Cas Gorecki, manager of the Crown Cork & Seal Co. plant in Fruitland, just south of this center of commerce on the Delmarva Peninsula, got a telephone call last week from an official at Chesapeake Utilities Corp., a natural gas distribution firm.
Gorecki was told that within a matter of hours all natural gas to his tin-can manufacturing plant would be cut off.
"I informed them that's an impossibility," Gorecki said in an interview. Although it would be possible to eliminate natural gas for production and plant heating, a 100 per cent curtailment was "out of the question" because gas is used to heat a large, outside water tower that supplies the sprinkler system.
In the Arctic-like weather that was expected to resume here his weekend, water in the tower would freeze and the factory would be without fire protection required by the Fruitland fire department and Crown Cork & Seal's insurance policy.
Gorecki said the Salisbury-based natural gas distributor agreed to review the situation and now is expected to provide at least enough of the increasing scarce energy source to fire the boiler that heats Crown's water tank. But that is all. Gorecki is seeking enough propane to operate this factory and to keep it warm for about 125 employees. Time is growing short, since Chesapeake curtailed all of its industrial customers at 8 a.m. Saturday and firm supplies for alternative propane will last only two weeks.
Like hundreds of other fctories east of the Rocky Mountains, Crown Cork & Seal may have to shut down.
President Carter said last week that 4,000 plants had closed, putting some 400,000 persons out of work. Later, the government reported 9,000 plants closed and more than 500,000 persons out of work. By week's end, those numbers were increasing rapidly:
About 40 per cent of the nation's fiber-glass-insulation production has been halted by a lack of natural gas at the very time when demand for such products to halt energy loss has mushroomed.
Retail stores were asked to reduce hours in several states; in metropolitan Washington, D.C., stores, office buildings and business users of gas were told to reduce thermostats as much as possible.
Because of a halt in transportation on ice-clogged rivers, coal mines have been shut.
Auto plants were shut or put on reduced schedules in Michigan, Ohio, New York and Georgia, putting 31,000 workers out of their jobs.
More than 7,000 carpet mill workers were laid off in Dalton, Ga., with more layoffs projected in an area that houses 125 plants.
Aluminum Co. of America said an aluminum smelter near Evansville, Ind., lost about a third of production capacity because of gas curtailments, with no prospect of full resumption before March.
Columbia Gas System subsidiaries announced new curtailments in supplies to various regions, affecting more than 26,000 industrial or commercial customers in Maryland, West Virginia, Ohio, Pennsylvania and Kentucky; firms affected included 27 in Western Maryland, most with other sources of fuel.
These few examples reflect not only a critical absence of energy needed to run a significant portion of American business but also a potential threat to Carter's hopes for continued economic recovery. Some economists have suggested that the President now will have to add to his projected package of stimulus to counter the lost revenues, reduced consumer spending and higher government outlays necessary to cope with the cold weather and financial aid to individuals and businesses that have been hurt badly.
"I'm not sure how the measured gross national product will be affected by the cold weather, but we clearly have suffered a loss of efficiency, a loss of real income to the workers, and a loss of profits to the investors . . . it also raises costs and prices a little in the process," said economist Edgar Fiedler at the Conference Board, a business research group in New York.
Otto Eckstein, a member of the Council of Economic Advisers during the mid-1960s, told the House Budget Committee that total damage could be as much as $3 billion and he said Carter should expand the economic package. Other experts in Washington said Eckstein's estimate may prove to be conservative. And Sen Hubert H. Humphrey (D-Minn.) said a good share of Carter's proposed rebates may be used just to pay for soaring monthly heating bills.
Natural gas is a key element in the economy because it accounts for about one-third of total energy consumed and about one-half of all non-transportation energy use. According to the Federal Energy Administration, half of the gas consumed goes for residences and commerical businesses, one-sixth is used to fire electric utility generating plants and the balance is used for industrial processes.
On the Eastern Shore of Maryland, in Delaware and in Virginia, among many other states, natural gas supplies have been dwindling for years. The absence was felt before by industries that had to make arrangements for other fuels but this winter's cold has made an emphatic statement about dimensions of the problem.
Edward C. Burton Jr., in particular, finds himself in the uncomfortable position of rationing out an ever-decreasing supply of natural gas as president of Chesapeake Utilities Corp., a Delmarva firm that distributes gas in the Salisbury area and throughout souther Delaware.
Chesapeake owns a pipeline subsidiary, Eastern Shore Natural Gas Co., which provides gas directly to several very large industrial users, a private gas company in Cambridge, Md., a city-owned gas company at Easton, Md., and a gas firm in Elkton, Md., that is a subsidiary of a Pennsylvania distributor.
Burton said last week he's doing everything possible to boost available incoming gas but that "if everything turns sour," his company would have to cut back on deliveries to larger customers - a decision that came on Friday.
Chesapeake buys its gas from the Transcontinental Gas Pipeline Co. of Houston, a pipeline firm that is finding it harder to supply gas than its competiors. As a result, distributing firms that have relied on Transco - including those in Delmarva, southern Virginia and the Carolinas - generally have been cut back more than most other local gas companies across the nation.
If the new administration's natural gas emergency act is enacted, the Salisbury distributor and its pipeline stand to be among the beneficiaries in terms of taking gas away from richer systems in othe r parts of the U.S. That could bring relief in terms of continued jobs here but it also will mean higher energy bills because another part of the Carter package would permit purchases of gas at unregulated intrastate prices.
Currently, Chesapeake Utilities is receiving about 30 per cent of the gas it needs to meet normal demands, a curtailment expected to last through March 31. The biggest industrial customers have been shut off for some time and smaller concerns had supplies from Chesapeake reduced by 30 per cent or more until the Friday decision to drop all industrial use, a decision Burton said was accompanied by a promise of help in finding other fuels.
Despite recent action of the Federal Power Commission permitting purchases of intrastate and higher-priced gas on an emergency basis, Chesapeake and other distributing or pipeline firms have had little luck in finding extra sources.
Burton was in Houston last Tuesday hoping to sign two contracts for emergency supplies. He was able to complete one deal for a 60-day purchase of 3 million cubic feet of gas a day but was unable to reach agreement on the second contract, which would have added another 4 million to 5 million cubic feet a day.
In Salisbury, Burton's company has urged customers to set their thermostats no higher than 65 degrees during the day. Contingency plans for new cutbacks are being studied even as negotiations continue for new supplies. The extent of possible plant closings probably will not be know until Monday morning, Burton added.
"The question is, do you want industry to function? Or to continue as now , with supplies dwindling, industries closing, jobs lost?" Burton said.
Although the bulk of his distributing firm's customers are residences and small commercial users who have priority in gas distribution, about half of Chesapeake's pipeline subsidiary volume normally is for industrial customers. The cutbacks this winter have affected, among other firms:
A Getty Oil refinery at Delaware City, which normally buys one-third of its gas from the Salisbury firm; operations have been cut by the loss of that energy.
Stauffer Chemical Co., which needs natural gas for production of various products used in many other industries; with curtailed output in Delmarva, plants of companies around the country have reduced supplies.
General Foods, in Dover, which accumulated stored gas as an alternative.
Crown Cork & Seal Co., until Friday on a 50 per cent curtailment but with storage facilities for propane, which can be converted for necessary processes in manufacturing cans.
Dresser Industries, Inc.'s,. petroleum equipment division, which uses gas to put finishes one its line of gasoline service station pumps, but which could switch to propane if adequate supplies can be found.
Gorecki, of Crown Cork, said natural gas normally is used to heat his firm's 10-year-old factory, which turns out 150 million cans a year. Gas also is used in production - for a 120-foot drying oven that heats cans at 450 degrees and higher after coating are applied and for a soldering unit, where seams are put in 450 cans a minute.
Since Jan. 7, Crown Cork's supplies had been sliced 50 per cent, necessitating use of a standby propane system installed several years ago to meet such a development. An engineer blends the propane so it can be used in production. With the projected cutback of all supplies except for the outside water tank boiler, Gorecki has been seeking new supplies of propane but "two weeks of firm supplies is as far as they (the propane suppliers) can project," the Crown Cork official said.
While the thermostat for Gorecki's office was set sat at 65 degrees last week, the plant temperature has been cut to 58-60 degrees and many workers wear coats on the job.A 65-degree temperature is being maintained in an employee cafeteria so workers have a place to "warm up," Gorecki added.
North on Route 13 across from Salisbury State College, Dresser Industries employs 600 persons at a plant that produces automobile hoists and gasoline pumps. Controller Gordon Weitzel and manufacturing manager Curran Gass (whose last name is a subject for much mirth when people find out his occupation), said Chesapeake Utilities notified them that all gas would be cut off.
Propane will be purchased to continue operations "if we can get it." Weitzel said. "We got some assurances of some propane supplies, but they are a little iffy," Gass said. Longer-term propane supplies will be available but the company needs it now or it will shut its doors.
Dresser uses gas for paint shop ovens and washers but normally uses propane for heating one section of the plant. Gass said propane for heating would be diverted to production and employees will have to wear coats. He also placed orders for electric space heaters but they are in great demand, too.
Painting operations already have been reduced to three days a week and Dresser may not be as fast on delivery of its gas pumps for some time but "we're hopeful we can keep the plant running," Gass said. The substitution of propane will mean an increase in energy costs of from 10 per cent to 15 per cent, the Dresser executives estimated.
Elsewhere in Delmarva, the plight of businesses if similar. Delmarva Power & Light Co. announced late in the week that natural gas to 20 of its largest industrial users would be ended immediately. Supplies to other firms were reduced sharply. In Wilmington, the giant E.I. du Pont De Nemours & Co. chemical firm said 1,000 persons could be laid off Monday.
Easton's gas company, supplied by the Salisbury firm, said supplies to several industries would be eliminated in order to husband natural gas for homes.
John W. Jardine Jr., vice president and secretary of Chesapeake Utilities, attributed the current gas crisis to three factors. For one thing, the Salisbury firm received less fuel than planned for last summer because the distributing companies supplied by Transco could not agree among themselves on an allocation plan as they had done in previous years. As a result, an FPC end-use allocation system was installed and that deprived companies with larger industrial bases of a larger percentage of supplies.
"Second, we had three or four really warm winters and since we haven't had a full demand in quite a long time, we didn't know exactly how much would be needed in one of the coldest winters in history," he said.
Finally, in the planning process, Chesapeake had counted on purchasing emergency supplies of the higher-priced intrastate gas and it's just not available today.
Once the current crisis is over, moreover, the outlook for next winter is more of the same for Chesapeake Utilities.Beyond the 1977-1978 season, Burton said, the supplies should increase because of Transco's purchases in the meantime plus new gas from wells being drilled by Chesapeake in a consortium with other Transco line distribution firms. A relatively small amount of this new gas will start flowing next winter, Burton added.
Long-term supplies will develop only with an end to federal controls over price, Burton concluded."If that step had been taken four or five years ago, it would have made a big difference today," said Jardine, referring to an FPC decision last year raising the interstate ceiling to $1.42 per thousand cubit feet - about triple the old rate.
The FPC decision has been challenge by consumer groups, who estimate that it will cost consumers up to $4 billion a year in higher bills. Currently, at the higher rate is subject to refunds if federal courts conclude that the rate is illegal. "It will produce some gas, but not much," said Burton.
"There is no question that gas will go up in price, regardless," the gas company executive stated. The American people have a choice of keeping the price artificially low and forcing plant closings and other industrial shifts, which bring about added costs to society, Burton said. Or a decision can be made to pay a higher bill for gas.
"Whatever option is picked, costs will rise but under higher gas pricing people will have better lives and jobs," he concluded.