US embassy cable - 05ROME3185

UNCLAS  ROME 003185 
 
SIPDIS 
 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, ENRG, EPET, PREL, IT 
SUBJECT: ITALIAN RESPONSE TO ENERGY SUPPLY DISRUPTIONS 
 
REF: STATE 163206 
 
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Introduction and Summary 
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1. (SBU)  ECMIN and Econoff met September 9 with Director 
General for Energy and Mineral Resources, Sergio Garribba, of 
the Ministry of Productive Activities (MPA) on Hurricane 
Katrina's impact on energy supplies.  The discussion centered 
on the international response to energy supply disruptions, 
and possible lessons learned from the International Energy 
Agency (IEA) response.  Garriba also spoke about the 
difficulty in passing effective energy legislation and 
offered his views on the U.S. energy law recently enacted. 
End Introduction and Summary. 
 
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International Response to Energy Supply Disruptions 
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2. (SBU)  ECMIN thanked Garribba for Italy's support of the 
IEA energy supply response in the aftermath of Hurricane 
Katrina, specifically, the GOI's immediate and strong 
endorsement of collective action to make available crude oil 
and refined products in response to supply disruptions. 
 
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Preliminary Lessons Learned 
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3. (SBU)  Garribba said that the Hurricane Katrina supply 
disruption was "unprecedented," a "test case," and that there 
would be valuable lessons learned as a result. On a 
preliminary basis, he thought that the IEA response has been 
"overly cautious," but that the greater risk had been not to 
act. He also thought that the IEA response system might not 
have had the flexibility needed to double or triple the 
release of energy reserves over fifteen days following the 
hurricane.  Garribba recalled that the Gulf War had been the 
first large world event affecting the oil market after the 
creation of the IEA.  At that time, the IEA had taken no 
action. 
 
4. (SBU)  With respect to Italy's national response to 
Katrina, Garribba thought there was room for improvement.  He 
said that the Italian Council of Ministers' September 9 
decision to release oil reserves had been made expeditiously, 
but it had taken a week to implement that decision--far too 
long, in Garribba's view. 
 
5. (SBU)  With respect to other EU member states, Garribba 
said that the European Union and the IEA needed to further 
harmonize their rules and procedures regarding reserves and 
distribution.  Many IEA members have little or no reserves to 
offer the IEA, and Garribba wondered whether it would be 
better for members who do, to offer those reserves 
immediately and unilaterally during an emergency. 
 
6. (SBU)  ECMIN then asked for Garribba's views on the likely 
impact of several weeks of continued disruption in the U.S. 
market.  Garribba said supply conditions would probably be 
difficult with the onset of winter in the northern 
hemisphere, and that there would probably be continued 
pressure as demand increases.  He said that while the IEA 
should not talk about prices, overall, it would be best for 
the market if prices were kept low. 
 
7. (SBU)  In this context, Garribba thought that the IEA 
should extend its market intervention for at least an 
additional thirty days, if not longer. 
 
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Recent U.S. and Italian Energy Legislation 
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8. (SBU)  Regarding the U.S. energy bill passed in August, 
Garribba widened his comments to include other countries' 
experiences with trying to enact comprehensive energy reform 
legislation.  He said that it was very difficult to pass 
good, coherent legislation on energy because of the 
inevitable pressure for a plethora of amendments responding 
to constituent and lobby interests.  Germany, for example, 
had experienced enormous difficulties, and the just-passed 
Italian energy bill had over seven hundred amendments.  This 
 
process in a parliamentary democracy usually leads to so many 
conflicting interests that in the end there is no clear 
policy direction, in Garribba's view. He said that he was not 
satisfied with the Italian energy reform law, and that, 
overall, the U.S. Congress had done a better job at producing 
coherent legislation than had the Italian parliament.  Given 
this dynamic, Garribba stated that in the future he would 
press for changes to Italy's energy framework through 
executive decrees, rather than parliamentary legislation. 
 
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Comment 
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9. (SBU)  Garriba is a knowledgeable interlocutor whose views 
on how the IEA should respond to Katrina-related events in 
world markets are broadly supportive of U.S. policy.  We 
believe we can continue to count on him as a helpful voice if 
further IEA actions are required in the weeks and months 
ahead.  End comment. 
 
SPOGLI 
 
 
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 2005ROME03185 - Classification: UNCLASSIFIED