natural gas, water and electric utilities infrastructure, although Ms. Napolitano said she doesn’t think there are power grid problems that could lead to the kind of blackout that hit the Northeast last month.

But regarding the state’s fuel supply and distribution systems, she said, “Arizona’s infrastructure hangs by a critical thread.”

Mr. Lavinia said the state needs to find out how “durable” its fuel supply system is to meet future growth. “Where do we meet critical mass≠” he asked. “We’re not rich in natural resources.”

Before the meeting, Mr. Lavinia was confronted with questions about his former company.

He was asked about a reported attorney general’s inquiry into retail gasoline supplies, which concluded that Circle K-Tosco (now Conoco-Phillips) controlled half the market in Maricopa County.

Mr. Lavinia responded, “I was president then. They looked at store count. We have a lot of stores, but they’re not what you’d call major gasoline stores. It’s a dominant convenience store chain . . . but that was two years ago. I’ve retired.”

Task Force Members

Members of the task force in addition to Mr. Lavinia, DEQ director Owens, Mr. Tibshraeny and Mr. Lopes are Stephen Ahearn, director of the state Residential Consumer Utilities Office; Peter Crouch, dean of ASU’s Fulton School of Engineering; Sharon Harper, CEO of the Plaza Companies; Gilbert Jimenez, director of the state Department of Commerce; Lea Marquez-Peterson of American Retail (Tucson gas stations and other businesses); and Richard Silverman, general manager of the Salt River Project. —