The world's largest oil company said today that world oil supplies are in better shape than a year ago, but that a serious disruption such as a cutoff of Iranian oil still would have incalculably bad effects on the United States and other oil-consuming countries.
T. A. Kirkly, president of Exxon Corp's. Exxon International, said that free-world inventories of crude oil and oil products such as gasoline are up sharply from a year ago, when they were unusually low.
Today the United States, Europe and Japan have the equivalent of 16 days of oil consumption in storage, about 10 percent more than normal, Kirkly said. o
"Last year, there were about six days in usable inventories," Kirkly said.
Furthermore, because Exxon anticipates a recession in the United States and a slowdown in economic growth in Europe and Japan, oil demand will decline this year. Demand also will be moderated by sharp increases in price and its attendant increase in conservation.
The relatively high level of inventories would help the world better weather another "severe curtailment" in oil supplies like the Iranian oil cutoff of early last year.
Nevertheless, because oil supplies remain uncertain and the balance of demand and supply is tight, the bigger inventories only make him "feel better," Kirkly said. "I sure don't feel comfortable."
In other oil-producer comments yesterday:
Shell Oil Co. President John F. Bookout told reporters in New York that Shell's 1979 net income last year was approximately 23 percent above 1978's at "a little bit over $1 billion," that Shell is raising wholesale gasoline prices by 5 cents a gallon, that gasoline prices in the $2-a-gallon range are "not all that unlikely" in "late 1980 or 1981" and that Shell will increase capital outlays by 8 percent this year to $2.7 billion.
Gulf Oil Corp. Chairman Jerry McAfee said directors approved "record" capital expenditures of $3 billion this year, 25 percent above last year's estimated actual expenditures and virtually all "earmarked for energy products."
The cutoff in Iranian oil not only touched off renewed gasoline lines in the United States last summer, but the global oil shortage also resulted in a near doubling of price.
Because world oil prices had been stable or falling in 1978 and because supplies seemed to be plentiful, major oil companies had permitted their inventories to fall to lower levels than normal.
As a result, when the Iranian cutoff occured, a shortage emerged both faster and more seriously than would have been the case normally.
Kirkly said that he thinks the oil industry -- here and in Europe and Japan -- will maintain higher inventory levels than they are used to because of uncertainties of supply.
Exxon estimates that the three major industrial regions will curb their use of oil sharply this year.
In the United States, Exxon estimates about 17.8 million barrels a day will be used, down from an average of 18.4 million barrels in 1979. "That estimate was made using more optimistic assumptions about U.S. growth than we are now using. Today we'd guess U.S. consumption will be more like 17.6 million barrels a day," Kirkly told reporters.
Exxon estimates European consumption will decline to 14.1 million barrels a day from 14.7 million last year, and Japan will use about 5.4 million barrels a day compared with 5.5 million barrels last year.
Other free-world countries -- including oil-producing nations themselves -- will increase their consumption of oil. Exxon said.
The so-called "other" countries will consume about 14.4 million barrels a day this year, up from 13.7 million barrels last year.
Exxon said that while oil production from the Organization of Petroleum Exporting Countries will decline, production from non-OPEC producers such as Mexico, Great Britian (from its North Sea fields) and Malaysia will increase.
On balance, Exxon expects the oil supply situation to be less tight in 1980 than in 1979, Kirkly said. The oil companies, however, would prefer available production between about 1.5 million and 2 million barrels a day more than consumption.
Although oil inventories are about 10 percent above "historical" norms, Exxon's are not, he said. Because Exxon lost 200,000 barrels a day from Iran and another 350,000 from British Petroleum, Exxon is having difficulties finding enough oil for its worldwide system. As a result Exxon inventories are about normal.