Tankers, Pipelines & Rails

For months the U.S. has been heading towards a transport bottleneck. Last week it was just around the corner--and so, as a result, were gasolineless Sundays. A transport shortage complicated older bottlenecks, notably steel. It also created new bottlenecks in commodities of which the U.S. still has a surplus--notably oil.

The U.S. has plenty of oil, produces 60% of the world supply. In fact, the oil industry has been one of World War II's conspicuous orphans, having suffered consistently from overproduction. But the oil fields are far from the oil market. Last week's prospective shortage at consumption points sent gasoline prices up, and fuel-oil distributors, refused to guarantee prices for next winter.

As war spread into the Middle East and tankers continued to sink in the Atlantic, the Maritime Commission planned to withdraw 50 tankers of the 345 in the U.S.'s intercoastal trade, put them into shuttle service for Britain. This week the first batch of 25 tankers are being shifted.

Intercoastal tankers carry over 90% of all the oil consumed on the U.S.'s Atlantic seaboard, which is nearly half the U.S. market for motor fuel. The 25 tankers withdrawn this week normally carried 100,000 barrels from the Gulf to Eastern cities every day. When the second 25 follow soon, the seaboard oil stringency will be acute. Already Standard Oil Co. (N.J.) has begun to convert part of its great Bayway (N.J.) refinery to burn coal instead of oil. This week Socony announced it would follow suit, and that it had already converted the heating system of its downtown Manhattan office building. Leon Henderson's civilian rationers in Washington assume that sales of new oil burners will have to be cut or stopped, that fuel for installed burners will have to be rationed this winter. The East has enough surplus of stored furnace fuel to last 67 days, enough gasoline for 31 days.

Only alternatives to the tanker haul are railroads and pipelines. But railroad tank cars, used mostly for refined products, number only 140,000 for the whole U.S., carry only 250 barrels a car, and charge a rate many times as high as the cost by tanker. Admittedly, they can't fill the hole. The oil companies, which own most of the pipelines anyway, have therefore turned to pipelines. To avert exhaustion of its eastern stocks, Standard of New Jersey last week started pumping 27,500 barrels of Texas, Arkansas and Louisiana crude a day via Tulsa and southern Illinois to its New Jersey refinery, 1,700 miles in all. The cost of this overland routing is 60-c- a barrel, against 21-c- or less by tanker. The rail rate would be about $1.80. Such cost increases make Leon Henderson's price-holding job more ticklish than ever.

Meanwhile, oilmen have pushed plans to increase the U.S. pipeline network, which carried only 7% of the East's oil last year. In that effort they have lost valuable time bucking the railroads, who lobby against pipelines just as resolutely as they used to wreck them in the oil wars of the '80s. Their most successful lobby is in Georgia. Pure Oil and Gulf, trying to run a line from Port St. Joe in Florida to Chattanooga, laid pipe on much of the route, but could not get permission to close the gaps across the railroads' rights of way.

Standard and Shell too have planned a line from Louisiana to North Carolina. About as long as Iraq's famous line, it would run 1,262 miles and carry up to 72,000 barrels a day, enough to fill half the gasoline needs of the five Southern States to which it would run. Since 17% of the U.S.'s needs for aviation gasoline is centered in those States, President Roosevelt tried to speed the line by writing a letter (for transmittal to the Georgia Legislature) to his old enemy, Governor Eugene Talmadge, who tried to start a Grass Roots revolt against him in 1938. But the railroads, two months ago, held the project up. Arguing that they had plenty of tank cars to do the work of any diverted tankers (in which the Army & Navy supported them), they persuaded the Legislature to adjourn without taking action. Now the Southeast faces an oil shortage.

Oilmen also hope to run a new through line from Texas and Louisiana all the way to New York. They are ready to put up $75,000,000 for the job, and claim they could finish it in six to nine months--if they can get the steel.

But the most significant new line announced last week was a 250-mile short cut from Portland (Me.) to Montreal. Standard of New Jersey has already ordered the tubing, and expects to finish the job in less than eight months. It will replace the long tanker haul around the Gaspe and up the St. Lawrence to Canada's chief distributing point. Its significance: the transport problem is a hemispheric problem, and its solution must see that the U.S.'s neighbors are served too.

Last week the oil paradox hurried the whole transport problem on its urgent way to the President's lap. He would have to find a hemisphere-minded Transport Coordinator; Railroader Ralph Budd admitted that his resignation was in the President's hands. Week before. ICC Sage Joseph B. Eastman warned the railroads that if their service breaks down, the Government may take them over again, as in World War I.

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