No Tankers, No Profits

Some 10,000,000 Eastern Seaboard car owners last week winced at the gasoline rationing (see p. 11), but the heavy losers were the big oil companies. Dopesters put the cost to the industry at about $300,000,000 for the year, about $200,000,000 less than combined profits of the 20 biggest units in 1941. Although predominantly Eastern outfits like Atlantic Refining, Sun Oil and Socony-Vacuum will be hardest hit, the whole oil industry faces its worst economic crisis since the depression.

Reason for these losses (and for rationing) is the tanker shortage. The big shift from water to land transportation has quadrupled oil freight costs or worse, accounting for $100,000,000 of the loss. (The rest comes from reduced refinery volume, etc.) Secretary Ickes last week told how the oil companies bought crude in Texas for 85-c- a bbl., paid $1.65 rail shipping costs, then sold it at a price-fixed $1.80 for a net loss of 70-c- a bbl. Atlantic Refining showed first-quarter profits of only $1,237,000 ($2,600,000 a year ago), explained that delivery costs per barrel of crude to the refinery have soared 500% in the past year.

The Government has helped somewhat. Since OPA's first oil ceiling, it has allowed gasoline price increases of 1.2-c- a gallon. This is still 1.6-c- short of estimated cost increases. Last week OPA got RFC to promise that it would soon subsidize oil freight costs to keep oil moving.

The cost of shipping oil by tanker from Texas to the East Coast is only 30-40-c- a bbl., and 90% of it is normally tanker-borne. But tankers aren't running now. That there is any oil in the East at all is a credit to the railroads. By feverishly shuttling tank cars across the continent, they have boosted deliveries from pre-Pearl Harbor's 70,000 bbl. daily to a titanic 640,000 bbl.--more than the most optimistic estimates ever made, but not enough. The East needs almost twice that much for minimum essential uses. This minimum includes short rations for most civilians but a full bill of fare for industry, the Army, and restocking badly depleted inventories.

To plug this gap workmen are now digging up local pipelines in the Southwest, assembling them into a makeshift cross-country pipeline. In addition oilmen have asked once more for a 1,400-mile pipeline from Texas to New Jersey, which has been twice turned down by WPB and predecessors for lack of steel. Finally oilmen have still another idea: let the Navy convoy tankers up the East Coast. But that is something the Navy is not likely to do until it has more warships or fewer places to fight.

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