Playing Politics with Gas

Pressured by Jerry Brown, Carter sounds optimistic--and confused

The two men have very little respect for each other. One is President, and the other wants his job. Jimmy Carter regards Governor Jerry Brown of California as a sloganeering opportunist, while Brown considers Carter incompetent. Nonetheless, Brown telephoned Carter at the White House last week to ask for an audience, and Carter, in the straight-faced account of Press Secretary Jody Powell, "was happy to provide it." What brought them together two days later was the gasoline shortage, which has been felt nowhere in the country so sharply as in California.

For yet another week, gas stations almost everywhere kept short hours, closed on the weekend or limited sales to a few gallons because supplies were short, by 5% to 20% of 1978 levels. In most states it was enough of a pinch to make gasoline a major topic of concern, but not enough to force Americans to change lifestyles. In California, however, long lines of cars formed at every open pump, as angry and panicky motorists tried to buy every drop available.

White House aides reacted to Brown's call as though they were receiving a visit from Count Dracula. In an effort to blunt any political benefits to Brown, they quickly got on the phones and invited to the meeting all 45 members of the California congressional delegation plus the speaker of the state assembly and Los Angeles Mayor Thomas Bradley.

Unintimidated, Brown flew east and told Washington reporters: "I'm not here to point any fingers. I'm here to try to get some answers." At 10 a.m. Wednesday, the Californian pointedly walked up the White House driveway, met with Carter for ten minutes in the Oval Office and then went with the President to the Cabinet Room for an amiable hour-long chat with the other Californians.

As soon as the meeting ended, Brown seized the initiative. He told reporters that he had warned Carter that the scarcity of gas in California might cause an economic disaster, which could spread quickly and tip the nation into recession. The Governor suggested that Carter had "responded" by promising that California would get more gasoline. Said Brown: "May will be the worst; in June things will improve." Brown could not resist one extra dig at Carter: "Many people actually thought that the President was punishing California because of me. I don't believe that." Then he turned over the microphone to Republican Senator S.I. Hayakawa, who promptly made the Marie Antoinette remark of the year: "Let gas go to $1.50, even $2 per gal. A lot of poor don't need gas because they are not working." Hearing that, Brown gingerly edged away from the microphone and headed for home.

Carter moved quickly to recover. He made an appearance of his own before reporters to proclaim that he had begun working to ease California's gas shortage long before Brown's visit. On May 1, Carter said, the Department of Energy changed the gasoline allocation formula so that California will get more gas. Previously allocations were based on 1978 supplies; the formula will now take into consideration population growth.

The President also announced that he was taking several technical steps to relieve the gas shortage, and aides distributed the DOE's newly completed "Report to the President on Gasoline Supplies for California," which suggested that Brown could act on his own to relieve the problem. By relaxing some state environmental regulations that are stricter than federal standards, such as on the lead content of gasoline, and strictly enforcing the 55 m.p.h. speed limit, California could save an estimated 55,000 bbl. of gasoline per day. That would certainly help bridge the gap between supply and demand: the state's gasoline supplies in May probably will fall about 70,000 bbl. per day below those of a year earlier. At Carter's side, Energy Secretary James Schlesinger declared: "I think it would be safe to say that we hope the worst is over."

For an Administration that has been sounding alarms on energy ever since taking office, the optimistic statements by Carter and Schlesinger seemed a remarkable change of direction. For months, Carter has predicted that gas would be scarce all summer, and in even shorter supply next year. Two weeks ago, when Congress refused to give him standby authority to impose gasoline rationing, he angrily accused his opponents of having "apparently put their heads in the sand." Just the day before his meeting with Brown, Carter told 200 business leaders at the White House that the energy crisis "festers like a cancer, sapping away the basic strength of our nation."

Now, overnight, Carter has begun sounding remarkably upbeat. At first it seemed the President hoped that by tinkering a bit with the American energy machine and by lessening the widespread tendency toward panic buying, he could shorten the lines at the pumps in California and vent some of the political pressure on him.

All the next day after Carter's surprisingly sunny forecast, White House aides tried to dispel the impression of presidential zigzagging. Fielding calls from politicians across the country, they insisted that Carter had not meant to imply that the overall gasoline squeeze was over. In fact, even when U.S. stocks of crude oil inch up to 1978 levels, as expected by July, they will fall short of demand by about 5%.

There was no undoing the confusion, however. Oregon Governor Victor Atiyeh complained that Carter's decision to help California was a "slap in the face" to other Governors who have been urging less driving in order to conserve gasoline. Illinois Governor James Thompson, for example, requested motorists to drive no faster than 50 m.p.h. New York Governor Hugh Carey asked motorists to cut their driving this month by 100 miles, which would enable them to save seven gallons of gasoline each. The New England Council, a Boston-based booster group, has proposed that everyone abstain from driving one day a week. To those who took the pledge, the council offered bumper stickers that read: SAY NO TO OPEC.

By the millions, however, Americans were still saying no to the calls for conservation. Only a minority of people switched to public transportation, and that may be temporary. Large cities reported slightly more passengers on buses and subways. Reservations increased by 16% on airlines and by 40% on Amtrak's trains. Amtrak's 925 reservations clerks were overwhelmed by phone calls--1.3 million, four times the normal number, in the first week of May. Long-distance travel on Greyhound buses was up 20%. Sales of big cars during the first four months of 1979 were 8% lower than a year ago, while sales of small cars rose 17%.

But outside of California, the vast majority of Americans apparently were making few changes in their travel habits or vacation plans, not even for the Memorial Day weekend, when gasoline supplies will be particularly short. Half a million people, traveling by cars, pickup trucks and garishly decorated vans--more than 200,000 vehicles in all --are expected at the Indianapolis 500 auto race. What will happen if there is not enough gas to get them home? Replied State Police Major Forest Cooper: "We are very concerned."

Despite the grim example of California, most Americans still refuse to believe the crisis is real. According to the latest Gallup poll, completed in early May, only 44% of the public think the nation's energy situation is very serious, about the same percentage as two years ago.

Amid such skepticism, Carter has won little support for his vacillating policies, particularly in California. Reported TIME Los Angeles Bureau Chief William Rademaekers: "There is a feeling that Jerry Brown forced Carter's hand. Brown comes out as an activist fighting for his state and Carter as the boy with his finger in the dike."

But most Californians were too busy trying to beat the gas lines to worry about whether Carter deserved praise or censure. Some drivers offered station owners bribes of $10 to $20 for a full tank; others bought bootlegged gasoline for $6 per gal. or hired people to wait in line for them at $3.50 an hour. Johnny Rodgers, a professional football player, told a reporter that he got so impatient at waiting in his Rolls-Royce for gas that he bought the service station. Said he: "I bought it for my friends' convenience too."

One Californian rented a truck for a day and returned it with a nearly empty tank, even though the truck had gone only eleven miles. To discourage similar siphoning, some major auto agencies rented out cars with tanks only one-eighth full. But for the second straight week, most drivers just sat in line for up to five hours, sunbathing, playing Scrabble, writing poetry in response to a San Diego radio station contest, reading magazines and newspapers and exchanging them with others in line. Highway officials reported that driving was down 15% on freeways and as much as 25% on city streets. Shopping fell off (down 15% in Beverly Hills); so too did visits to dentists and doctors, though while one physician waited in a San Francisco gas line, he examined a patient in his car, diagnosed a minor ailment and wrote out a prescription.

The Gallup poll found that 77% of the public believe the shortage was deliberately caused by the oil companies--a view held even by many gas station owners. Said Curtis Robertson, executive director of the Indiana Service Station Dealers Association: "When the price is right, we will get all that we need."

Gasoline prices had already soared to what most consumers felt were astronomical heights, up to $1.01 per gal. in Manhattan. Many drivers thought they were being charged too much. The enforcement office of the DOE's Economic Regulatory Administration was receiving 500 complaints a week of price gouging. But after auditing 2,000 stations' books, federal officials concluded that most of the nation's 171,000 gas station owners had not raised prices beyond the profit-margin limits imposed by the Government in 1973.

Nor was there anything to substantiate the suspicions of dealers and their customers that the gas shortage had been contrived by the oil companies. Nonetheless, a probe was being pursued by the Federal Trade Commission because statistics showed that gasoline production may have fallen more sharply than warranted. Said Alfred Dougherty Jr., the FTC's Bureau of Competition director: "If this cutback in the production of refined products was not justified by a scarcity of crude oil or other legitimate business reasons, the current gasoline shortage may be contrived." Admitted FTC Investigator Ronald Rowe: "Right now, we have a lot more questions than we have answers."

The answers will not be simple. Oilmen disclaim any wrongdoing and insist that the problem is mainly the result of OPEC members' decision to prop up high oil prices by reducing exports. Because oil shipments from Iran take about two months to reach the U.S. market, the loss caused by the shutdown during the revolution--about 700,000 bbl. per day--did not affect American consumers until March. The American Petroleum Institute estimates that the U.S. now is short as much as 1 million bbl. of imported oil per day. Iran resumed exports in March, but this oil will not show up in American petroleum markets until late this month, which is why Carter and Schlesinger believe the gasoline crunch will be eased in June. But shortages will continue because OPEC nations that temporarily helped offset the lost Iranian production have reduced exports to keep supplies tight.

At the same time that imports were reduced, oilmen say several other factors worsened the situation. Among them:

1) To hold down domestic prices, the Department of Energy urged oil companies not to buy crude on the spot market, where prices are up to $12 higher than the world average of $18 per bbl. There is some debate among oilmen over the degree to which this policy affected supplies. In any event, because of a change in DOE policy last week, the companies are now free to buy on the spot market, though several of them are reluctant to do so until the Government assures them that they can pass the extra costs on to consumers.

2) With the stock of heating oil and diesel fuel at the extremely low level of about 117 million bbl., the Energy Department pushed the 34 largest refiners to boost production so that supplies would hit 240 million bbl. by Oct. 1. This would be considerably above the 198 million bbl. that the DOE considers to be the "minimum acceptable level" for that time of year. Energy officials are now telling the refineries that they can have until the end of October to get stocks of heating oil and diesel fuel up to the requested levels, thereby allowing them to produce more gasoline.

3) As gasoline production has waned, consumption has risen much faster than can be accounted for by population growth, which is only about .8% a year. For the first four months of 1979, consumption jumped 2.6%. One reason is the booming popularity of pickup trucks and vans, which get lower gas mileage than many cars. Another is the growing number of two-and three-car families; according to an oil-company estimate, the number of cars on the road (about one for every two Americans) climbs about 10% a year. A poll by Amoco found that the average household drove 20,400 miles last year, up 11% since 1974, and that 22% of that driving could have been eliminated without "any great personal sacrifice." Moreover, drivers increasingly are ignoring the 55 m.p.h. speed limit; each additional 5 m.p.h. requires 1% more gasoline. The gas supply situation is aggravated in the Southern and Western states because on top of all the other factors, their populations have soared (up 1.9% in California alone last year), and their cities generally have inadequate mass transit.

There now is some evidence that Americans are beginning to cut down on gas consumption. Beginning in mid-April, sales of gasoline fell about 5% below last year's levels. At the same time, crude oil stocks began to rise; the latest figure was 322 million bbl., up from 300 million bbl. in January, when refineries began cutting back on gasoline production. By the end of May, predict federal energy experts, gasoline supplies for California and the rest of the nation could hit 99% of 1978 stocks. Still, unless tank topping stops and American drivers practice a little conservation, the great gasoline crisis of 1979 will continue.

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