The United States faces a continued severe lack of oil supplies that will lead to "spot shortages at a minimum this summer." Energy Secretary James Schesinger said yesterday.
Responding to questions from the House Energy and Power Subcommittee about the extent of any shortage, Schlesinger said there is a "tenuous balance between supply and use" on a worldwide basis right now but that there was not really a balance between supply and demand because of the need to rebuild inventories drawn down during the Iranian crisis.
Schlesinger defended his department's estimates of the size of the oil shortfall, and said that actual oil imports to the U.S. have been declining. The subcommittee staff earlier had prepared a memo stating that U.S. oil company reports to the International Energy Agency in Paris showed a much higher level of imports.
The energy secretary also said that the U.S. is not close to meeting its pledge to the IEA to reduce American oil consumption by 5 percent or roughly 1 million barrels a day by the end of the year.
Earlier this week, Schlesinger's deputy, John O'Leary in an interview with a Washington Post reporter, said that the U.S. was already saving between 700,000 and 800,000 barrels a day and that the nation was well on its way to meeting the pledge, O'Leary also said that the remainder of the savings could be achieved without using any mandatory conservation measures.
Yesterday, Schlesinger declared flatly, "Mr. O'Leary did not make the statements attributed to him. What Mr. O'Leary was discussing apparently in a very brief commentary was the Iranian response plan which dealt with prospective measures that might be taken to deal with the problem over the balance of the year."
On the second point concerning meeting the pledge without use of mandatory conservation steps, such as requiring non-residential buildings to keep thermostats high in summer and low in winter, Schlesinger said, "In my judgment, it is questionable whether indeed we could get by without turning to mandatory measures.
"I don't say that it is impossible, but it is questionable, and it is not clear that it is desirable to avoid some mandatory measures," he continued.
"On that point, I do not know precisely what Mr. O'Leary said. Mr. O'Leary's in the Bahamas. . . He seems to be on a boat and unavailable." Schlesinger explained.
With the resumption of some oil exports from Iran, Schlesinger said that beyond normal seasonal shifts worldwide demand will exceed production by about 1.7 million barrels a day during the first three months of this year. That is out of a total of about 50 million barrels a day of normal usage.
The U.S. normally uses about 700,000 barrels a day of oil from stocks during the first quarter of the year because of heating demand. This year he said, U.S. inventories have been drawn down at a 1.6 million-barrel-a-day rate, or 900,000 more than usual.
The reports from oil companies to the IEA indicating that they would import nearly 11 million barrels of oil a day during February, Schlesinger said, were based on what they "hoped" they might import. "Unfortunately, those reports were on the high side."
Schlesinger said inventories for distillates, such as home heating oil, are far below normal and that gasoline stocks are being drawn down at the rate of more than 5 million barrels a week. "If this drawdown continues, it will underscore the difficulty we will have this summers," he declared.
A number of subcommittee members expressed concern that some mandatory conservation measures under consideration, including weekend gasoline station closings, could have a severe impact upon the tourist industry. Schlesinger acknowledged that, and urged states that wished to come up with an alternative plan to have a similar amount of gasoline. The administration has estimated Sunday closings could save about 280,000 barrels of oil daily.