A news analysis on the gasoline shortage in yesterday's Washington Post incorrectly reported the nation's gas stocks. The paragraph should haves stated: "By June 1978, the nation's gasoline stocks had slipped to 228.6 million barrels from 272.3 million barrels in January. That mark was the lowest for the nation's gasoline stocks since August 1975, when they stood at 215.5 million barrels. By comparison, in June 1977, gasoline stocks were at 256.4 million barrels."
The nation's gasoline shortage, by far the severest in the world, has been aggravated by the oil industry and by a succession of misdirected policy decisions made by the Carter White House and Energy Secretary James R. Schlesinger.
While it's hardly a comfort to millions of Americans waiting in gasoline lines daily across the country, the origins of the crunch preceded the Iranian shutdown last summer. In a sense, the shortage started with the oil glut.
Yes, the oil glut.
Last year, months before the revolution that choked off Iranian exports, the U.S. oil industy, reeling from two years of weak prices and oversupplied markets, began drawing down inventories. Eventually oil and even gasoline inventories reached a point lower than they had been in years.
The Organization of Petroleum Exporting Countries (OPEC) had gone nearly two years without raising world oil prices, and inventories worldwide were brimful during the first half of 1978.
In the United States, however, major oil companies, upset at the prospect of continuing "soft" product prices, moved to tighten the market. They began a six-month drawdown in gasoline stocks.
By June 1978, the nation's gasoline stocks and slipped to 219,660 from 272,287 barrels in January. That mark was the lowest for the nation's gasoline stocks since August 1975, when they stood at 215,480 barrels. By comparison, in June 1977 gasoline stocks were at 256,446 barrels.
For the next five months of 1978, the major oil companies held gasoline inventories below the August 1975 mark, at levels that oil analysts today concede were lower than the oil industry should have maintained.
Nevertheless, no note of alram was sounded by the Carter White House, Schlesinger or members of Congress, who today are given to handwringing over the gasoline squeeze.
The result was that the U.S. domestic gasoline market was primed for a squeeze before the shah of Iran fell.
Meanwhile, another turnabout at the center of the world oil trade had taken place. Dramatic gestures by President Carter and Egyptian President Anwar Sadat to move toward an Egyptian-Israeli peace agreement, and the shah's fall from power, shifted - perhaps irrevocably - the attitudes of the critical Persian Gulf producers and made them unwilling to produce sufficent crude oil to meet world needs and maintain stable oil prices.
The Saudis and their equally conservative, pro-western neighbors have enough untapped capacity to flood world markets.
The Saudis and other Gulf producers were moving on a conservationist track before the Israeli-Egyptian peace accords were signed, and the treaty criticized by most Arab states hardened their resistance to expanding production.
Today U.S.-Saudi relations are at their lowest point in decades. And member of the Saudi royal family say privately that they are unwilling to dramatically increase production unless the United State gets Israel to accept Arab demands on the Palestinian question and related issues.
Robert O. Anderson, chairman of Atlantic Richfield, says assurance of an additional 1.5 million to 2 million barrels a day on the world market would be enough to stabilize prices and supply.
After the first of the year, as it became evident Iran was becoming involved in a protracted revolution, the pace of events picked up dramatically. A succession of often-contradictory policies put in place by Schlesinger and the industry assured Americans of a disproportionate share of the world shortage.
Meanwhile, because of uncertainty over future imports, American industrial users began a massive stockpiling of petrolum products. Demand for oil products, which is a measure of withdrawals from oil company investories rather than a measure of consumption, surged upward by 5.1 percent in Januray and 3 percent in February, compared to the same months in 1978.
Despite the January-February build-up, oil executives such as Amoco's Ted Eck say that actual consumption of gasoline was not sharply above 1978 levels in the months that followed.
The hoarding at the industry level, and later the topping off of motorists' tanks, have placed demands on the oil supply system that would be difficult to meet even under normal circumstances.
Nevertheless, during the Iranian oil cutoff, which lasted through March, U.S. oil supplies and world oil production were higher than they were in 1978.
Then, in mid-March 1979, as the new Iranian government began to export oil again, Schlesinger privately called on U.S. oil companies not to buy high-priced oil in the "spot" market.
The administration's rationale was grounded in fine intentions but guarteed to ensure that the United States would have a smaller share of world oil supplies than other countries. The thought was that keeping domestic oil companies out of the spot market would hold prices down. I didn't work, and by late May, chafing from political heat over the gas lines, the White House called on Schlesinger to reverse his policy.
Still another Schlesinger policy that was subsequently modified was a call on refiners in April this year to reduce the output of gasoline to ensure adequate supplies of fuel oil for the winter. In recent weeks, Schlesinger has called on the industry to maximize gasoline production.
The final and most controversial issue is refinery production. Critics have been saying for months that the administration should force refiners to increase output. This week Schlesinger criticized the industry for reducing output from 87 percent of capacity to 84.5 percent in the last two weeks. Meanwhile, the industry has allowed its inventories of crude oil to rise from 322.6 million barrels to 350.2 million barrels over the same period. Industry spokesman claim they are not holding back gasoline supplies.