Competitive fears among U.S. oil companies and federal price regulations have combined to make the Iranian oil shortage appear worse than it really is, according to industry experts.
So far, most companies are trying to keep their stocks of oil from falling or even to increase them, much as they did during the Arab oil embargo from the fall of 1973 to the spring of 1974. When the embargo was over, it turned out that world oil stocks had gone up, not down, during that shortage.
Meanwhile, a series of announcements by oil companies that they are beginning to restrict sales of some products, including gasoline, has contributed to a kind of shortage mentality, said one Carter administration official, that has helped boost sharply the prices of most oil products.
Even though the worldwide shortage is estimated at no more than 5 percent of world demand, some oil companies are allocating customers only 80 to 90 percent of their purchases last year.
Oil company officials say that the appearance of a greater shortage was an unintended but unavoidable side effect of trying to manage their inventories in a prudent way.
"A responsible company just can't run down its inventories to zero," said Ted Eck, chief economist for Standard Oil Co. (Indiana). "That's the reason for the allocations to customers."
But Exxon Corp. estimates world-wide oil stocks that could be drawn down without causing any spot shortages by at least 600 million barrels -- out of a total of 4.9 billion. Iran's exports totaled 5 million barrels a day, but since other exporters have increased production, the net loss in world production is probably about 2 million barrels a day.
Some energy experts put usable world inventories much higher, with the United States alond having close to 400 million barrels beyond what is needed to keep distribution lines filled.
If both consuming countries and the oil companies were willing, these stocks could be used to cover the shortage for up to a year.
Some of the U.S. companies have moved quickly to trim deliveries to customers, according to some industry sources, in an effort to keep competitors from stocking up at their expense.
Also, federal regulations limiting the way in which refiners can pass through costs could mean, the sources said, that drawing down inventories could force some refiners to lower their gasoline prices despite the tight market.
The action taken Thursday by the Energy Regualtory Administration allowing refiners to pass through some additional costs, which could add about 2 cents to the cost of a gallos of gasoline, could encourage added use of old stocks.
However, the Center for Auto Safety, a consumer group, yesterday went into U.S. Court here in an attempt to block these so-called "tilt" rules. The group's suit against the Department of Energy was continued until Monday, at which time U.S. District Court Judge Aubrey Robinson will decide on whether or not to issue a restraining order to block temporarily implementation of the rules.
The shutdown of Iranian exports is just beginning to be fully reflected in deliveries of foreign crude oil to the United States. Thus, any spot shortages so far have been largely the result of the way in which inventories are being managed.
As Standard Oil's Eck put it, "You probably could make a fair case that the allocations are not needed right this second."
"The industry is trying to not run down inventories, but to normalize them," he added. He said that a normal seasonal accumulation of gasoline inventories is under way, while stocks of home-heating oil are going down. The gasoline stock picture, he said, "doesn't look bad."
Just as they did during the 1973-74 embargo, the oil companies are attempting to spread the shortage among all consuming nations.
Harry Bergold, assistant secretary for international affairs at the Department of Energy, told the Senate Energy and Natural Resources Committee this week that the companies are "shifting from an import share allocation toward a consumption share allocation."
This has meant that some countries such as Canada, which imported no oil from Iran, nevertheless is getting less oil. When Exxon recently reduced oil shipments from Venezuela, "The Canadians were unprepared for the company's action," Bergold said.
Meanwhile, DOE officials yesterday took strong exception to a Congressional Research Service report released yesterday by Rep. Albert Gore Jr. (D-Tenn.) that projected the world oil production shortfall resulting from the Iran cutoff at 80,000 barrels a day, considerably lower than DOE's estimate of about 2 million barrels.
"DOE strongly disagrees with the CRS method of analysis," a spokesman for the department said yesterday. He said the problem was not with the figures on the amount of oil being produced in the world, but with Gore's assessment that present production is enough to meet the growing world demand.
"The CRS study estimates a growth in demand of about three-tenths of 1 percent a year," a DOE spokesman said. "We estimate demand will grow about 3 percent."
"We are firmly convinced," the spokesman said, "that there is right now a shortfall of 2 million barrels a day in world oil production. This view is confirmed by reporting of our State Department and intelligence agencies as well as the International Energy Agency in Paris, independent oil analysts and oil companies."
Several oil industry spokesmen said yesterday that they agreed with DOE's analysis, and criticized the CRS-Gore report for failure to recognize increasing world demand.
While Gore had criticized Doe/'s use of fourth quarter 1978 world production figures to make its estimates, DOE responded by criticizing CRS' use of January to September 1978 figures for projecting demand.
"January to September 1978 oil production was abnormally low because of a large stock buildup that occurred during 1977," DOE said. "Therefore, world oil stocks were drawn down sharply during first quarter 1978 and the buildup of stocks that normally occurs during the second and third quarters was less than normal."