Business: The Energy Shortage Worsens

INCREDIBLE as it seems in the resource-rich U.S., this summer's discomfiting electric-power cutbacks are likely to be only a prelude to many more pervasive difficulties. Part of the industrial U.S. is running short of the main sources of energy—coal, fuel oil and natural gas. Some forms of rationing have already been imposed, and more may be necessary if winter brings severe weather, strikes in crucial spots, pipeline breaks or new trouble in the Middle East. Though few, if any residential consumers may be asked to curtail their use of fuel or power, there is a possibility of factory closings.

The pinch is already affecting commerce and industry across wide segments of the East and Midwest. Last week the Tennessee Valley Authority disclosed that its normal 60-day stockpile of coal is down to a ten-to twelve-day supply overall, and to four days' worth at some of its thermal power plants. When the town of Braintree, Mass., sought bids recently for oil to run its generating plant for another year, none were submitted. Though there is plenty of natural gas available in the Southwest, the fuel has become so scarce on the East Coast that the Elizabethtown (N.J.) Gas Co. is turning away all new commercial and industrial customers. East Ohio Gas Co., which serves Cleveland and adjacent industrial centers, has turned down orders from steel, chemical and rubber companies for 27 billion cu. ft. of gas. The company has also warned that a severe cold spell will cause a repetition of last winter's shortage, when local factories had to close temporarily to provide enough gas to heat homes, schools and hospitals.

The Acute Phase. The fossil-fuel shortage, warns Chairman John N. Nassakis of the Federal Power Commission, is "the most acute phase of our developing energy crisis." The problem is complicated in some areas by inadequate generating facilities and a lack of pipelines and power grids to carry gas and electricity to industrial centers. "Never before in peacetime have we faced such serious and widespread shortages of energy," says John Emerson, an economist and power expert for Chase Manhattan Bank. Many analysts believe the problems will be temporary, but some maintain that the energy gap may limit economic growth for years to come.

At the very least, the shortages mean that consumers will be forced to pay more for electricity and heat. In its first "inflation alert," the President's Council of Economic Advisers noted that prices of industrial fuel oil rose at an annual rate of 48% during the first half of 1970. Bituminous coal prices climbed at an annual rate of 56%. As a result, the TVA recently posted a 23% increase in its electric rates.