Most major oil companies, faced with indications that some distributors are hoarding petroleum as a hedge against a Persian Gulf war, said yesterday they are restricting the amount of fuel wholesale customers can buy.
The possible hoarding would reflect unnecessary panic buying, according to officials in the petroleum and transportation industries, because there appear to be plentiful inventories of gasoline, heating oil and crude oil.
Fairfax-based Mobil Corp. said today it had begun asking wholesale customers to limit their purchases to no more than the amount specified under existing contracts. Texaco Inc., Amoco Corp., Phillips Petroleum Co. and Citgo also have put similar restrictions into effect. Exxon Corp. said it was not restricting its wholesale customers' purchases.
Energy officials from the District, Maryland and Virginia met here this week to discuss possible odd-even day sales of gasoline and other contingencies in the event of war. But officials from the three jurisdictions stressed that a shortage would develop only if there is panic buying.
"We are awash in gasoline," added Eve Thorson, assistant operations officer for the Virginia Division of Energy, who attended Monday's meeting at the Metropolitan Washington Council of Governments (COG).
"We've got enough fuel to get us to hell and back again," said Thomas Donohue, president of the American Trucking Associations Inc., one of several industries reporting they have no problem with fuel supply.
"We do not have a worry at this time about the supply of fuel," said Edward A. Merlis, vice president for policy and planning of the Air Transport Association, spokesman for major airlines. Merlis said airlines have 25 percent more fuel in storage than a year ago.
"There's just no basis for any panic concern that there will be a physical shortfall," a senior executive at one major oil company said. "It just doesn't comport with the real world."
Despite the threat of war, the price of oil declined yesterday in trading on the New York Mercantile Exchange, dropping 71 cents a barrel to close at $30.07 after a run-up on Monday of $3.49.
But U.S. supplies have become ample in recent weeks. Yesterday, the American Petroleum Institute reported that U.S. gasoline stocks stood at 220.3 million barrels in the week ending Jan. 11 -- down more than 2 million barrels from the week before, but still comfortably above the minimum operating level of about 195 million barrels. Crude oil inventories rose slightly last week, the API said.
However, oil companies expressed fears that shortages could be created by panic buying.
"If we started to top our gas tanks, we could create allocation problems and price run-ups that the market normally would not see," said Larry Goldstein, president of Petroleum Industry Research Foundation, an analysis group. "The availability of supply should not be an issue as long as we can avoid the issue of hoarding."
"There is no need to rush out to the pump to cap off. All that will do is run up the price," said Sharon Cooke, public affairs chief of the D.C. Energy Office. "We have as much supply as we ever have had. There is no need for alarm or hysteria."
The new oil company limits generally apply to wholesale customers, such as gasoline dealers, distributors and large commercial customers such as trucking companies, limiting them to contract volumes or slightly above.
Phillips imposed a somewhat different plan, saying it would charge wholesale customers an extra 10 cents a gallon on purchases above contract amounts. "It is our intention to protect inventories destined for all our customers from possible hoarding by some at the expense of others," said Jack Howe, vice president of marketing at the Bartlesville, Okla.-based oil company.
Mobil said it was asking wholesale customers that buy gasoline and heating oil from company terminals to voluntarily limit purchases to the amounts specified in contracts with the company. Normally, wholesale customers can increase their "liftings" of supplies to 120 percent of contract volumes, Mobil said.
Mobil said it was taking the step "because some of its terminals have been hit by withdrawals greatly in excess of local demand for these products."
Mobil said it was asking the customers to limit their purchases voluntarily to avoid instituting stricter mandatory "allocations" of supply.
Staff writer Donald P. Baker contributed to this report from Richmond.