1999 ANNUAL REPORT
Management Letter

1999 a Turbulent Year with Major Accomplishments

1999 was another turbulent year for WSPA and its member companies. But despite potentially disruptive changes in the political climate in some states, continued consolidation within the industry and unfortunate accidents, it was a year of major accomplishment too.

Our outreach efforts and advocacy, grounded on good science and sound economics, enabled the industry to head off counterproductive legislation in many cases and forge realistic compromises in others. This was accomplished despite new political landscapes in California and Washington State following the 1998 elections; landscapes that many believed would be hostile to business generally.

In California, for example, WSPA was able to support the final decision of Governor Davis to allow the industry adequate time to phase out the use of MTBE in cleaner-burning gasoline. By reaching out to the community, we were also successful in holding off open supply and divorcement legislation that, in the final analysis, would have hurt the consumer.

Counterproductive legislation addressing tanker safety in Puget Sound seemed destined for passage early this year when the power base in the Washington legislature changed hands and a virtual tie between parties developed in the House. The industry's advocates, however, were able to make their case and the tanker escort and the dedicated tug bills remained in committee.

These examples underscore the fact that WSPA has been able to marshal our information and arguments on controversial issues and work with elected and appointed officials of either major political party for the benefit of the industry and the customers it serves.

It should be noted that these activities have gone forward even as WSPA continues its efforts to contain costs and streamline operations. This annual report to the membership illustrates that fact. We are using electronic publishing not only to cut costs of printing and mailing, but to demonstrate that our upgraded and revitalized web site can be a more efficient and speedier method of communication between WSPA and its members. The favorable reaction we received to publishing the WSPA newsletter electronically was the basis for the decision to "go electronic" with the annual report.

No accounting of the turbulence of 1999 would be complete without recognizing the difficulties presented by accidents to our industry, its employees and neighboring communities this year. Unfortunately, industrial accidents do occur despite the serious, long-term commitment of the petroleum industry to accident prevention and safety training. In the WSPA states, this year, accidents and shut downs at a variety of facilities received sustained media attention. Along with the tragic results for individuals and companies involved, they also triggered politically-motivated legislative activity. Thankfully the more punitive legislation was not enacted but much of it was put over until next year.

As this year ends, WSPA is well positioned to address the pressing issues of the Year 2000 and beyond. Much needs to be done to allow production on offshore leases, to continue to seek flexibility in manufacturing CARB Phase 3 gasoline, new diesel regulations and to find a substitute for MTBE. With our new structure and the active participation of our member companies, WSPA is prepared to continue its innovative advocacy on behalf of the industry into the next century.

Dwight L. Wiggins Tosco Corporation Chair, WSPA Board of Directors		Douglas F. Henderson Executive Director WSPA

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