Cold Comfort

The oil industry last week gave the Administration its plan to ease the oil shortage. As the pinch is tightened in fuel oil, the industry proposed to 1) cut back gasoline production for 60 days in oil-short areas and turn out more fuel oil, and 2) pool scarce supplies so they can be distributed evenly.

The industry knew that the plan, if approved by the Department of Justice (which must waive prosecution under the Sherman Antitrust Act on such an industry agreement), would be only a stopgap. The shortage will soon get worse. The enormous demand for oil this year is expected to exceed the 1945 wartime peak by some 14%. Among the reasons: over 90% of the locomotives now on order are oil-burning; oil-burners are being installed in homes at a record clip, and farmers are mechanizing their farms at a record rate. Since 1938 U.S. per capita oil consumption has increased 66%. The shortage, said Secretary of the Interior J. A. ("Cap") Krug, might last for three years. Most oilmen agreed.

Big Notions. Secretary of Defense James V. Forrestal last week told Congress that the long-range oil picture was also dark. The U.S., he said, was using up its oil four times as fast as it was finding it. Said Forrestal: if the nation went to war tomorrow, it would be 2,000,000 barrels a day short of its minimum needs (current crude production: 5.3 million barrels a day). Forrestal wanted the U.S. to create a vast new industry to make petroleum out of coal, natural gas and oil shale.

This week, Cap Krug gave his estimate of the cost: $9 billion. Krug estimated that the job would take five to ten years. Oilmen thought Krug was trying to bite off too much. The technology of making synthetic oil was improving so rapidly that such big plants might well be obsolete before they were in production. Know-how had already reached the point where gasoline from natural gas could compete with gasoline from crude oil.

Small Beginnings. Long before Krug or Forrestal, the oil industry had seen the revolution on the way and started to get ready. The Texas Co. has a 38% interest in Carthage Hydrogl, Inc., is now building a $20 million plant at Brownsville, Tex. to produce synthetic gasoline and oil daily from natural gas. Standard Oil Co. of Indiana will shortly begin construction of an $80 million synthetic plant in the Hugoton gas fields of Kansas. The two plants will produce 14,000 barrels of oil daily.

Standard Oil Co. (N.J.), which has a synthetic-fuel pilot plant at Baton Rouge, is placing its long-run major bet on gasoline from coal. This week, Standard and the Pittsburgh Consolidation Coal Co. broke ground at Library, Pa. for their pilot plant to gasify coal. The next step, a fairly simple one, will be to make petroleum from the gas. Said E. V. Murphree, president of the Standard Oil Development Co.: "Enough oil can be made from the nation's known coal reserves, alone, to last the U.S. for 1,000 years."

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