Rep. Albert Gore Jr. (D-Tenn.) has challenged the Energy Department's estimate that the Iranian oil cutoff created a worldwide shortfall of more than 2.5 million barrels per day.
Instead, Gore contends, based on a study by the Congressional Research Service for his office, the shortfall is really only 80,000 barrels a day, a far cry from the worldwide crisis predicted by DOE.
The difference between Gore's estimates and DOE's estimates are basically in the methodology used by the two.
Gore used January-Septembr 1978 oil production figures from oil producing countries to estimate future production, while DOE has used fourth quarter 1978 figures. Gore contends the fourth quarter figures are distorted because production was artificially boosted by the oil companies in anticipation of the OPEC price increase.
While both Gore and DOE believe the loss because of Iran's situation is about 5 million barrels a day, Gore believes most of that will be made up by increased production from other nations.
"What is really happening," Gore contends, "is that the oil compaines are capitalizing on market dislocation and hording supplies. They are no longer buying on the spot market and are cutting their refinery runs and making windfall profits."
He says those "windfall profits" are the real cause of the recent rash of oil price increases. "They (oil producing countries) see how much our oil companies make, and decide that they should be making some of that," Gore says.
As an example, Gore offered a recent incident between Exxon and Venezula.
According to Gore, Exxon purchased 1.5 million barrels of residual oil from Venezuela in one shipment destined for Canada. But instead of reaching Canada, Exxon allegedly diverted the ship to New ENGLAND, WHERE IT SOLD THE OIL AT A HIGH SOPT PRICE.
After Canada reportedly asked Venezuela what happened to the shipment, Venezuela ciscovered the diversion.
"The next day," Gore said, "Venezuela increased the price of its oil by the same percentage Exxon increased the price to its New England buyer."