Independents for Nasser

OIL & GAS

"Our friend Nasser has sunk 21 ships, and I wish to God it had been 121." Thus Texas Independent Oil Producer H. P. Nichols hailed Egyptian President Gamal Abdel Nasser for blockading the Suez Canal. At the annual banquet of the West Central Texas Oil & Gas Association came more kudos. "As the person who has done the most for West Central Texas oilmen," Nasser was voted the members' "extinguished service" award: a bright pink chamber pot.

Such cynical gratitude to Egypt's dictator had an eminently practical basis. The Suez blockade was just the opportunity the independents needed to use up U.S. oil stocks, go on to win a long-sought crude price increase. The independents' objective: a 60-c--a-bbl. rise (over the current price of $2.77 to compensate for the increased cost of discovering new oil.

Victory in Texas. In pursuit of this goal, the independents have loudly opposed any increase in U.S. oil production, maintained that the stocks above ground are ample to supply Europe. Last week the independents won an all-out victory before the Texas Railroad Commission, which sets quotas for the Texas fields (source of 45% of all U.S. oil). Despite the rising European demand, the Commission refused the pleas of big oil companies, which buy much of their oil from independents, to boost production. January output will be held to 16 producing days, an average of 3.4 million bbls. daily for the month.

The independents contended that the commission's decision would have no adverse effect at all on the shipment of oil to Europe. The normal U.S. stock, they pointed out, is around 265 million bbls., while current stocks amount to 273.7 million bbls. The talk of a shortage, they charged, was nothing but propaganda concocted out of the foreign crisis by the big producers and shippers to keep domestic prices down.

But some of the facts contradicted the independents' argument. To begin with, the biggest surpluses were in the eastern and midwestern oil districts that export very little oil. District Three, however, including Louisiana and Texas--the biggest exporters--showed a storage drop from 121.3 million bbls. in September to 99.7 million in December. Moreover, since only about a third of total stocks are what is called "readily dispatchable" crude (the rest is filling the pipelines or the bottoms of tanks), the 21.6 million bbl. storage decline between September and December was highly significant. It meant that over half the readily dispatchable was gone.

Shortage for Europe? At the Commission hearings, big exporters argued that shipments to oil-short Europe were already being restricted. Humble Oil, subsidiary of Jersey Standard and the biggest producer and oil-buyer in Texas, testified that it could supply only 165,500 bbls. of a 300,000 bbl. order from Esso Export. W.C. Connel of the B.P. (British Petroleum ) Trading Co. wired that British companies wanting to buy 3,000,000 bbls. on the Gulf Coast were forced to divert their tankers around Africa to the Persian Gulf because "there is no assured supply of crude in the U.S."

But at week's end the independents showed no sign of changing their minds. Said Earl Turner, executive vice president of the Texas Independent Producers and Royalty Owners Association: "This is not an emergency. We don't want to rush in and supply oil for the convenience of a few companies--and find ourselves in a worse position after the crisis ends."

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