September 7, 1973
Page 28891
FUEL OIL ALLOCATION
Mr. MUSKIE. Mr. President, as the summer draws to a close, public attention is now shifting from the relatively minor gasoline shortages of recent weeks to the prospect of far more severe shortages in heating oil this winter.
Newspaper reports in the last 2 days state the Federal Government has now prepared a confidential assessment of the next winter's supply which indicates, in the words of some officials, that the situation ranges from tight to miserable. I ask unanimous consent that an article in this morning's New York Times, discussing the implications of this issue, be printed in the RECORD at the end of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
[See exhibit 1]
Mr. MUSKIE. Last week John Love, Director of the President's Energy Policy Office, met with New England Governors and, once again, refused to institute a mandatory allocation program to assure that limited supplies of heating oil will be distributed equitably. Equally significant, Governor Love indicated that his office has yet to develop a detailed plan for providing supplies to priority customers – schools, hospitals, homes – should a serious emergency arise this winter.
This delay is intolerable. I call upon Mr. Love to produce such a plan and open the issue to public debate and discussion.
The citizens of Maine, who live at the end of our national distribution system, will be the first to feel the effects of a shortage of heating oil. The Governor, local officials and retail dealers are prepared to develop and implement any reasonable contingency plan. But without prompt action at the Federal level, their hands are tied.
What arrangements are being made to set aside a national pool of heating oil to meet emergencies? What steps are being taken to see that the oil producers provide information on production and distribution plans? What enforcement provisions are needed to assure compliance with an allocation program? These are only some of the questions which need discussion.
There will be no easy answers to the problem of supplying adequate heating oil if we have a cold winter. But, certainly, the planning for emergencies should not be kept behind closed doors. For New Englanders, closed doors have too often meant capitulation to the oil industry at the expense of the consumer.
If Governor Love is preparing a plan, let us see it.
EXHIBIT 1
[From the New York Times, Sept. 7, 1973]
NIXON AIDES SAY HOMES MAY FACE HEATING OIL CURB
(By Edward Cowan)
WASHINGTON, September 6.– Energy officials in the Nixon Administration disclosed today that the Government might have to restrict the amount of oil that could be burned by individual consumers, including that used in private homes.
Confidential estimates circulating within the Government put the potential supply gap this winter, particularly if the weather is colder than normal, at 10 to 15 per cent. Last winter the shortage was approximately 3 to 4 per cent.
John A. Love, director of the President's Energy Policy Office, said that the Government was drafting a tentative plan for the rationing of heating oil this winter.
In another development, the Exxon Company U.S.A. raised its wholesale gasoline prices today by a cent a gallon. Most service station owners will have to absorb the increase, however, because retail gasoline prices are frozen through tomorrow and will then be subject to ceiling prices already established under the Phase 4 economic controls.
UNEVEN IMPACT SEEN
Officials said that, like last winter, the impact of a heating oil shortage would be uneven, with outlying places, such as Maine and Minnesota, likely to be hardest hit. The shortage that developed in the Middle West last winter caused some dealers to run out of fuel briefly, and some schools were forced to close for a few days.
Because heating oil is distillate, essentially the same petroleum product as diesel fuel, the shortage then also threatened to curtail truck and bus operations. Service cutbacks on the whole were minor, but they could be more extensive this winter.
Mr. Love, in extemporaneous remarks to reporters, said that "the situation for this winter is very tight, although it is difficult to forecast because of the variables." Weather was described as the foremost variable, and availability of imports as a close second.
Mr. Love said that the Administration had not definitely decided to adopt rationing this winter but was getting ready just in case.
Another energy specialist in the Government who had studied the confidential supply appraisal summarized the situation by saying "The picture does not look bright. It's a real miserable mess."
PRESSURE IS APPLIED
Officials hoped that the announcement of the possibility of rationing would put pressure on Federal, state and local officials to relax air quality standards in big cities, particularly on the east coast, for the heating season. Such a relaxation would increase the oil supply by permitting the use of high-sulphur residual oil in power utility boilers, thereby releasing the less-polluting
low-sulphur heating oil that utilities have been blending with residual in increasing volumes.
Officials asserted that any relaxation of the standards should be announced quickly to give oil importers time to line up additional supplies.
Another energy planner said that the potential problem looked too big to be cured by a system of priorities and supply allocations, the system the Administration adopted last spring on a voluntary basis for deliveries of crude oil and gasoline.
The heating oil supply outlook is "far worse than it was for gasoline," the planner said.
"Allocation just spreads around the available supply," he added. "We have to cut the consumption, not chase the shortage."
Analysts said that the principal elements of the supply uncertainty were the following:
Consumption is running ahead of last year. The steel industry, a big consumer, is operating at capacity. Utilities are using more distillate, which is low in sulphur, to meet air quality standards. Natural gas shortages this winter will be worse than last year, causing more shifting, or attempted shifting, to oil.
As was true last winter, imports must fill the gap between domestic supply and consumption. At a minimum, the country must import 500,000 barrels a day of distillate from October through March. That rate of importation was reached for a short time late last winter. A more realistic import need may be 700,000 barrels a day or more, particularly if subnormal temperatures occur.
Supplies are very tight in the Caribbean and may prove to be tight in Europe. Belgium already has restricted exports pending a reappraisal of her own supplies. Canada has said she may restrict exports. An early cold spell in Europe could cause further restrictions. So could crude oil shortages that may result from Libya's takeover of 51 per cent of several major oil companies or from cutbacks in other Middle East producing countries.
The sulphur content of crude oil refined in Europe is generally above the levels allowed by many East Coast cities.