The Direst Fears Disappear

During last January's Big Freeze, it seemed that the weather would never warm up fast enough to save the nation from a series of natural-gas emergencies. As fuel shortages forced the closing of many schools and factories, industry officials expressed fears that their underground reservoirs were being depleted so rapidly that they could not be built back to normal during the summer--dooming the U.S. to another shortage next winter.

Now those fears have faded. As the weather in much of the nation turned milder in February, then downright summery in March and April, demand for natural gas fell. The Emergency Natural Gas Act passed by Congress last February helped too. It enabled gas-consuming states to buy--at high unregulated prices--supplies that had been held in such producing states as Texas and Louisiana. Supplies in storage have now been rebuilt to the point that factories burning natural gas can count on getting enough to keep them running through the summer and fall. Since supplies are being replenished faster than they are being used, reports the American Gas Association, by fall "we'll be in our traditional start-of-winter posture: full storage." Meaning: homeowners and most factory managers can forget about being cut off if next winter's temperatures are fairly normal.

Other dire fears of last winter have also disappeared. A shortage of fertilizer had seemed likely because large quantities of natural gas are needed to make it, and a Government survey found manufacturers' inventories to be low. But the survey did not count the inventories of wholesalers and retailers, who had built record stocks. Farmers this year have enough fertilizer to enable them to produce huge crops (see ECONOMY & BUSINESS).

Gasoline supplies once threatened to run low this summer because refiners had to devote more of their production than usual to heating oil during the icy winter. But now only a few spot shortages of unleaded fuel are possible. On June 3, at the start of the warm-weather driving season, national inventories of motor fuel totaled 257 million bbl., 38 million bbl. more than a year earlier, and driving has not been increasing much. During the first four months of 1977, drivers used only 1.9% more gasoline than they did during early 1976.

Toward Compromise. None of this means that the nation's long-range energy squeeze is less threatening. The U.S. is still importing more than half of its oil, and prices could rise above their already inflated levels. Reports spread last week that Saudi Arabia, the world's largest oil exporter, had decided to raise its prices 5% by July 1. That would bring its quotes up to the general OPEC level and heal--or at least paper over--the bitter split that developed in the cartel last December (the eleven OPEC countries that raised prices 10% then would supposedly cancel a further 5% boost scheduled for July 1). The Saudis are not talking officially, but OPEC negotiators have been trying for months to work out some such compromise.

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