Competition for Tankers?

With the East Coast oil shortage about over, the oil industry last week had a new worry--the fate of the government-owned Big Inch and Little Inch pipelines. Last week, the New York Journal of Commerce reported what the industry would like to do about the lines. It plans to ask Congress to 1) shut them down completely, and 2) bar their sale to any oil company or group of companies.

The industry took the position that the lines, which can easily transport almost 40% of the East Coast's entire prewar oil supply, might just as easily disrupt peacetime oil prices, if run by the Government or to benefit a few private interests.

The industry also had a big investment to protect: the millions now tied up in tankers. As an alternative, the industry suggested that Big Inch be converted to a natural gas pipeline. Since Texas bitterly begrudges the gas that now flows from the state, there seemed little chance of that happening.

But closing down the Inches may not be so easy. If keeping the lines open means cheaper oil through lower transportation costs, East Coast oil users will object to any such proposal. Reconstruction Finance Corp. contends that Big Inch should continue to operate, but in private hands. It is now getting its figures together to try to prove its point.

The oil industry is skeptical about the pipe lines' use. At capacity, the industry estimates that Big Inch can haul oil cheaper than tankers; 16-c- a barrel v. 18.3-c-. But it doubts that Big Inch, which worked at capacity during the war, can be kept there in peace. As soon as the flow drops to two-thirds of capacity, then costs per barrel rise above that of tankers. Unless the RFC can prove differently, there may be no buyers for its $146,100,000 property. Last week it put its best sales foot forward. It cut Big Inch's per barrel price to tanker levels. But even if the pipe lines are shut off for good, they will have saved the U.S. $100,000,000 in rail costs, almost as much as their total cost.

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