Gas: A Long, Dry Summer?

Gas: A Long, Dry Summer? Shortages spread, tempers are hot and Congress rejects rationing

By tradition, Memorial Day starts the American summer. Beaches, amusement parks, resorts welcome their biggest crowds since the previous Labor Day. The roads are jammed with city families streaming out to picnic areas or campgrounds. Next weekend, however, the stream may be more of a trickle, and some who venture forth may even be stranded, unable to find a gas station that will fill their tanks for the haul back home. Memorial Day could mark the point when the gasoline shortage of 1979 starts to hurt nationwide--and when Americans finally realize that the nation's growing addiction to undependable supplies of foreign oil can really jeopardize its prodigal way of life. And although President Carter asked for standby authority to impose gas rationing, Congress last week rejected his proposal. The vote, a stunning defeat for Carter, reflected all too accurately a national unwillingness to face the facts about energy if doing so would mean any change in cherished habits. It left drivers vulnerable to what Press Secretary Jody Powell called "allocation by chaos."

A so-far irresistible force is about to collide with an immovable object. The force is the average American's desire to climb into his auto and take off, regardless of revolutions in Iran, soaring gasoline prices or presidential appeals to drive less. Gasoline demand has increased 3% since last year. No decrease at all has been noticeable since President Carter in April called on every motorist to reduce driving by 15 miles a week.

The immovable object is the empty service station. Why it may be empty is a complicated question, but the fact is inescapable: gas stations just do not have as much fuel to sell as they did a year ago. Each month, oil companies are allotting their station chains anywhere from 5% to 20% less gas than in the same month of 1978. Every month, many stations are drained early, and in the last week of the month they start closing early in the evening, or on weekends, or until they get the next shipment. Come Memorial Day and the start of the great summer driving orgy, most experts predict serious trouble.

Much will depend on whether the rest of the nation follows California in gas-buying habits. For the past three weeks, Golden State drivers have been in a kind of panic, scrambling to buy every last drop available. Lines as long as eight blocks have formed at those gas stations still open; motorists have waited three hours or more to fill up. At some stations, drivers who rose groggily at dawn to hunt for gas have had to queue up behind long lines of cars parked and locked by people who had left them there overnight. Fights with guns, knives and broken beer bottles have erupted in the lines. In Los Angeles a male motorist deflated the tires of a car that cut into line ahead of him, then beat up a pregnant woman who climbed out of the car to protest.

In an effort to calm the frenzy, 13 California counties containing more than two-thirds of the state's drivers last week adopted an allocation plan--the first government-sponsored one in the nation in five years. The plan, made possible by legislation hastily drafted by Governor Jerry Brown, is that followed widely across the nation during the 1973-74 Arab oil embargo: drivers whose license plates end with an odd number can buy gas only on odd-numbered days, with even numbers only on even-numbered days. The plan will do nothing to increase supplies, or even to reduce consumption. It is aimed solely at reducing panic buying, and in its first few days, it failed to do even that. Most station attendants ignored an order to sell gas only to drivers whose tanks were less than half full.

The California uproar seems to have been caused more by panic psychology than by actual shortage. Atlantic Richfield officials estimate that Southern California gas stations are getting only 5% less fuel to sell this month than they did in May 1978. That relatively small shortage has been enormously magnified by two factors:

> Californians, having created an economy and culture almost totally dependent on the auto, are increasing their driving even more (as much as 9%) than Americans generally. Said Paul Lozoya, waiting in a Los Angeles gas line in a battered 1969 Chevy: "I'll drive, I'll drive. I'll have to cut somewhere else. Did you ever try walking around this goddam town? Ever try a bus?" (Angelenos voted down a proposal to build a $6 billion, 232-mile mass-transit system in 1976.)

> California drivers started at the first sign of shortage to "top off' their tanks --buy a few gallons for an already mostly full tank--and thus caused a huge surge of panic demand. Secretary of the Treasury Michael Blumenthal told Congress last week that the average California gas purchase has lately been a mere $3--barely enough to fill a quarter of the tank of a compact car at today's prices. "I've had this car washed four times in six days," reported Fred Tyler as he stood beside a dripping Mercedes 280 on Santa Monica Boulevard in West Hollywood. His reason: the Santa Palm car wash will sell five gallons of gas to anyone who will also pay $3.49 for a cleaning.

Outside California, drivers so far seem to have their emotions more under control, but gasoline supplies are falling below demand in almost every state. Florida Governor Bob Graham reported last week that the summer shortage could be anywhere from 5% to 15%, depending on how much Floridians and tourists use their cars.

Across the nation gas stations are closing on Sunday or shortening weekday hours to conserve supplies so that they will have a few drops left to sell at the end of the month. In the Pittsburgh area, some 60% of all stations now close on Sunday; in Madison, N.J., some stations are selling gas from 7 a.m. to 10 a.m., closing until 4 p.m., then reopening till 7 p.m. To date, however, most drivers have simply grumbled and driven a bit farther to find an open station.

Many are also beginning to take the eminently practical step of buying fuel-efficient small cars. Detroit had expected small cars to account for about 47% of all sales of U.S.-made autos this year. The actual share is now 54%. Sales of the GM Chevette and Ford Mustang in March and April ran 77% to 79% ahead of last year. Imports, mostly small and gas thrifty, are taking more than 22% of all sales, a record share. At the same time, sales of gas guzzlers are off so sharply that totals for U.S.-made cars in April ran 11.5% below a year earlier. Says Chrysler President Lee lacocca, assessing the sales performance of his company's large offerings: "The big-car industry is going down like a rock."

There are ominous rumblings that the effects of the gas shortage may get much more troublesome. Gas lines have started to appear in Rhode Island, though they are short (only 15 cars or so) by California standards. Says Peter Montaquila, who owns an Arco station in Providence: "I'm getting lines between 7:30 a.m. and 10 a.m. A lot of the cars are driven by housewives gassing up for their husbands. Topping off has started; we're selling $2 and $3 amounts." Some Rhode Island dealers are apprehensively distributing bumper stickers (pompously worded PRIDE, HONESTY AND SERVICE) to regular customers. Purpose: to enable the dealers to single out faithful customers and give them preferential treatment.

In some parts of the country, a real pinch could start as early as May 17. Gasoline dealers from 30 states met in St. Louis last week and resolved to try to organize a four-day shutdown, from Thursday through Sunday, in protest against federal price controls. Though the retail price of gasoline has risen 20% in the past few months, almost all of that has represented a simple pass-along of higher wholesale prices. Dealers have been permitted only two small increases in the gross margin of selling price over buying cost since 1973, and out of that they have to pay more for wages, rent, heat. It is too early to tell how widely the shutdown will be observed, but in some states the impact may be severe. When the Memorial Day weekend comes, closings will be widespread. Michigan officials fear that most of that state's gas stations will be dry by the time holiday crowds start heading home. Around Pittsburgh, 63% of gas stations will be closed Sunday, May 27, and 56% the next day.

What happens after Memorial Day depends heavily on whether Americans can somehow be persuaded to curtail their driving. Gasoline inventories in early May were not quite 7% below a year earlier, and production was running 3.6% behind 1978. That would be enough to produce a shortage, but one that would be quite manageable with a bit more car pooling, slightly shorter vacation drives, somewhat more use of public transportation.

"Traveling is no longer a luxury," says Edward Mayo, professor of travel management at Notre Dame. "It's a need, a right. You've got to get out of the house, get away from the urban centers, and people are going to get away one way or another." Many Americans, he asserts, think of their car as "a second home--a castle." Sociologist Wayne Youngquist of Marquette University agrees: "The car is America's magic carpet, and it gives people freedom and autonomy--it's their little box where they have control over their environment. There is tremendous resistance to anything that threatens the use of the car."

Gas-station closings bring out a suspicious streak in many drivers. Across the country, large numbers of motorists believe that the shortage has been contrived by the oil companies and the Government to push up prices. Says John Langille, a Boston salesman who keeps topping off the tanks of his two cars: "It's the same as in '73. As soon as gas goes to $1.20 a gallon we'll have all we want."

Not likely. If the shortage has been "contrived" by anybody, it has been by the 13 members of the OPEC cartel, who have reduced crude-oil pumping 7% to 10% in support of the 14.5% price boosts they have imposed so far this year. The cutbacks have turned last year's world oil glut into a global shortage, which the resumption of exports from Iran has not relieved. U.S. imports, which now account for half the nation's oil consumption, are running 8% below two years ago, when demand was much lower.

Two other factors aggravate the gasoline situation. One is that antipollution regulations require all cars built in the 1975 model year or later to use unleaded gas. A refinery needs 5% to 10% more crude to turn out a gallon of leadfree as opposed to regular gas. More important, stocks of heating oil have dropped dangerously (4.6% below the "minimum acceptable level" for May). Refineries would ordinarily be starting all-out production of gasoline now, to supply the summer driving surge, but the Carter Administration is urging them instead to switch as much output as possible to heating oil, in order to make sure that enough is on hand by October to carry the U.S. through the winter.

Some kind of gas rationing may become necessary, but the Administration bungled its proposal and Congress shortsightedly rejected the whole idea. Carter made two serious errors. First, in order to get his new tax on windfall oil profits, he railed so vehemently against oil-company "ripoffs" that he fanned public suspicion that the shortage is a hoax--though the Administration knows quite well it is not. Then the Administration presented a poorly drafted stand-by rationing plan; and when that came under fire, which should have been anticipated, it scrambled madly to find some kind of compromise that could get through.

Congress completed the debacle by yielding to parochial interests and finally shrinking fearfully from anything that might restrict driving. The Senate did approve stand-by rationing, 59 to 38, but only after forcing several concessions. The most important would have allotted ration coupons on the basis not of car ownership but of past gasoline consumption, thereby funneling more to Western and rural states. Besides, the Senate passed a resolution that the plan should go into effect only if gasoline supplies fell 20% below demand, a greater gap than anyone presently expects.

The House then thumbed down the plan, 246 to 159. One reason was that the same compromise that placated farm-state Senators angered urban Congressmen. Pennsylvania and California Representatives, whose states would have got less gas than under Carter's original proposal, voted heavily against it. Republicans seized on the chance to voice ideological hostility to Government regulation --and embarrass a Democratic President making an unpopular proposal. "We do not need rationing; we need production!" cried John Ashbrook of Ohio. But the biggest reason for the turndown was simple fear that a vote even for stand-by rationing in an emergency would brand a Congressman as being "for rationing" and lose him support at home.

Carter on Friday called reporters into the Oval Office to announce that "I was shocked and I was embarrassed for our nation's Government." A majority of the House members "have apparently put their heads in the sand," he said, and left him with "no authority to meet what could be a national crisis." Rather than submit another plan for Congress to pick apart, he said, "I challenge Congress" to come up with itsown rationing plan.

The centerpiece of Carter's present energy strategy--a proposal to lift price controls on domestic oil next month and accompany that with a tax on windfall profits--is also encountering strong opposition. Two weeks ago, the House Commerce Committee tied, 21 to 21, on a proposal to extend price controls beyond their June 1981 expiration date. If the proposal comes to the floor, says Speaker Tip O'Neill, the vote will be "close." In fact, he adds that he would personally vote in favor of extending controls --though he normally lobbies the President's programs through the House.

Whatever happens, the outlook is for a long dry summer.

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