Energy Secretary James R. Schlesinger said yesterday the nation will face a "noticeable but not crippling" gasoline shortage this summer, cutting supplies between 5 and 8 percent, as a result of the Iranian oil shutdown.
He also told a House panel that gasoline prices are likely to increase 3 or 4 cents a gallon by the summer driving season. He said prices could go even higher if the oil cartel again raises crude prices.
"There will be a gasoline problem, in all likelihood this summer," Schlesinger told the House Budget Committee.
[In Iran yesterday, however, Assistant Prime Minister Ibrahim Yazdi said oil exports will resume "within a few days."]
Meanwhile, the Energy Department announced yesterday that it was putting into effect the first portion of its emergency standby oil allocation plans on March 1. While stopping short of Schlesinger's prediction of limited gasoline shortages next summer, DOE's Economic Regulatory Administration said that the basis of the department's complicated allocation program would be updated.
David J. Bardin, head of the administration, said in a written statement that "gasoline stocks are currently at adequate levels for this time of year," but he added that there is a "serious possibility" gasoline supplies will have to be allocated.
Schlesinger's warning of gasoline shortages and DOE's new allocation announcement come on the heels of growing signs that if the Iranian oil squeeze continues, the Organization of Petroleum Exporting Countries will move its prices upwards, and world oil markets will be stretched still tighter.
Thus far, Iran's political turmoil has reduced U.S. oil supplies overall by less than 5 percent. This week, however, Libya, a key North African producer, raised its prices 5 percent, joining Saudi Arabia, Abu Dhabi, Qatar, Kuwait and others in the 13-member cartel that have moved prices upwards to take advantage of record prices on the spot market.
State and Energy department officials are now conceding that OPEC's recently announced March 26 meeting in Geneva could lead to official price increases in excess of the 14.5 percent the cartel announced last December.
Arnold Safer. Irving Trust Bank chief economist, is one of a growing number of international oil specialists who are now talking openly about another OPEC price increase. "I am very concerned about the recessionary effects of another oil price rise," Safer said. He said that the cartel could move prices $2 or more a barrel above the official prices now set at about $13.70 a barrel, at the meeting scheduled for next month.
The key questions are still whether Iran will soon begin exporting oil, and, if so, in what volume.
Schlesinger also told the committee that the administration may submit a proposal next month to end oil price controls in June. He said it may also call for an "excess profits tax" on oil industry earnings.
In a related development yesterday, Sen. Henry M. Jackson (D-Wash.) said the Senate Energy Committee he heads would begin monitoring current oil prices to determine if there is any price gouging.