The Shortage Hits Home

To conserve fuel, Georgia Governor Jimmy Carter has ordered state troopers to drive slower and go on fewer highway patrols. On the Pennsylvania and Ohio Turnpikes, gas stations are allotting a maximum of ten to twelve gallons of gas to each customer. From Martha's Vineyard, Mass., where panicky residents begin queuing up at gas pumps at 6 a.m., to Los Angeles, where some stations are getting 51-c- a gallon, the long-feared gasoline shortage is finally making itself felt.

Last week the American Automobile Association reported that only 64% of the stations it monitors were operating normally--down from 75% the previous week. The remainder were either curtailing their hours of operation or rationing gas. So far, this has created only minor annoyances for motorists, who may have to search harder for an open station or make two stops in order to fill 'er up.

Phase Outs. Harder hit are farmers, who have to get gas delivered to them; many predict that a shortage will impair their ability to harvest crops this fall. Truckers are also hurting. Chicago's Spector Freight System Inc., for example, expects to spend $1,000,000 more this year because of a 7-c--a-gallon jump in the wholesale price of diesel fuel. Before the freeze, prices were rising at the corner gas station as well; in Boston they went up 2-c- a gallon in the past week. The Society of Independent Gasoline Marketers of America, whose members buy fuel from major oil companies and sell it at cut-rate prices, reports that since last fall 1,450 of its 25,000 members have been forced to shut down their pumps permanently. At the same time, major oil companies are cutting back their retail operations in areas where they are weak. In recent weeks, Exxon began phasing out at least 150--and possibly as many as 400--of its Midwestern stations. Atlantic Richfield plans to fold some 2,400 of its outlets in the Upper Midwest and Rocky Mountain regions.

Many independent station owners claim that the big oil companies have contrived a phony shortage to drive them out of business by shutting off their supplies. That conclusion was supported by six state attorneys general --from Massachusetts, North Carolina, Florida, New York, Connecticut and Michigan--who testified at a Senate hearing last week. The gasoline shortage, said Massachusetts Attorney General Robert Quinn, is "a means of squeezing the little guy out of the market." In some cases, asserted his Connecticut counterpart, Robert Killian, "the majors are taking over the choice locations, putting up giant 20-pump stations with 24-hr, service and are replacing the small dealers."

The Justice Department gave the critics more ammunition last week when it brought suit against Texaco and the Coastal States Gas Producing Co., a big refiner, to nullify an agreement that would have reduced the amounts of gas available to independent station owners. Under the agreement, Texaco would buy an increasing share of Coastal States' gas output and, in return, supply the refiner with larger percentages of its required crude. In reply, both Texaco and Coastal maintain that the agreement is legal.

In rebuttal to charges that they are cooking up a shortage, officers of the major oil firms argue persuasively that refineries are working at their highest realistic capacity--more than 94%. Refineries are churning out a prodigious 49.5 million barrels of gas a week--5 million barrels more than last year--but inventories are 12 million to 14 million barrels below 1972 levels. Americans are simply driving more, in cars that get as much as 25% fewer miles per gallon than earlier models because of their greater weight, antipollution devices, air conditioners and more powerful engines. Last week the Environmental Protection Agency proposed a plan that could ameliorate the gas shortage by restricting the use of cars by 1977 (see ENVIRONMENT).

Tight Clamps. If the shortage worsens, a mandatory allocation system may be needed to replace the Administration's month-old voluntary plan, under which many independents are having difficulty getting as much gas as they require. Some of the majors, like American Oil Co., support a form of mandatory allotments, partly because that would protect them from complex legal problems that could occur under the present scheme. The chances are fairly good that the Administration will clamp on compulsory distribution rules in the near future. Until a new program takes shape, motorists and gas dealers will have to face continued stalls and slowdowns.

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