N.D.: Officials Discuss Fuel Supply

"I'm worried," said Sen. Byron Dorgan, D-N.D., who held a Senate committee meeting Tuesday to discuss a shortage of fuel supplies in North Dakota. "We've got a real challenge ... we can't be whipsawed by the lack of supply and high prices."

A U.S. Department of Energy representative and officials and from refineries and pipeline companies testified in Bismarck before the U.S. Senate Appropriations Subcommittee on Energy and Water Development, at Dorgan's request.

Howard Gruenspecht, deputy administrator of the Energy Department's Energy Information Administration, said refinery outages -- "both planned and unplanned" -- and strong demand contributed to tight supplies in North Dakota and elsewhere.

"The areas that generally experience the most supply problems are those that are at the ends of the distribution system -- and I'm sorry to say North Dakota is one of those places," Gruenspecht said.

North Dakota motorists paid among the highest prices in the nation for gasoline this summer, behind Hawaii, Dorgan said. While gasoline prices have eased, diesel shortages continue to hamper the state, especially farmers, he said.

"North Dakota is an agriculture state -- when farmers need diesel, they need diesel now," Dorgan said.

Diesel supplies remain tight in North Dakota, said Leon Westbrock, a vice president of CHS Inc., the nation's largest cooperative oil refiner, owned by farmers, ranchers and cooperatives. Its Laurel, Mont., refinery pipes diesel and gasoline to Fargo. The co-op also owns a terminal in Minot.

"I don't expect the supply issues in diesel to heal soon, but I believe they will in time, as the market adjusts to demand," he said.

Westbrock and Mike Rud, president of the North Dakota Petroleum Marketers Association, said a colder-than-normal winter in North Dakota could lead to tight home heating fuel supplies.

"Just as the industry scrambled to meet the diesel demand, it may be similarly challenged with the heating fuel supply, "Westbrock said.

Dawna Leitzke, executive director of South Dakota Petroleum and Propane Marketers Association, said her state also was suffering from severe fuel shortages because of high demand and refinery outages.

"We are all in the same situation -- we're all struggling," Leitzke said. "It's not a good situation and it's not getting better."

Rud said fuel dealers have said the tight supplies are as bad as the oil embargo of the 1970s.

"We can't keep taking the crumbs on the end of the pipeline," Rud said.

Rud said as many as eight refineries experienced outages this year, most of which were planned.

Antitrust laws forbid companies to share information on planned refinery shutdowns, but Rud said an independent liaison could be assigned to ensure the shutdowns don't happen at the same time.

"A little coordination is all we are asking for," Rud said.

Energy officials told Dorgan that increased refinery capacity likely would ease the supply pinch in North Dakota.

Tesoro Corp.'s refinery at Mandan is the state's sole oil refinery. Officials there have said about 75 percent of the refinery's production is shipped to Minnesota.

Dorgan called the fuel shortage a cruel irony.

"We produce six times more energy than we use and we can't get it," he said.