OIL: Summer Shortage

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The oil shortage began to pinch the Midwest last week. The major companies announced that they would have to ration dealers. Standard Oil Co. (Indiana) was first; in twelve central states it reduced gasoline deliveries 15%. Shell Oil, Phillips Petroleum and Socony-Vacuum quickly followed.

For the rest of the summer, at least, the Midwest will have no more gasoline than in 1946—and consumption is up about 15%. The Midwest felt the pinch first because the railroads, swamped by the bumper wheat crop, could not haul enough tank cars. The East Coast, supplied by tanker, is luckier.

Current U.S. consumption is 5,346,000 bbl. daily. Refinery output, because of inadequate transport for crude, is down to 4,662,000 bbl. a day. The Armed Services are also pinched.

The Navy said last week it does not have enough oil for an "emergency." Some Congressmen raised a hullabaloo over exports of oil to Russia, but these were a negligible factor. The services are short of oil chiefly because the oil companies: 1) get a better price from motorists than from bulk sales to the Government, and 2) are in a competitive "brand name" fight for the U.S. market. To eke out its supply, the Navy plans to import an extra 3,400,000 bbl. from the Persian Gulf.