Due to an editing error, an article in yesterday's editions about the increase in Saudi Arabian oil production said that there are 55 gallons in the standard barrel of oil. The correct amount is 42 gallons.
The oil shortage in the United States and the rest of the world should be all but eliminated by an increase in Saudi Arabian output of 1 million barrels a day that may already have begun, energy experts said yesterday.
President Carter told members of Congress yesterday morning at a meeting at Camp David, Md., that he had received a personal committment from Saudi Crown Prince Fahd "to increase substantially crude oil production for a significant and specific period of time."
The Saudi government made no official announcement, but the increase, which some sources said is already reflected in tanker loadings in the Persian Gulf, is expected to be 1 million barrels a day for at least three months.
Crude oil imports have risen above 6 million barrels a day in recent weeks, and refiners, with more crude on hand and on the way, have increased operations to 89 percent of their capacity.The promise of still higher imports means refinery runs can remain close to 90 percent, easing both the immediate gasoline pinch and fears of a heating oil shortage this winter, the experts said.
Dr. Gary Ross of the Petroleum Industry Research Foundation in New York said that even though it takes up to six weeks for tankers to reach here from the gulf, "the Saudi move can permit some oil companies to draw down their stocks of crude oil more rapidly than they would otherwise."
"This means the oil companies can put more refined products on the market than would have been available otherwise," he said.
Gasoline lines around the nation are already shrinking, and Energy Secretary James Schlesinger, castigating the oil industry for being "too conservative," has urged that more gasoline and other products be made available.
The Saudi increase in production should be enough to balance world supply and demand, one Carter administration energy economist said. His reasoning: the 61 percent price increase so far this year by the Organization of Petroleum Exporting Countries and the looming world economic slowdown should both work to reduce demand.
The one caveat on everybody's mind was summed up by Ross: "Even an additional 1 million barrels a day would not be enough to prompt the oil companies to draw down inventories if they thought there would be new and unfavorable surprises in other OPEC countries."
Such a surprise might be a reduction in output by another OPEC nation, as was threatened recently by Libyan President Muammar Qaddafi, or sabotage of production. Pipelines from Iran's major refinery were damaged by explosions this week, halting that country's limited exports of refined products though leaving critical crude oil exports unaffected.
If all of the Saudi increase is made available to the four U.S. companies holding shares in Aramco, the partnership that operates the oil fields there, Exxon, Texaco and Standard Oil of California would each get and added 290,000 barrels a day. Mobil, with a small er 15 percent share, would get about 150,000 barrels (a barrel is 55 gallons).
Even if a portion is reserved by the Saudi national oil company, Petromin, for direct sales to developing nations, the increase may be enough to wipe out Mobil's worldwide crude deficit, which it has estimated at 8 percent to 10 percent of its needs. Last year Mobil produced and refined just over 2 million barrels of oil a day.
Exxon has pegged its shortage at a much larger 1.5 million barrels a day out of a total of 6 million. SoCal's shortfall is set at 485,000 barrels a day, but that estimate was based on "projected" demand, using projections made prior to the recent OPEC price increases.
If the United States gets its normal share of the Saudi increase, that would be about 350,000 barrels a day. In the "first 179 days" of this year, U.S.imports averaged 8 million barrels a day, the White House said.About 1.9 million of that was refined products.
Adding 350,000 barrels a day would leave the United States comfortably under the 8.5 million limit it agreed to at last month's economic summit meeting in Tokyo.
The gasoline shortage in Washington and some other metropolitan areas has been made worse by the allocation system imposed by the Department of Energy, which favors rural over urban areas.
The Saudis' stepup in production - which the White House said is based "on their historic friendly relationship with the United States" - may not be large enough "to overcome the allocation systen's distortions immediately," an administration economist warned. "Even if we have enough in total, there won't be any margin to speak of, and that system could still mean (the refined) product won't get where it's needed most," he said.