Monday, May. 14, 1979

Drive Now, Freeze Later?

Supplies are down, tempers are up, and gas station lines come back

Pulling into a service station is beginning to seem like entering a combat zone. With more and more of the nation's 171,000 gas stations closing on weekends, shortening hours during the week, and cutting sales to $5 per customer to stretch supplies, frazzled and angry drivers are starting to boil over.

In Las Vegas, only ten of the city's more than 200 stations were open a week ago Sunday when scuffles and fistfights broke out at several of them as fuming vacationers waited for gasoline in lines that sometimes stretched for blocks. In California, where drivers are now lining up before dawn and service station operators grant appointments like doctors, a customer at a San Francisco self-service pump jumped to the head of the queue, then stabbed a man in line behind him who tried to protest. In Miami, some drivers tank up and roar off without paying when attendants turn their backs.

Tempers will flare even more in the weeks ahead. Tight supplies have already forced nearly all oil companies to allocate deliveries to their retail outlets on a monthly basis, usually 90% or 95% of what the stations sold during the same month of 1978. Last week Texaco, Sun oil, Union and Exxon tightened their allocations still further, in the case of Exxon to 80% of the 1978 level. Thus, as summer progresses, drivers will find it increasingly difficult to buy gas toward the end of each month as service stations run dry.

Warnings of a gasoline squeeze have been voiced repeatedly since last winter by everyone from oil executives to Jimmy Carter and Energy Secretary James Schlesinger, all of whom have urged the public to curb its driving and start conserving fuel. No one has paid much attention, and people seem instead to grow more convinced by the day that the shortages are part of a price-gouging hoax perpetrated by Big Oil.

The real and immediate reason why supplies are tight is that overall output by the 13-nation OPEC cartel, which produces nearly half the world's oil, has been cut by between 7% and 10% since December, when shipments from Iran first stopped. Now that Iran is back to exporting, at two-thirds normal capacity, Saudi Arabia, Libya, Kuwait and other oil states are reducing their own deliveries to keep the market tight.

Supplies are also being crimped because demand for petroleum continues to grow. Last year's momentary surplus brought on by increased output from the North Sea and Alaska has been more than wiped out by rising consumption as well as OPEC's cutbacks. Steadily growing consumption of gasoline is causing most of the demand problem. Nearly 40% of all oil used in the U.S. goes for gasoline, and even though the price has almost doubled since 1973, the nation's 142 million motorists are burning it in record amounts. Not only have over 20 million new drivers streamed onto highways since 1973, but so have 24 million additional cars, trucks, campers, vans, Jeeps, dune buggies and other such toys for grownups.

Of the 154 million registered vehicles in the U.S., only passenger cars and light trucks must meet federal mileage standards. In the case of cars, the standards require each automaker's fleet to average 27.5 miles per gallon by 1985. So far, the phasing in of new, more fuel-efficient autos has boosted the average mileage of the nation's total fleet of 98 million passenger cars by a scant half a mile per gallon, to 14.35 m.p.g. But the size of the fleet itself continues to grow, so consumption goes up, not down. Officials at the Department of Energy and oil company planners contend that consumption will level out and begin to decline by 1982, but no one knows for sure.

Federal clean-air standards are making the squeeze worse, because they require that U.S. cars from 1975 onward must use unleaded gas. That fuel now accounts for four out of every ten gallons sold and is in the shortest supply of all. A refinery needs up to 10% more crude to make a gallon of unleaded than leaded gas, and demand for the product has far outstripped the industry's ability to keep pace by expanding refinery capacity to make it.

As consumption climbs, oil companies are having to dip deeper into their gasoline inventories, which have dropped by just over 10% since last spring. Home heating-oil stocks have declined by an even sharper 16%, and DOE officials are calling in company executives one by one and telling them bluntly to start rebuilding their heating-oil stocks immediately by a full 140 million bbl. in the next five months in order to prevent the Squeeze of 1979 from turning into the Freeze of 1980. The switchover is essential but could reduce gasoline production by as much as 8% between now and October.

With the pinch at the pump growing worse, Carter and Congress continue to struggle over just what sort of energy policy is best for the nation. The House Commerce Committee came within a single vote of approving a bill that, if later accepted by the full Congress, would have stopped the President from phasing out domestic crude-oil price controls beginning next month.

Decontrol is almost certain to take place, in spite of growing House opposition. Congress would quickly have to pass a new law to prevent the President from authorizing it, and decontrol is generally supported in the Senate. But Carter's request for stand-by powers to ration gasoline is in trouble.

No such problems face a fellow who may well challenge Carter for the Democratic presidential nomination next year. Governor Jerry Brown announced that California will set up its own emergency gasoline rationing program this week. Counties that choose to participate will restrict gasoline sales on alternate days to cars with license plates that end in either odd or even numbers. So-called vanity plates with names, messages or risque puns spelled out in letters instead of numbers will be considered odd in any case.

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