The Growing Gasoline Gap

CASSANDRAS of the energy crisis have long warned that some day gasoline rationing would allow only a few gallons per customer and that autos, buses, police cars and fire trucks across the nation would be stranded for lack of fuel. Suddenly, some day seems ominously close. Many parts of the country are, in fact, short of gasoline and diesel fuel. The scarcities threaten to persist, at least in some localities, throughout the peak summer driving season.

Texaco, the nation's largest marketer of gasoline, is already allocating its distributors only as much fuel as they received last year, even though demand is up. Gulf has declined to continue supplying diesel fuel to the Metropolitan Atlanta Rapid Transit Authority, and the city's 606 buses will be stalled if another supplier cannot be found by April 30. For the first time in memory, authorities in Des Moines and Boston have not received a single bid for contracts to supply city vehicles. Boston's police and fire departments have only enough gas to last through June.

Independent oil marketers--the chains of off-brand stations that buy surplus gasoline and resell it at discount prices--are being squeezed hardest as major oil companies save what gas they have for their own stations. White Eagle Oil Co. of Chico, Calif., closed six outlets last month; Gibbs Oil Co., a 350-station chain in the Northeast, has shut 15 stations and may put others on short hours. Eleven Sears, Roebuck & Co. outlets around Miami have begun to limit motorists to ten gallons per visit. Metro 500 of Minneapolis has temporarily closed 16 of its 17 stations, and Owner Paul Castenguay is keeping the sole survivor open only by stealth: late at night he drives his tank truck to major-brand stations where friends will secretly sell him a few gallons, on which Castenguay makes no profit.

Refineries are simply not turning out as much gasoline as motorists want to buy. Production currently is running around 42 million bbl. a week, but consumers are buying about a million barrels a week more than that. The excess is being siphoned out of gasoline inventories, which are about 16% below those of a year ago. This summer, demand is expected to hit 50 million bbl. a week. One main reason: manufacturers put nearly 11 million new cars on the highways last year, and more of them than ever before are equipped with air conditioning and other power options that reduce gas mileage.

Independent marketers, who have captured 22% of the retail gasoline trade, suspect that major oil companies have contrived the shortage to force them out of business, drive up prices, and silence environmental critics. They note bitterly that despite the gas shortages last week the nation's refineries worked at only 88.7% of capacity, the lowest level since last November.

Spokesmen for the major oil companies claim that refinery runs are down because their stocks of unrefined crude oil are dwindling in the face of a worldwide tightness of supply. Lowered gasoline output also reflects the fact that last winter oil companies shifted much refinery capacity to production of home-heating oil; they are just beginning to switch back. In addition, the Cost of Living Council last month reimposed mandatory price controls and profit-margin limits on the petroleum industry; one effect is to discourage many refiners from importing expensive foreign crude to augment their supplies. Further exacerbating the problem, environmentalists have recently blocked construction of new refineries that they feared would cause ecological damage along the coasts of California, Delaware and the Gulf of Mexico.

Executives of major oil companies suggest a number of predictable remedies for the shortage: raise the oil-depletion allowance so that they can afford to spend more money on exploration; lift price controls so that they can raise gasoline prices to levels that would discourage consumption; and delay proposed federal antipollution standards that seem likely to cut auto gas mileage.

Pools. In Minnesota, where at least 113 independent stations have closed already, the state legislature has taken another tack. It is considering a bill that would force major oil companies to sell independents at least 10% of all gasoline brought into the state. In Washington, D.C., Darrell Trent, acting director of the Office of Emergency Preparedness, suggests that commuters form car pools or take public transportation to work and that states reduce highway speed limits because cars consume less fuel at lower speeds.

Many independent marketers favor removing all restrictions on imports of foreign oil. President Nixon is unlikely to go that far, but he is expected shortly to replace quotas, at least temporarily, with a tariff system that would permit much more crude oil to be imported at higher prices. If that step is taken, Administration officials are convinced that the nation can get through the summer suffering nothing worse than localized gasoline shortages and some rise in prices. There is one major hitch: if refineries produce enough gasoline to meet peak demand this summer, they may have to curtail heating-oil output enough to threaten more chillouts next winter.

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