Lines at the Pumps Again?

A threat of fuel curbs and Sunday closings in April if...

A bumpy stretch of gasoline shortages and substantially higher prices may well be lurking just around the bend for American motorists. That was the message coming from Washington and the nation's oil industry last week. The threat of scarcities is being raised by the political upheaval in Iran, which has virtually shut down that country's vast oilfields and is reducing supplies worldwide. Last week Energy Secretary James Schlesinger warned that unless Iran's wells are pumping again by April 1--which is unlikely, given the complexity of the job of resuming production even if the political crisis is soon resolved--the Administration will have to take steps to clamp mandatory restraints on U.S. gasoline and oil consumption.

Until now the Administration has given the impression that the U.S. could ride out the loss of Iranian oil without mandatory cutbacks until late spring or summer. The 900,000 bbl.-a-day shortfall in crude supplies resulting from the Iranian shutdown has so far been made up by increasing imports from other countries and drawing down domestic reserves. But Schlesinger said that the Government would move more quickly than expected to cut consumption so that stockpiles for next winter can be replenished over the spring and summer.

Schlesinger reported that his department is preparing "a variety of measures" to curb demand after April 1 if such moves become necessary. The most likely step: limiting the crude oil and gasoline made available to refiners and dealers. Another possibility is the mandatory closing of gasoline stations on Sundays and evenings. However, Schlesinger ruled out, at least for now, any resort to outright rationing of motor fuel.

Even before the Iranian crisis became acute, spot shortages of gasoline were occurring, largely because of tightened supplies of unleaded gas, which must be used in newer car models produced to meet federal antipollution laws. Unleaded gas requires about 10% more crude to produce than ordinary fuel, and the industry lacks the sophisticated refinery capacity needed to keep up with runaway demand.

The oil companies argue that the federal controls on gas prices that were imposed during the fuel panic touched off by the 1973 oil embargo discourage investment in new refineries because the return on investment is too low when compared with that produced by other operations. As supplies diminish, more and more oil firms are limiting deliveries of both leaded and unleaded to dealers. Two weeks ago Texaco joined American Petrofina and Phillips Petroleum in allocating supplies, and last week Chevron sought Government permission to take similar steps. Says Texaco Vice President Annon Card: "If demand keeps going up, we'll have even greater problems as we get closer to the peak driving season."

Both Government experts and industry officials agree that the surest way to resolve the problem is to lift price controls. But that is politically difficult because it would boost living costs and thus run counter to the Administration's anti-inflation drive. Last week the DOE estimated that gasoline prices would rise by about 9-c- a gal. under present price controls by the end of 1980, and by about 13-c- a gal. if the restraints were lifted. Though the department contends that decontrol would probably not greatly increase the premium on unleaded, now 4.4%, it agrees that under the worst of circumstances, the gap between prices for leaded and unleaded could increase to 8-c-. Some experts fear that a big differential between the two kinds of gas would tempt motorists to use leaded in cars designed for unleaded. That would damage the car's antipollution gear and increase exhaust emissions.

Though the Administration clearly favors lifting price controls, it has by no means decided to ask Congress to do so, given the headaches the move could cause. As Schlesinger notes, "What I want, and what I recommend, may be two different things."

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