February 1, 1973
Page 3017
THE OIL CRISIS
Mr. MUSKIE. Mr. President, this morning's New York Times contains an article by Mr. Edward Cowan concerning the present fuel crisis. The article has the most disturbing implications.
It points out that the administration's own estimates of the oil supply for the remainder of the winter indicate the very real possibility of a full-blown crisis with widespread shortages far surpassing anything we have yet experienced.
According to the article, current stocks of home heating oil east of the Rockies amount to 125 million barrels and are dwindling at a rate of 1 million barrels per day. At this rate, by April 1 the total supply east of the Rockies could drop to a point at which there would be "virtually no reserve."
The article then quotes one knowledgeable oil expert as saying that, if this occurs, "the outer reaches of our distribution system like Maine, could have no fuel at all."
Mr. President, at 7 o'clock this morning, the temperature outside my district office in Waterville, Maine, was 20º below zero.
The President's own advisers are now saying that the situation could become a disaster. What more does the President need to lift permanently the import quotas which contributed to the current crisis?
I ask unanimous consent that Mr. Cowan's article be printed in the RECORD and earnestly hope that the President will heed the warning it contains.
There being no objection, the article was ordered to be printed in the RECORD, as follows:
U.S. AIDES SAY COLD WAVE COULD SPUR FUEL OIL CRISIS
(By Edward Cowan)
WASHINGTON.– In a fresh appraisal, Government energy planners have concluded that the fuel-oil shortage could reach crisis proportions before winter ends if there is a sustained cold wave.
The most optimistic assessment being circulated within the Government is that the states east of the Rockies will just squeak through the rest of the winter if temperatures are normal.
Looking further ahead, the analysts believe that unless President Nixon makes further modifications of the oil import quotas, the fuel-oil supply situation next winter could be even tighter.
Criticism of the quota system, including the charge that it has enabled the big oil companies to take customers away from independent terminal operators, is expected to be heard tomorrow at a hearing of the Senate Interior and Insular Affairs Committee. Witnesses from the industry and the Administration, plus Gov. Francis W. Sargent of Massachusetts, are expected to testify.
The Senate Democratic Caucus called on President Nixon today to take "all necessary emergency measures, including the release of military stockpile supplies, to meet the essential requirements for oil and other fuels in regions of critical shortage."
INCREASE IN OUTPUT CITED
The American Petroleum Institute reported today that refinery production of heating oil increased last week after declining for two weeks in a row. Stocks of heating oil east of the Rockies, where the shortage has been concentrated, continued to fall at a rate of roughly one million barrels a day. In the week ended Jan. 26 they stood at 125 million barrels, down 26 million barrels from a year earlier.
The Government analysts expect that, with normally cold weather, stocks east of the Rockies, will fall to 60 million to 75 million barrels by March 31.
Below 70 million, it is said, there is virtually no reserve to meet extra demand in the event of subnormal temperatures. The reason is that the stocks are widely spread around the country and at such a low level that individual refineries and distributors find they have no oil to spare.
SYSTEM BREAKING DOWN
If stocks drop to 60 million barrels, one oil expert commented, "your system is already breaking down." He said, "The outer reaches of your distribution system, like Maine, could have no fuel at all."
The analysts calculate that if temperatures average 5 per cent below normal, which happens about one winter in five, stocks could drop to 40 million barrels. "That is a disaster," one official said. Twenty-five per cent of your distribution system will be dry at that point."
Industry data indicated that as unpromising as the Government's analysis was, it may be tilted toward the side of optimism.
Figures of the American Petroleum Institute show that refineries east of the Rockies converted 24 per cent of their crude oil to heating oil last week, slightly less than the 24.4 per cent high reached in the week of Jan. 5, when heating oil output hit a peak.
The Government analysis assumes a heating oil, or distillative yield of 25.4 to 26.3 per cent.
GAS SHORTAGE EASES
The Federal Power Commission reported that the natural gas shortage eased somewhat in January as the early winter cold wave moderated and some above-normal temperatures occurred in many parts of the country.
Nevertheless, the situation remained tight and officials expressed concern about the possibility of another cold spell.
Newly compiled figures showed that deliveries of gas by interstate pipelines in December fell 124 billion cubic feet below contract commitments. Allowing for double coupling because some gas goes through more than one interstate line before reaching a local distributor, the average rate of curtailment nationally was about 5 per cent, somewhat higher than had been anticipated last autumn.
For some individual pipelines, and their customers, however, the shortage was far more acute. The United Gas Pipeline Company, which serves Southeastern states, fell 1.1 billion cubic feet a day below its contract commitments, or 23 per cent.
POWER COMMISSION ACTS
The power commission, in the first step of its kind, has ordered United to show cause why it should not discontinue sales of natural gas to all its industrial customers. That action was in line with the commission's list of user priorities, which puts homes and small commercial customers at the top.
Reiterating earlier assurances, a commission official said: "I just don't see any possibility of residences or small commercial customers being without gas. Every company has a contingency plan."
The official added, however, that he had mistakenly forecast earlier that deliveries would be stopped in a cold wave only to so-called interruptible customers, those with stand-by oil or coal burners. In fact, some "firm" customers, those without alternatives, were also cut off temporarily earlier this month.
Officials of The Federal Power Commission said that no oil- or gas-burning electric utility had been shut down, despite "some real tight squeaks." The utilities burn residual oil, a heavier product than heating oil, but it too has been in short supply. In 1970, gas accounted for 29 per cent of utility fuel, oil 15 per cent, coal 54 per cent and uranium 2 per cent.
COAL SUPPLIES UNAFFECTED
A spokesman for the National Coal Association said that mining had not been affected despite the anxieties of some carriers of strip-mine coal that they would run out of diesel fuel for their vehicles. Diesel fuel is essentially the same petroleum product as heating oil and has also been in short supply.
Coal accounted for 18 per cent of energy consumed in the United States in 1971, natural gas and gas liquids, such as propane, for 36.5 per cent, petroleum products for 40.8 per cent, hydro-electric power for 4.1 per cent and nuclear power for 0.6 per cent.
Government energy specialists believe that the President must go beyond his recent suspension until April 30 of import quotas for heating oil to assure a build-up of adequate supplies for next winter and to protect independent terminal operators and distributors from a permanent loss of markets to the major oil companies, which have better access to foreign supplies.
One estimate is that the suspended quota of 50,000 barrels a day for the independents should be raised to at least 100,000 barrels and perhaps 150,000 barrels for the rest of 1973. A widespread complaint is that the 120-day suspension benefits the big international companies, because they have widespread foreign supplies at their command, but does not give the independents enough time to arrange for and take delivery of large volumes before May.
Most of the big companies have told the Government that they were meeting their contractual commitments. However, they have refused to disclose, presumably for competitive reasons, what proportion of their business was under contract and how much was so-called spot-market sales.
In any event, the major companies are understood to have sought to place contracts with wholesalers and retailers that customarily bought in the spot market from independent deepwater