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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Reagan, Ronald: Gubernatorial Papers,
1966-74: Press Unit
Folder Title: Issue Papers - Energy Crisis (1 of 2)
Box: P30
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
NROLLED BILL REF JRT
Form BD-44 (Rev. 12-73 4M
AGENCY
AUTHOR
BILL NUMBER
DATE LAST AMENDED
DEPARTMENT OF FINANCE
Warren et al
AB 1575
5/2/74
SUBJECT:
Bill declares legislative findings relating to energy resources. It established the State
Energy Resources Conservation and Development Commission in the Resources Agency. The Commis-
sion, which is to be a salaried commission, consists of five members from specified backgrounds
appointed for five-year terms by the Governor with the approval of the Assembly and the Senate.
In addition, the Secretary of the Resources Agency and the Chairman of the Public Utilities
Commission are ex officio, non-voting members of the Commission.
The bill provides for forecasting and assessment of energy demands and supplies, and for
conservation of energy resources by designated methods. Provides for a program of power plant
siting and certification of power facilities by the Commission. Certain facilities presently
in the planning stage are exempted. Requires the Commission to carry on a program of research
and development of energy resources, and provides for limiting the use of electrical and other
forms of energy under designated emergency conditions. The bill further requires that environ-
mental impact reports include a statement of measure to reduce wasteful, inefficient, and
unnecessary consuption of energy. The bill also provides a comprehensive program for energy
shortage contingency planning concerned with all types of energy and fuel resources.
The program outlined under the bill is to be funded through the State Energy Resources Conser-
vation and Development Special Account in the General Fund which is created in the bill.
Principal revenue in the account is derived from a surcharge of one-tenth of a mill per kilowatt
hour to the cost of electric power sold to consumers in the state. If necessary to support the
program after January 1, 1976, this amount may be increased to two-tenths of a mill. Adjustment
of the rate to be charged will be based on an action by the State Board of Equalization. The
surcharge rate is to be sufficient to provide the revenue necessary to fund expenditures from
the account appropriated by the Legislature in the Budget ACC for the 1975-76 fiscal year and
each fiscal year thereafter. The surcharge is to be collected by the utility and quarterly
payment will be made to the State Board of Equalization starting April 1, 1975.
HISTORY, SPONSORSHIP, AND RELATED BILLS
None
ANALYSIS
A. Specific Findings
This bill creates the State Energy Resources Conservation and Development Commission to be
established in the Resourtes Agency. The Commission would complement the work of the State
SUMMARY OF REASONS FOR SIGNATURE/VETO
This bill will initiate a comprehensive program to enable the State to develop a
long-range energy policy. The bill proposes development of information and research
on all facets of the power problem. The program is self-financed and annual review
of expenditures is provided.
RECOMMENDATION
SIGN THE BILL
DEPARTMENT REPRESENTATIVE
DATE
DIRECTOR
DATE
5:30:14
AB 1575
-2-
Public Utilities Commission and other energy related agencies and would not supplant
such bodies. The bill represents a major policy bill as it is concerned with the
identification of emerging trends relating to energy supply, demand, conservation,
public health and safety, and air and water quality standards.
The bill defines a comprehensive program of power plant siting and power facility
certification with an elaborate system of reports and public hearings. Certain
facilities presently in the planning stage are exempted. In addition, the program
provides for an elaborate system of research and information collection related to
all forms of energy resources including fossil fuels and nuclear, solar, and geothermal
sources. The Commission is also to be responsible for a program of energy shortage
contingency planning which will require each electric utility, gas utility, and fuel
wholesaler or manufacturer in the State to prepare and submit to the Commission a
proposed emergency load curtailment plan or emergency energy distribution plan. The
latter material will be used as the basis for public hearings to develop statewide
plans.
B. Fiscal Effect
This bill would provide its own financing through a surcharge of one-tenth of a mill
per kilowatt hour to the cost of electric power sold to consumers in the State. It
is reported that in 1969 there were 109 billion kilowatt hours sold, and in 1970 this
figure was 115 billion kilowatt hours. This would place revenue at $10.9 million in
1969 and $11.5 million in 1970. Current estimates place return from the surcharge at
$15 million to $16 million. Under the certification of electric generating facility
capacity fees for certification range from $1,000 to $25,000 based on net electric
production capacity. These resources all flow into a special account in the General
Fund.
No budget information is available at this time on which to base an accurate cost
estimate. Research costs could be substantial and the direct cost of the Commission
and staff will probably exceed $1 million. In addition, the State Board of Equalization
will incur unidentified costs in collecting the surcharge.
###
Energy
CONTACT:
Earl C. Parker
Sacramento, Calif.
(916) 445-0680
news
FROM THE OFFICE OF
Press Secretary
LT. GOVERNOR
eD Reinecke
PR - 39
Lt. Governor Ed Reinecke may deviate
from these remarks but will stand
by them.
HOLD FOR RELEASE - NOON, WEDNESDAY, MAY 1, 1974
SANTA BARBARA -- Lt. Governor Ed Reinecke today called
Assembly Bill 1575 "reactionary legislation" which creates an
official governmental body with widesweeping powers.
Speaking to members of the Santa Barbara Channel Club,
Peinecke said he opposes the energy resources bill "simply because
it creates a commission that could dictate our state's economic
future."
Reinecke said the control of the state's future should be
left in the hands of the private sector, and government should
maintain its checks and balances system established in the
Constitution between the legislature and the administrative branch.
"I am anazed that politicians seen to think the best answer
to an issue is to create a commission and give it the powers
reserved for elected officials," he said.
"In a sense, it is elected officials passing the buck to
appointed commissioners, and then elected officials don't have
to answer to the public for the tough decisions facing our state's
future," Reinecke said.
=2=
Reinecke also cited the state's Energy Planning Council
as an example of good government, as a council fought by the
Democratic-controlled legislature.
"They keep saying the Energy Planning Council has no
authority and that we need a powerful commission," Reinecke
said. "The truth of the matter is that the council has worked
and maintained a sound economy during the energy crisis, and
that it should -- like all such councils or commissions - not
have widesweeping powers, and function autonomously."
....
5/1/74/PR-39
Energy
State of California
ENERGY PLANNING COUNCIL
ELEVENTH AND L BUILDING, ROOM 704
1127 ELEVENTH STREET
CALIFORNIA
SACRAMENTO 95814
RONALD REAGAN
GOVERNOR
April 22, 1974
SUGGESTED OPENING STATEMENT FOR GOVERNOR
@ 4/23/74 PRESS CONFERENCE
I want to emphasize that the energy shortage is still with us. Increased oil
imports are reducing its severity but not eliminating the basic problem.
Demand has simply outgrown our ability to supply and process energy. Petroleum
refining capacity has not yet caught up with the significant new demand for
fuel oil created by the need to replace our drastically reduced natural gas
supplies. Where 50% of our electricity was generated by natural gas and only
7% by fuel oil just a short time ago, those percentages have now very nearly
reversed.
This means that less oil can be made into gasoline; Californians must continue
to observe the 55 mile per hour speed limit and to hold down unnecessary driving.
It also means that we must continue to conserve natural gas and electricity in
our homes, shops and factories. The less natural gas and electricity we use as
consumers the less oil the utilities will have to burn to generate electricity.
California has been fortunate in that this past winter was warm and wet. Hydro-
electric generation has been very high and we needed to burn less oil than
expected in the generation of electricity. We can't count on that happening
again next winter. The utilities will need all the oil they can store going
into next winter to assure an adequate supply of electricity.
I therefore urge all Californians to keep up their energy conservation efforts.
There will be enough gasoline, electricity, and natural gas for everyone's
needs but only if we use them carefully.
Wes
Energy
CONTACT:
Earl C. Parker
Sacramento, Calif.
(916) 445-0680
news
FROM THE OFFICE OF
Press Secretary
LT. GOVERNOR
eD Reineche
March 14, 1974
PR - 27
FOR IMMEDIATE RELEASE
SACRAMENTO -- Lt. Gov. Ed Reinecke has urged the federal
government not to exempt California owned crude oil from price
controls because "it is the responsibility of government
officials to resist inflationary forces."
The Federal Energy Office will hold hearings this week
on the recent decision to put a ceiling on the price of crude
oil sold by the state government.
Reinecke submitted a minority position to the Federal
Energy Office as one of three voting commissioners of the
California State Lands Commission.
Reinecke said he does not concur with the two other commissioners
that California should be exempt from price control.
In a telegram, Reinecke said:
"Exemption would increase cost to perhaps double the
controlled price and cost increase would pass directly to the
public who are the end users. Such price escalation contributes
only to inflation, and it is a responsibility of government
officials to resist inflationary forces.
(more)
- 2 -
"If the state is exempted, "Reinecke's telegram said,
"the increased revenues will result in higher prices at the
service stations. This increased revenue represents windfalls
not planned for in the budget. Under current California law,
use of state oil royalty revenues is restricted to specified
programs that are adequately budgeted under controlled price.
The price increase passed to the consumer is equivalent to a
tax imposed arbitrarily and without consideration by either the
legislature or the public.
"I urge strongly that state owned crude oil not be
exempted from price controls," Reinecke's telegram went on
to say.
"While I will continue to fight for adequate fuel for
California," he said, "I will not support actions which increase
prices and are inflationary.
"Open hearings on this issue are appropriate and I support
such hearings as a means to air the public's views," he concluded.
#
#
#
Executive Department
Energy
State of Colifornia
REGULATIONS FOR CALIFORNIA'S GASOLINE EMERGENCY
In light of the state of emergency now existing in the counties
of Los Angeles, Orange, Alameda, Contra Costa, Solano, San Mateo,
Riverside, Santa Clara and' Ventura, and pursuant to the authority
vested in me to promulgate, issue and enforce rules, regulations
and orders, I deem the following amended rules and regulations neces-
sary for the protection of life and property:
1. At the retail level, gasoline may be dispensed into
vehicles with a license plate whose last (or only)
digit is an odd number (1, 3, 5, 7 and 9) only on
odd numbered days of the month, that is, on the
first, third, fifth, seventh and so on. Environ-
mental license plates that contain letters only
will be equivalent to the digit 1. Examples of
odd number plates are as follows:
SAM 123
123 SAM
MARTHA
KAM 2345
12345J
J12345
2.
At the retail level, gasoline may be dispensed into
vehicles with a license plate whose last (or only)
digit is an even number (0, 2, 4, 6 and 8) only on
even numbered days of the month, that is, on the
second, fourth, sixth, eighth, tenth and so on.
Examples of even number plates are as follows:
SAM 132
132 SAM
DAVE 2
2 MARY
KMA 3456
01234J
J01234
W6ABC
3.
For any calendar month in which there are 31 days,
sales may be made on the thirty-first day of the
month without regard to the registration plates
of the motor vehicle.
4.
Gasoline shall not be sold to any vehicle that
has more than one-half tankful of gasoline. When
requested by the gasoline attendant, the customer
shall permit inspection of the fuel gauge with
the ignition key in the "on" position.
printed In CALIFORNIA OFFICE OF STATE PLINTING
Executive Department
State of California
5.
When dispensing gasoline to the general public,
gasoline retailers shall not refuse to sell gaso-
line to anyone, on appropriate odd or even days,
except to refuse to sell gasoline to vehicles
with more than one-half a tankful of fuel.
6.
No general hours or days of operation are required
by these regulations. However, each gasoline
retailer shall clearly post by signs legible from
off the premises his anticipated minimum business
days and hours of operation for dispensing gasoline.
COMMENT:
Individual retailers are the best judges
of the business days and hours that satisfy
their customers' needs, and are encouraged
to work out staggered hours of operation
in common marketing areas. All gasoline
suppliers are urged to refrain from estab-
lishing additional retail stations, and
are urged not to reduce the gasoline sup-
plies available to existing stations in
order to supply unnecessary new stations.
7.
Each gasoline retailer shall manage his monthly fuel
allocation so that it will last through the month.
COMMENT:
The need for maximum and minimum purchase limits
appears no longer necessary. Gasoline retailers
are discouraged from establishing maximum or mini-
mum purchase limits; however II limits are adopted
the retailer should clearly indicate these limits
by signs legible from off the premises.
8.
Each service station shall clearly indicate its gaso-
line supply and service situation by a sign or flag,
easily visible from off the premises. If the flag
system is used, the following will apply: Green
flag--gasoline available for the general public (on
appropriate days for appropriate license plates) ;
yellow flag--gasoline available for emergency vehicles
only; red flag--out of gasoline and/or closed. If
the sign system is used, it should state the fol-
lowing, or equivalent information: Gasoline avail-
able--emergency vehicles only-out of gasoline
and/or closed.
9.
The following vehicles are exempt from the-provisions
sections 1 and 2 of these orders:
Executive Department
State of California
at Emergency vehicles as defined in Section 165
of the California Vehicle Code:
a) Public transportation vehicles regularly used
to transport passencers which are buses, taxis
and vehicles rented for less than 30 days.
bt Buses regularly used to transport passengers,
as defined in Section 233 of the California
Vehicle Coder
b) Vehicles used for commercial purposes in the
judgment of the gasoline retailer (see attach-
ment A)
et Vehicles used for commercial purposes in the
judgment of the gasoline retailer.
c) Vehicles with out-of-state license plates.
d) U.S. Postal Service vehicles.
e) Vehicles operated by handicapped persons, who
have no practical alternative to auto trans-
portation, as designated by the following
license plate letters:
DPW 000 - 999
000 - 999 DPY
DPX 000 - 999
000 - 999 DPZ
DPY 000 - 999
VET 000 - 999
DPZ 000 - 999
VTN 000 - 999
000 - 999 DPW
VTR 000 - 999
000 - 999 DPX
000 - 999 VET
Vehicles with out-ef-state license plates are exempt
from the alternate day ban on gasoline purchases but
not from the one-half tank purchase prevision.
Operators of the above exempt vehicles are urged to
purchase gasoline only on appropriate alternate days
whenever possible.
10. The following vehicles are exempt from the provisions
of these orders:
a) Emergency vehicles as defined in Section 165 of
the California Vehicle Code (see attachment B).
b) Other emergency repair and service vehicles,
whether public or private, used for functions
directly related to the protection or life, prop-
erty or public health. c) Vehicles operated in
in an unusual emergency situation in the judgment
of the gasoline retailer.
11. At the retail level, gasoline may be dispensed into
separate containers only when necessary in the judg-
Executive Department
State of California
SECTION 165, DIVISION 1., STATE VEHICLE CODE
165. An authorized emergency vehicle is:
(a) Any publicly owned ambulance, lifeguard or lifesaving
equipment or any privately owned ambulance used to respond to
emergency calls and operated under a license issued by the
Commissioner of the California Highway Patrol.
(b) Any publicly owned vehicle operated by the following
persons, agencies or organizations:
(1) Any forestry or fire department of any public agency or
fire department organized as provided in the Health and Safety
Code.
(2) Any police department, including those of the University
of California and the California State University and Colleges,
sheriff's department, or the California Highway Patrol.
(3) The district attorney of any county or any district
attorney investigator.
(4) Any constable or deputy constable engaged in law
enforcement work.
(5) Peace officer personnel of the Department of Justice.
(6) Peace officer personnel of the state park system
appointed pursuant to Section 5008 of the Public Resources Code.
(7) Peace officer personnel employed and compensated as
members of a security patrol of a school district while carrying
out the duties of their employment.
(c) Any vehicle owned by the state, or any bridge and
highway district, and equipped and used either for fighting
fires, or towing or servicing other vehicles, caring for
injured persons, or repairing damaged lighting or electrical
equipment.
(d) Any state-owned vehicle used in responding to emergency
fire, rescue or communications calls and operated either by
the Office of Emergency Services or by any public agency or
industrial fire department to which the Office of Emergency
Services has assigned such vehicle.
(e) Any state-owned vehicle operated by a fish and game
warden.
(f) Any vehicle owned or operated by any department or
agency of the United States government:
(1) When such department or agency is engaged primarily
in law enforcement work and the vehicle is used in responding
to emergency calls, or
(2) When such vehicle is used in responding to emergency
fire, ambulance or lifesaving calls.
(g) Any vehicle for which an authorized emergency vehicle
permit has been issued by the Commissioner of the California
Highway Patrol.
Executive Department
State of California
OES RELEASE #7353
(amended)
On behalf of the Energy Planning Council, the Office of Emergency
Services announces the following clarifications of the Emergency
Gasoline Marketing Plan.
1.
Vehicles used for commercial purposes: These guidelines were
issued today for use by retailers in determining whether a
vehicle is used for commercial purposes.
A. Vehicles which by their design, size, or recognizable
company identification are obviously being used for
commercial purposes.
B. Vehicles which are owned and operated as part of a company
vehicle fleet as may be determined by company marking or
the vehicle's registration.
C. Individually owned vehicles used for commercial purposes,
as evidenced by the presence of specialized equipment,
instruments, tools of the trade or profession, supplies
or other material which cannot be readily carried by the
vehicle operator on public transportation, or any other
evidence that it is necessary to use the vehicle for
commercial purposes.
2. Doctors and Nurses: No blanket exemption is made for doctors
and nurses. However, when they are using their vehicles for
professional purposes (such as special calls) their vehicles
should be considered as those being used for commercial
purposes and when using their vehicles for emergency calls
they should be considered emergency vehicles. Physicians
and nurses are expected to do the same planning in fueling
their vehicles for private use as are other citizens. In
extreme emergency situations, they can call upon taxis,
ambulances, or the local law enforcement agency,
3. Appointments: "Sales by appointment only constitute discrim-
ination under Section 210.62 of the Federal Petroleum
Allocation and Price Regulations, unless he (the retailer)
conducted his business by appointment only prior to
January 15, 1972 in so far as he continues his pre-
existing practice."
4. FEO regulations also prohibit stations from selling exclu-
sively to commercial vehicles.
Executive Department
State of California
ment of the gasoline retailer. Such sales shall
be in the smallest practical quantity.
COMMENT:
Storage of gasoline in separate containers
in the trunk of automobiles is an extremely
dangerous practice.
12. Pursuant to the authority of Section 8665 of the Govern-
ment Code, any violation of these orders or regulations
is a misdemeanor and upon conviction, shall be punish-
able by a fine of not to exceed five hundred dollars
($500) or by imprisonment not to exceed six months or
by both such fine and imprisonment.
Ronald Reagon
Governor of California
Attest:
Edrand Secretary r of Brown State 2
Date: March 15, 1974
by may Deputy Secretary Cell of Will State
Energy
OFFICE OF GOVERNOR RONALD REAGAN
RELEASE: Immediate
Sacramento, California 95814
Clyde Walthall, Press Secretary
916-445-4571
2-27-74
#131
Governor Ronald Reagan today announced a mandatory marketing plan
for the sale of gasoline in California counties requesting him to
declare a state of emergency in their areas because of the problems
caused by the shortage of fuel.
The plan goes into effect March 1 in those counties that will have
requested it by 5 p.m. Thursday. (Counties that have made the request
up to now will be announced at today's press conference.)
"I would like to emphasize that this plan is only a temporary
measure," Governor Reagan said. "I am taking this action at the request
of a number of local government officials and gasoline retailers.
"The plan is designed to eliminate the long lines waiting for
service at gasoline stations and to protect the general public and
station attendants.
"There has been some violence and disruption of traffic at
scattered locations. I am hopeful that this marketing plan will
alleviate the problems caused by the shortage of fuel for both drivers
and station attendants."
The plan provides that service stations in the affected counties
will sell gasoline on even numbered days of the month only to customers
whose vehicle license plates end in even numbers. Customers whose
license plates end in odd numbers could purchase gasoline only on odd
numbered days of the month.
Personalized license plates that have no numbers will be considered
as odd numbers under the plan.
The plan will be enforced by local law enforcement officials.
Violations would be a misdemeanor upon conviction with a maximum fine
of $500 or six months in jail, or both. Citations would be issued to
violators.
Service stations will be required to clearly indicate their supply
of gasoline either by a sign or flag. If the flag system is used, a
green flag will indicate gasoline is available for the general public
(according to their license plates) ; yellow flags will indicate that
gasoline is available for emergency vehicles only, and red flags will
show that the stations are out of gasoline or closed.
-1-
#131
The plan permits individual retailers to set their own hours for
business and the days of operation. However, they will be required to
manage their monthly fuel allocations so they will last throughout the
month.
Emergency vehicles, buses and vehicles used for commercial purposes
are exempted from the plan. Vehicles with out-of-state license plates
are also exempted from the alternate day ban, but not from the half
tank provisions.
The plan urges all gasoline suppliers to refrain from establishing
additional retail stations and not to reduce existing supplies to open
any unnecessary new stations.
Governor Reagan offered the plan to the requesting counties under
the authority of the California Emergency Services Act.
# # #
-2-
Walthall
OFFICE OF GOVERNOR RONALD REAGAN
RELEASE: Immediate
Sacramento, California 95814
Clyde Walthall, Press Secretary
916-445-4571
2-25-74
#126
Governor Ronald Reagan today announced in Los Angeles that he
has directed Herbert Temple Jr., director of the Office of Emergency
Services in Sacramento, to immediately send the following telegram to
the boards of supervisors in the state's 58 counties (please note that
the governor's reference is to a "marketing system" as opposed to
rationing).
Text of the telegram:
"Governor Reagan will entertain formal requests from county
governments to proclaim a 'state of emergency' for that county in
order to exercise his emergency powers under the provisions of the
Emergency Services Act to establish a marketing system for more orderly
consumer purchasing of gasoline at the retail level.
"Upon receipt of the formal request from the county, the governor
will proclaim a 'state of emergency' implementing the plan generally
outlined below.
"The plan will become effective March 1, 1974 and will consist
of the following general provisions:
"(1) It will be mandatory;
(2) It will be based on alternate days of the month and odd and
even license plate numbers;
"(3) Gasoline will not be sold to vehicles whose fuel tanks are
more than half full. The details of this plan will be provided
tomorrow, February 26.
"It is requested that within 24 hours after receipt of this
telegram the local counties will either:
"(1) Declare their local emergency and request proclamation of
a 'state of emergency,' or;
"(2) Transmit to the director of the California Office of
Emergency Services their decision not to declare a local emergency.
"It is planned that local state teams will be established to
monitor the conduct of this program to include such functions as:
"(1) Provide assistance in resolving local government gasoline
retail and consumer issues which can be resolved at the local level;
=
(2) Identify problems related to the plan itself for transmission
to the California Office of Emergency Services to identify and
investigate distribution inequities within their counties;
-1-
#126
"(3) Coordinate a program of voluntarily staggered business
hours for retail service stations.
"It will be necessary that each county establish a control center
to provide for this monitoring of the program.
"A telephone number for this control center should be announced
and manned by competent persons to insure that citizens and the
private businesses concerned have a continuous source of information
and assistance. At the state level the emergency monitoring location
will be the Office of Emergency Services."
# # #
-2-
Walthall
OFFICE OF GOVERNOR RONALD REAGAN
RELEASE: 12 NOON FRIDAY
Sacramento, California 95814
FEBRUARY 15, 1974
Clyde Walthall, Press Secretary
916-445-4571
2-15-74
PLEASE GUARD AGAINST PREMATURE
RELEASE
#102
Governor Ronald Reagan today issued the following statement:
"I know I won't be telling you something new or unusual when I
say we haven't as much gasoline as we've been used to having in the
past.
"But our situation here in California through the next few months
is not an emergency. With a little care and consideration, we'll have
enough for all our necessary driving.
"Everyone can have about 80 percent of the gasoline we had before
the energy shortage. This means we each only have to hold down our
driving by 20 percent.
"Eliminating some unnecessary errands, doubling up now and then,
holding down speed should do it.
"There is no need for panic or panic buying with the long lines
we've seen on television. May I suggest not buying until you have less
than half a tank.
"We have a contingency plan but we'd rather not have to use it,
and we won't, if we all just eliminate one mile out of five. There
will be an adequate supply for everyone."
######
Walthall
OFFICE OF GOVERNOR RONALD REAGAN
RELEASE: Immediate
Sacramento, California 95814
Clyde Walthall, Press Secretary
916-445-4571
12-12-73
#597
Governor Ronald Reagan today announced that the following bill
has been signed:
AB 1969 - Moretti
Reduces the maximum speed limit for all vehicles in
Chapter 1218
California to 55 miles per hour, effective January
1, 1974.
#####
Garcia
good
TELEGRAM TO OIL COMPANY C.E.O.'s, 3/15/74
IN LIGHT OF CONTINUING DIFFICULTIES MANY PEOPLE ARE HAVING
IN OBTAINING GASOLINE I AM ASKING THE OIL COMPANIES TO
VOLUMBARILY OPEN THEIR COMPANY OWNED AND OPERATED STATIONS
ON SUNDAYS. SEVERAL HAVE ALREADY AGREED. I HOPE YOU WILL
JOIN THEM. PLEASE ADVISE ME WHETHER YOU ARE ABLE TO DO
so.
RONALD REAGAN
GOVERNOR
runny les for 5u
1. Fred L. Hartley, President and Chairman of the Board
Union Oil Company
P.O. Box 7600
Terminal Annex
5/23
Los Angeles, California 90051
2. James E. Lee, President
Gulf Oil Company
P.O. Box 1166
Pittsburg, Penn. 15230
3. R. F. Tucker, President
Mobil Oil Company
150 East 42nd
New York, New York 10017
4. W. F. Martin, President
Phillips Oil Company
18 Phillips Building
Bartlesville, Oklahoma 74004
5. H.W. Woodruff, President
Texaco Oil Company
3350 Wilshire Boulevard
Los Angeles, California 90010
6. M.A. Wright, Chairman and Chief Executive Officer
Exxon Oil Company
P.O. Box 2180
Houston, Texas 77001
7. Douglas Oil Company
D. J. McNutt, President
881 Dover Drive
Newport Beach, California 92660
8. T.F. Bradshaw, President
Arco Oil Company
515 South Flower Street
Los Angeles, California 90071
1). H. J. Haynes, Chairman of the Board
Standard Oil Company
225 Bush Street
San Francisco, California 94104
10, Harry Bridges, President
Shell Oil Company
P.O. Box 2105
Houston, Texas 77001
11. Ray Abendroth, President
Time Oil Company
2737 West Commodore
Seattle, Washington
12. V. H. Dolan
American Oil Company
P.O. Box 1099
Kansas City, Missouri 64141
STATEMENT OF CALIFORNIA GOVERNOR RONALD REAGAN
BEFORE FEDERAL ENERGY OFFICE
WASHINGTON, D. C.
MARCH 13, 1974
The State of California appreciates this opportunity to
appear today to present its views on the recent action of the
Federal Energy Office in revoking the state and local government
exemption from crude oil price ceilings.
This statement speaks primarily to the fiscal impact on
California of the FEO action. State Controller Houston Flournoy,
who is Chairman of the California State Lands Commission, will
present details on the restrictive effects on crude oil production
this amendment has had.
(Economic Impact on California)
Underneath the California tidelands exists a wealth of
oil which belongs to all the people of the state. Under car-
fully devised legislation, this is being exploited in two forms:
(1) oil and gas leases issued by the State Lands Commission in
which the state receives a royalty percentage - in money or in oil;
and (2) the net profits contracts system in the Long Beach tide-
lands in which the state and the City of Long Beach share the
profits of production with the operating oil companies.
In simplified terms, under present leases and contracts,
the State Treasury is entitled to the value of roughly 135,000
barrels of oil each day.
As everybody knows, the fair market price for domestic
crude oil right now is $5.00 per barrel above the FEO imposed
ceiling price. In California, and particularly on tidelands,
where gravities generally are lower than in the mid-continent,
this ceiling price is in the range of $4.25 and $4.75 per barrel.
Thus, the fair market value of California crude, as shown by the
exempt price, is currently over twice the ceiling price imposed
by FEO.
Applying this $5.00 per barrel differential to the daily
production from which California receives payment, it amounts to
approximately $650,000 per day or $230,000,000 per year.
Put more bluntly: The FEO action revoking the state's
exemption is costing the people of the State of California $650,000
a day - $230,000,000 a year.
Another vice of the FEO action is its retroactive effect -
not only is the exemption lost, but it was back-dated to October
25. This action alone wiped out over $55 million due the State
Treasury, and has put the State in the position of being re-
quired to pay back some money - claims so far of $1.3 million.
(California's Use of Tideland Oil Revenue)
Now the question has been asked, what would California
do with all this money? Two points are important:
First - the tidelands oil is a public asset - owned by
the people of California, and this oil is a depleting asset.
Once a barrel of oil is out of the ground it is gone for good.
Californians are entitled to receive fair market value for that
oil. The FEO ceiling price order deprives the people of Cali-
fornia of over half of that value, and at a time when California
(2)
tidelands oil production has reached its peak. A federal rule
which allows over half the value of oil to be kept by purchasers
cannot be considered in the public interest.
Secondly - since the creation of the State Lands Commission
in 1938, the California Legislature has recognized that tidelands
oil is a capital asset and has directed that oil revenue be
devoted to public capital projects. Initially this was the
acquisition of State park lands. In the late 1950's and the
1960's a large portion of this revenue was devoted to California's
outstanding Central Valley Water Project. $25 million of this
revenue is still used annually for this purpose. The balance
currently is devoted for capital outlay for California's
University and College systems. The City of Long Beach's share
of tideland oil has, of course, been used to help create a
modern and thriving port.
There have been suggestions that this new money be devoted
to energy related uses, such as rapid transit facilities as urged
by State Controller Houston I. Flournoy and the California
Legislature. This matter is currently under serious study and
revenue derived from a scarce and valuable public asset will be
used only for long-term and statewide public benefit.
(Roll-backs and the Consumer)
It has been suggested that to restrict California'a
oil revenue to ceiling prices would result in lower gasoline
prices at the pump. This requires two assumptions, neither
of which will hold up:
(3)
First, that the California public-interest oil is a
significant factor in the gasoline market. It is not. The
135,000 daily barrels of oil is virtually nothing against the
9 million plus barrels per day of crude oil production in the
United States, or the 17 million plus barrels of daily demand
in this country, or the 5 million plus barrels of imported crude
oil and products free from price controls. At least 40 percent
of all oil used in this country is not subject to price ceilings.
California's share is miniscule.
The second assumption is that any savings resulting from
an artificially restricted price impound on California's crude
oil will be passed on to the consumer at the pump.
As the President said in his message on vetoing the
Emergency Energy Act, roll backs on crude oil prices would result
in "minimal, if any, reduction in gasoline prices". If this
system created by the FEO worked perfectly, perhaps we could
have that result. We all know the system is not working perfectly,
and the FEO does not have the staff to make it perfect. As a
recent newspaper article pointed out, FEO has the use of 300 IRS
agents to check on the 225,000 service stations in this country,
and in checks on 20,000 of them, found 25% were overcharging.
There is no way of checking on whether this roll-back on State
crude oil prices would be passed through to the consumer at the
pump. If FEO could guarantee that result, California might re-
consider its position. California can guarantee you that the
(4)
$230,000,000, if received by the State, would be expended for
the public, the same people who are supposed to benefit by re-
duced prices.
(Federal - State Relationships)
Last September Governor Reagan created in California an
Energy Planning Council to cope with the energy crisis. This is
the agency that handles state functions under the Emergency Petro-
leum Allocation Act of 1973 enacted by Congress. The Energy
Planning Council and its staff have cooperated fully with its
Federal counterparts. The state has tried to work with the FEO
so that we can all do a job that must be done.
Despite this, we have seen the FEO divert gasoline supplies
to other states, saddle us with an excessive share of military
oil products demands, particularly when the military
could produce its demand from Elk Hills, and now this - cutting
off our revenue. Actions such as this, which was taken without
public notice and without public hearing, place an intolerable
strain on our system of federalism. California believes an action
of the Federal government which will have such an adverse effect on
staete government and will override well established state policy,
deserves far greater consideration and public airing than was
given in this case. Fair treatment for the 20 million people of
the State of California requires that the FEO action of February
21, 1974 be immediately repealed and the state and local government
exemption be restored.
Thank you for this chance to express our grest concern over
the action taken by the Federal Energy Office.
(5)
Energy
CABINET ISSUE MEMO
To:
Governor Ronald Reagan
Date: December 17, 1973
From: Public Utilities Commission
No. : PUC 73-12
Signed
Originated
By
By VERNON L. STURGEON
President
ISSUE: Should the Governor evoke powers granted him by the
Emergency Services Act to declare a statewide electrical-energy
emergency and to order temporary relaxation of state air pollution
standards to allow the burning of higher sulphur fuel oil solely
for the generation of electrical energy.
FACTS: It is established that several municipally-owned electrical
utilities serving significant population centers= are faced with
oil supply shortages by the middle of January 1974 which will force
curtailment of electrical generation by as much as 80%. Curtail-
ment of this magnitude would produce dire health, safety and
economic consequences for those affected. It is also established,
however, that these utilities have prospects for obtaining
significant quantities of conventional fuel oil (up to one year's
supply for one) which are not useable under current air pollution
restrictions regarding sulphur content.
DISCUSSION: Relaxation of the state air-quality restrictions which
limit fuel oil for electric generation to .5% sulphur content is
far preferable to requiring other utilities to give up some of
their own inadequate supplies of scarce low-sulphur oil, because
the former action would, in effect, increase the total supplies
available to all, rather than further reducing the already
diminished supplies of the other utilities. It appears also that
insufficient time exists to allow the normal variance procedures of
the ARB to run their course and allow this result prior to the dates
projected for curtailment.
RECOMMENDATION: That the Governor take action by executive order
accomplishing the purposes discussed herein. A form of executive
order is attached for further reference.
1/ Cities of Burbank, Glendale and Pasadena.
GOVERNOR'S OFFICE
State of California
EXECUTIVE ORDER NO.
WHEREAS, it has been established that several electrical
utilities serving significant population centers in this state are
faced with the prospect of major curtailment of electric generation
by the middle of January 1974 as a result of inadequate supplies of
fuel oil meeting the applicable air quality restrictions imposed by
this state through order, regulation or otherwise; and
WHEREAS, curtailment of electric generation in the magnitudes
projected would constitute a condition of disaster and of extreme
peril to the safety of persons and property in the areas affected;
and
WHEREAS, such utilities have specific prospects for obtaining
additional quantities of fuel oil which could prolong significantly
the date at which such curtailment would otherwise occur, but which
because of its sulphur content is not usable under current air
quality restrictions imposed by this state; and
WHEREAS, the normal administrative procedures for obtaining
permission to utilize such supplies of fuel oil for electric
generation may not be sufficiently expeditious to enable the swift
confirmation and utilization of such supplies; and
WHEREAS, supplies of fuel oil available to other utilities
in this state which meet the applicable air-quality standards
regarding sulphur content are also inadequate to meet the minimum
requirements of such utilities; and
WHEREAS, I am empowered under Article 3 of Chapter 7 of the
Government Code (California Emergency Services Act) to amend or
rescind all orders and regulations necessary to carry out the
provisions of that Act;
NOW, THEREFORE, IT IS HEREBY ORDERED that any restrictions,
limitations or other regulations or orders imposed by any state or
local agency regarding the permissible sulphur content of fuel oil
suitable for the generation of electricity are hereby suspended for
a period of ninety (90) days or until such time as legislation is
adopted which would allow a continuation of such suspension for the
duration of an energy emergency as defined in such legislation.
Date: December
, 1973.
RONALD REAGAN
GOVERNOR OF CALIFORNIA
Management Bulletin
From the Office of Governor Ronald Reagan
November 26, 1973
MF 73-18
Cayde Walkhall
Energy
TO: HEADS OF AGENCIES, DEPARTMENTS,
MAJOR UNITS AND OTHER KEY PERSONNEL
SUBJECT: Information Coordinator for Energy Planning Council
Proposals for news releases regarding Energy Planning Council
activities or proposals not yet approved by them should be
coordinated with the chairman (Lt. Governor Reinecke).
Mr. Robert Hardgrove has been temporarily assigned to the
Lt. Governor's Office to coordinate information releases for
the Energy Planning Council and with the Governor's Office.
Departments proposing news releases should recommend whether
the release should be issued by the Energy Planning Council
Chairman (Lieutenant Governor), Governor, Agency, or
Department.
Media calls for information on energy-related matters approved
by the Council should be hundled by the cognizant Agency or
Department.
Whinache
ED REINECKE
Acting Governor
DEPARTMENT THE CALIFORNIA
Management Bulletin
XXXIII
From the Office of Governor Ronald Reagan
MF 73-19
November 27, 1973
AS a result of Executive Orders R 45-73 and R 46-73 being
issued earlier this week, enclosed are two Governor's
Memos 73-1 and 73-2 implementing the necessary action by
your department.
Please review carefully and make every effort to see
that the action necessary to carry out the intent of
the Governor's directives is strictly observed in your
department.
BY DIRECTION OF THE GOVERNOR:
EDWIN MEESE III
Executive Assistant
to the Governor
Attachments
State of California
Memorandum
: HEADS OF AGENCIES, DEPARTMENTS,
Date : November 26, 1973
MAJOR UNITS AND OTHER KEY PERSONNEL
Subject: Automobile Speed Limits
73-1
From : Governor's Office
As you know the country is facing a very real energy shortage
this winter, and it behooves each of us to do everything possible
to assure that enough fuel is available for our true needs in the
coming months. We in State Government must set an example for
all citizens of California, therefore, I have today signed
Executive Order R 45-73. As a result, the State of California
will voluntarily reduce the maximum speed of State vehicles to
50 miles per hour. Only vehicles driven by law enforcement
personnel or those being operated in an emergency situation may
exceed this limit.
The State had in service last year approximately 16,000 units
traveling a total of 398,457,000 miles. Using this experience
as a base for analysis, by reducing vehicle speed to a maximum
of 50 miles per hour we can reduce the State's consumption of
gasoline 10 percent.
Local government is being advised of our action for continuing
fuel conservation and I am encouraging them to adopt the above
guidelines.
I request each of you as administrators to advise your employees
of this action.
Sincerely,
Ed Mir who
Ed Reinecke
Acting Governor
DISTRIBUTION: ABCDEXFSGHIJKLRMNOP MM
State of California
Memorandum
:
HEADS OF AGENCIES, DEPARTMENTS,
Date : November 27, 1973
MAJOR UNITS AND OTHER KEY PERSONNEL
Subject: Gasoline Gallonage and
Mileage Restrictions
73-2
From : Governor's Office
I have today signed Executive Order R 46-73, which mandates
each state agency will reduce the mileage driven on state
business from that recorded in the 1972-73 fiscal year by 10%.
Mileage of both state-owned automotive pool passenger vehicles
and privately owned passenger vehicles shall be included. Our
statistics show that state employees now drive 398,457,000 miles
and use 26.5 million gallons of gasoline annually.
In addition, I request that a careful evaluation of need for
each trip be made to further conserve fuel. Only those trips
clearly to the benefit of the State which must be made by
vehicle are appropriate. I ask that you carefully plan your
trips to include a number of stops or meetings wherever possible
in preference to making a number of single purpose trips. Car
pools should be created whenever practical from a fuel stand-
point. I therefore, direct that each person carefully evaluate
any proposed trip.
Your assistance in helping to make a 10% reduction in mileage
driven during the 1973-74 fiscal year is greatly appreciated.
Sincerely,
Ed Min who
Ed Reinecke
Acting Governor
DISTRIBUTION: ABCDEXESGHIJKLRMNOPMM
August 1, 1973
ENERGY POLICY ISSUES
Agriculture and Services Agency
Issues
Action taken by Cabinet
a-1 Shall air conditioning be prohibited in
1. Agriculture and Services shall review the State's
new cars?
policies on purchasing State vehicles with air
conditioners. The review shall include outlining
the geographical areas of the State where vehicles
are purchased with air conditioners and what effect
would result if the State discontinued these policies.
2. Agriculture shall determine to what extent the State
can influence manufacturers into developing more
efficient air conditioners.
a-2 Utilize advanced communication techniques
to reduce travel, where feasible.
1. Agriculture and Services is to investigate the
facilities available in order to expand conference
calls on the ATSS telephone lines.
2. Agriculture and Services is to develop additional
information on the feasibility of utilizing closed
circuit television between Sacramento, San Francisco
and Los Angeles. This study would include summarizing
the state-of-the-art for using closed circuit TV today,
costs involved, availability of equipment, and if it is
not available now, when it will be available for use.
a-3 Revision of State policy for leasing
1. Agriculture and Services is to write a Cabinet issue
buildings to include establishment of
which accepts the recommended policy.
minimum energy efficiency standards to be
met before a building can be leased by
the State.
a-4 Replace gas-fired pilot lights with electrical
1.
Public Utilities Commission is to give the results of its
starting devices.
energy hearings to Agriculture and Services for review.
After its review, Agriculture and Services shall write
a Cabinet issue for discussion on this matter.
2
-2-
a-5 Reduce packaging to conserve energy
1. Resources Agency will work with the Department of
Agriculture, Consumer Affairs and Public Health to
compile additional information on this subject in
order to prepare a report to Cabinet. (no deadline
set for presenting this report)
a-6 Set minimum energy performance
1.
The Office of Planning and Research will work with
specifications on all buildings in the
Agriculture and Services in preparing a Cabinet issue
State as a condition for granting building
which supports Senators' Alquist and Gregario's
permits.
bill number SB 144.
a-7 Initiate a massive public educational
1. Agriculture and Services is to prepare a Cabinet
program to encourage lower thermostat settings
issue which implements this recommendation.
in the winter and higher thermostat settings
in the summer.
2. Agriculture and Services, working with the Department
of Public Health, is to investigate lowering the
lighting standards for State buildings.
a-8 Prohibit the use of electricity for
1. Agriculture and Services is to prepare a Cabinet
resistive space and hot water heating
issue which would establish minimum performance standards
on new installations.
in all new air condition units except those installed
in motor vehicles.
Business and Transportation Agency
Issues
Action taken by Cabinet
b-1 Limit the maximum speed to 50 MPH
1. Business and Transportation is to gather additional
on highways.
information on reducing the speed limit; in particular,
obtain input from private sectors such as trucking
industry on potential energy savings V. costs.
b-2 Encourage voluntary car pooling.
1. Business and Transportation is to implement the
recommended policy, wherever possible. (no mention
of Business and Transportation preparing a Cabinet
issue)
b-3 Expanding the bus systems.
1. Business and Transportation is to continue its
present efforts on this matter and to prepare a
progress report summarizing its efforts for the
Cabinet's review.
b-4 Establish bicycle lanes and paths.
1. Business and Transportation is to continue its
present departmental policies for non-motorized
facilities for bicycle use.
Business and Transportation is also to prepare
a progress report summarizing its efforts on this
matter. (no mention of deadline for presenting
this report to Cabinet)
b-5 Develop taxes and other incentives
1. Business and Transportation is to compile additional
designed to reduce the weight of the
information for further discussion of this issue by
automobile.
the Cabinet.
b-6 Use gasoline tax funds for rapid transit.
1. Cabinet accepted the recommendation which deferred
any action until September, 1973.
b-7 Establishment of a ceiling on per capita
1. Cabinet agreed to delete this issue by requesting
transportation.
no further study be conducted nor any recommendations
be proposed.
Resources
Issues
Action taken by Cabinet
r-1 In view of large potential reserves and
1. Resources Agency is to modify the recommendations
recent advances in drilling technology and
presented so that safety factors are included and
safety equipment, should the offshore
additional information on the four recommendations
petroleum reserves be developed?
is provided.
2. After the recommendations have been modified to
include the suggestions just listed, Resources Agency
is to prepare a Cabinet issue.
r-2 Should California accomodate the vastly
1.
The Division of Oil and Gas is currently coordinating
higher level of necessary imported petroleum
all comments submitted to them.
by construction of deep water ports and, if so,
This report will be available for Resources Agency's
where?
review not later than August 10, 1973. At that time
the development of a Cabinet issue on this subject
should be considered by the Resources Agency.
r-3 It has been estimated that through primary,
1.
Resources Agency needs to change the recommendation
secondary and tertiary recovery techniques
reading "increase the depletion allowance" to
the State has a potential onshore oil and gas
"continue present depletion allowance".
reserve of 16 billion equivalent barrels.
How can the State encourage full development
2.
Additional information on the other recommendations
of this reserve?
presented needs to be gathered by the Resources Agency
and presented to the Cabinet for further discussion.
Summary of Cabinet actions prepared
by the Office of Science and Technology.
MEMBERS OF THE ENERGY PLANNING COUNCIL
1. Lt. Governor Ed Reinecke
State Capitol Rm. 209
phone 445-9533
5-9686
2. Ed Meese
Executive Assitant to Governor Reagan
State Capitol , First floor
phone 445-2841
3. Vernon Sturgeon
President of the Public Utilities Commission
350 McAllister Street
San Francisco, Cal. 94102
557-2440
4. James Stearns
Secretary of the Agriculture and Services Agency
1220 N St.
Phone 445-1935
5. Earl Brian
Secretary of Health and Welfare
915 Capitol Mall Rm. 200
phone 445-6951
6. Verne Orr
Secretary of the Department of Finance
State Capitol Rm. 1145
phone 445-4141
7. Norman B. Livermore
Secretary of the Department of Resources
1416 9th St.
phone 445-5656
8. Frank J. Walton
Secretary of the Business and Transportation Agency
1120 N. St.
phone 445-1332
9. Earl Davis
Coordinator of the Commission of Science and Technology
1416 9th St. Rm. 1311
phone 445-4422
10. Robert DeMonte
Director of the Office of Planning and Research
1400 10th St.
phone 322-2318
11. Wesley Bruer
Coordinator for the state Energy Planning Council
1416 9th St. Rm. 1310
phone 422-3600
BRIEF ANSWERS TO CRITICAL QUESTIONS ON THE CURRENT PETROIEUM SHORTAGE
1) QUES:
Why is there a shortage of petroleum products?
ANS:
The two largest Arab exporting countries, Saudi Arabia and Kuwait,
have reduced production and in conjunction with their Arab neighbors
barred exports directly and/or indirectly to the U.S.
2) QUES:
How great is the present shortage?
ANS:
We estimate that the supplies available are about 100,000,000 gallons
per day (12-13%) below the normal demand level.
3) QUES:
Why is the shortage greater in certain areas of the country?
AND:
There is no single reason. The Federal Energy Office has directed the
companies to supply gasoline based upon 1972 sales, and in many
instances the 1972 sales do not reflect the present needs of that
section of the country.
4) QUES:
Will the gasoline shortage get worse?
ANS:
Probably. Increased driving normally occurs in spring and summer and
will cause supplies of gasoline to become even tighter.
5) QUES:
Will ample supplies be available when the Arab embargo ends?
ANS:
The current supply crunch will ease, but we do not foresee & return
to the virtually limitless supplies of the past. When the Arab
embargo ends, it will be at least 6 weeks before the crude will reach
U.S. distribution levels.
6) QUES:
Why have the prices of oil and gasoline risen?
ANS:
The primary one is the increased cost of both foreign and domestic
crude.
7) QUES:
Are the major oil companies forcing the independents out of business?
ANS:
MOBIL has not and is not. The Federal Energy Office requires MOBIL to
supply petroleum to all customers it serviced in 1972.
8) QUES:
Are gas stations closing?
AIS:
Yes. Marginal operations historically fail or are closed.
9) QUES:
Why are the independent oil companies' prices for heating oil so
much higher than those of the major oil companies?
ANS:
The major oil companies have relied primarily on domestic product,
whereas, many of the independents have relied primarily on foreign
imports. In order to compensate for the enormous increase in
foreign costs, the independents have been forced to raise their prices.
10) QUES:
Why have oil company profits risen in the past year?
ANS:
MOBIL's increase was attributed primarily to its operations outside
of the U.S.
11) QUES :
Why did the energy crisis hit us all at once?
ANS
The shortage of petroleum has been building for a number of years,
but it was the Arab embargo that suddenly brought it to an acute state.
12) QUES:
Are their enough refineries in the U.S. to meet requirements?
ANS:
No.
13) QUES :
What is the long-range outlook for the U.S.?
ANS :
The long lead time required for the development of energy resources
whether they be nuclear, coal or petroleum makes it doubtful that
this country will achieve energy self-sufficiency even by 1985.
14) QUES
Does MOBIL favor gasoline or "end-use" rationing?
ANS:
The problems faced by the public in some areas of the country
have reached intolerable levels. MOBIL believes that if the
problems increase, there will be a need to implement federal
gasoline rationing.
QUESTIONS AND ANSWERS CONCERNING ThE ENERGY SITUATION
These questions have been developed by Mobil in an effort to highlight
issues most frequently raised by the media, government officials and the
public.
The answers are based upon the most current data and information available
to Mobil and will undoubtedly require review and revision soon after
publication.
1) Why is there a shortage?
Initially the shortage was the result of the Arab oil embargo super-
imposed on an already tight and tightening supply situation. Saudi Arabia
and Kuwait have barred exports directly and indirectly to the United States
and certain other countries. In mid-October, these two countries reduced
their production by 25% (later relaxed to a 15% cutback.) The reduction
was made at a time when the world demand was entering the peak demand
winter season. These production cutbacks have limited supplies to the
great majority of importing countries worldwide, whether embargoed or not.
The result was a desperate rush for crude by major consuming countries.
Although the embargo commenced in October, the full impact was not felt
in the United States until January because of supplies in transit.
Since early February, the crude allocation program adopted by the Federal
Energy Office may be contributing significantly to the U.S. crude oil
shortage. This program provides a disincentive to U.S. refiners, both small
and large, to seek overseas crude for import into the U.S. This results
because under the program refiners who have elected to reduce imports of high
priced crude to give them below average crude availability are permitted to buy
lower priced crude domestically. One company has instituted a court challenge to
the program. Mobil, on its part, is continuing its efforts to make imported crude
available, in spite of the requirement to sell nearly 2,000,000 gallons daily of
crude to other companies. This is nearly 6% of our total availability of crude
for our refineries.
2) What is the extent of the current shortage of petroleum products?
On the basis of projections before the embargo began, we estimated that
the country would be consuming about 800 million gallons of all petroleum
products every day this winter. We estimate that the supplies available are
only 700 million gallons -- about 100 million gallons a day (about 12-13%)
below the normal demand level. The reduction in petroleum supplies is entirely
from imports -- a one-third reduction in the total U.S. imports that would
have been required. This import shortfall covers both crude oil and finished
products.
3) Why are some areas shorter of gasoline than other areas?
There is no single answer to this question. The Federal Energy Office
required oil companies to supply agricultural users with their full require-
ments. Certain other classes of customers such as emergency and transportation
services receive preferential allocations. The major portion of the shortage
is borne by service stations.
The preferential allocation to agricultural users is clearly essential to
maintain food production, and has probably tempered the shortage in rural
areas. Furthermore, less long distance driving has probably reduced the
demand by transients in the rural areas.
Conversely, the suburban and urban areas have generally been much tighter in
supplies. Shortages have been particularly severe in areas of fast population
growth, since these areas do not receive any higher relative allocation than
areas of more modest growth. Speed limits are normally low in more densely
populated areas, therefore, savings in gasoline consumption resulting from the
55 mph speed limit would also be less in these areas.
There are many other reasons. Less vacation driving has resulted in less
demand in some locations on vacation routes. In some areas of the country,
withdrawal from marketing by some companies has clearly intensified local
shortages. In suburban areas there is probably a virtually irreducible
minimum requirement to meet established living and commuting patterns.
When this level is reached, service station run-outs become widespread.
The Federal Energy Office has the obligation to allocate products between
states. The FEO has moved to increase allocations to the most critically
short areas. This is being done by inventory drawdowns which are at
relatively low levels and this will reduce future availabilities for the
higher driving spring and summer periods.
4) Will the gasoline shortage get worse?
We expect that as the peak driving months approach the supplies of gasoline
will become tighter. Historically, gasoline consumption has been about 4%
higher in March than in February -- gradually increasing to about 15%
higher in July and August than in February.
Refineries were maximizing heating oil in the fall and winter to insure no
one went cold. With the help of a warm winter, this has been achieved.
In February, Mobil moved to maximum gasoline production. We believe most
other companies have. However, estimated industry crude supply availability
to refineries as reported by the Federal Energy Office for allocations are
only 76% of refinery capacity for the February through April period. Even
with every effort to maximize production, there may not be enough gasoline
to go around.
If the gasoline supply situation continues to worsen, rationing would seem
a preferable solution to the increased disruptions now occurring.
5) What gasoline volumes will Mobil supply to California in March?
Mobil's crude runs have been limited to 76% of capacity by the FEO
allocations. On the basis of the allocation regulations Mobil had planned
to supply 67.5 million gallons of gasoline to California in March. This
would be equal to 94% of our March gasoline sales in 1972 and 91% of our March
gasoline sales in California in 1973, and is based on an allocation fraction
of 87% for gasolines. We are now reviewing our supply program in light of
the recent 10% supplemental gasoline allocation given by the FEO to 28 states
in late February to determine if it will be possible to continue allocations
at the 87% level throughout March. However, we will be able to supply diesel
fuels and heating oil on the basis of a 100% allocation fraction.
6) Will ample supplies be available when the embargo ends?
Mobil is not in a position to forecast the timing of the end of the
embargo. However, even at the end of the embargo, the necessary tanker
voyages will mean perhaps six weeks or more before crude can reach the
United States from the Persian Gulf and another week or longer before it
can be refined and moved to consumers.
We do not know at what level the Kuwait and Saudi Arabia Governments will
set future production levels. There are reasons to believe they will not
allow production to increase to the levels required to sustain the growth
in oil demand that the world experienced the past few years. These
countries, and many of the other crude exporting countries, may be unable
to spend the income they would be receiving. Furthermore, they may want to
preserve some of their petroleum reserves for their income in future
generations. Kuwait, with an average per capita income approaching that
in the United States, is reported to be considering a further production
cutback.
With an end to the embargo, the current supply crunch will ease, but we do
not foresee a return to the virtually limitless supplies of the past.
7) Why have prices of oil risen?
The oil industry is subject to rigid price controls. Under these control
formulas, oil refiners are only permitted to pass on the increased costs of
domestic and foreign crude oils and to pass on cost increases on imported
products. Larger increases are not permitted.
The increased costs of crude oil are the primary reason for the increased
costs of products. For example, during 1973 a typical Persian Gulf crude
increased from about $2.32/bb1 to $4.83/bb1 by December. Further increases
in 1974 of at least another $4/bbl have already occurred. U.S. crude oil
production has also increased in price. Under price control formulas the
maximum price of nearly three-fourths of U.S. crude production is
established and now averages about $5.25/bbl. This level is about $1.00/bbl
higher than the level last summer.
In an effort to stimulate additional production, some crude oil was freed
from price control by the Congress and by the Federal price control
authorities. This crude includes oil from very low production wells
(called stripper wells), oil from new oil fields, and oil from fields where
production has been increased.
The demand for crude much exceeded supply, and by December the oil which
was exempted from price controls increased to $10.00/bbl or more. Congress
now has under consideration the roll back of exempted crude prices.
In late 1973, the worldwide shortage of imported product led to even more
rapid increases in the free market price of product than of crude. For
example, last summer heating oil cost 24¢/gallon in Rotterdam; by late
November the price had increased to over 70¢/gallon.
8) Are the major oil companies forcing the independents out of business?
Mobil has not and is not forcing any independent out of business. Under
the allocation procedures of the Federal Energy Office, Mobil is required to
sell to all customers we supplied in 1972. Moreover, while Mobil sells some
product direct to customers, the great majority of Mobil sales are through
independent distributors and service station dealers who are independent
businessmen in every sense of the word.
9) Why has Mobil closed down service stations?
Over the years, it has been Mobil's policy to close down service
stations that were no longer viable. For example, changing traffic patterns
or the construction of competitive stations made these stations unattractive.
In developing suburban areas and along new traffic arteries Mobil has
constructed new stations. In 1973 Mobil sold nearly 7% more automotive
gasoline in the United States than we sold in 1972.
10) Why have the oil company profits risen so in the past year?
Mobil can only speak for its own profits. In 1973, Mobil's profits did
increase by 47%, but the increase occurred primarily from our operations
outside of the United States. Many foreign currencies increased in value
in 1973 and thus when expressed in dollars these earnings contributed
"significantly to Mobil's improved profit.
We believe the fairest means of analyzing earnings is in relation to the
shareholders' investment. On this basis, Mobil's 1973 earnings in the U.S.
did not reach the level achieved in 1968 through 1970 as is summarized below:
Mobil Return on Shareholders' Investment - %
U.S.
Foreign
Total
1968
10.4
11.4
10.8
1969
10.8
10.9
10.9
1970
10.1
12.0
10.9
1971
9.3
14.2
11.5
1972
9.2
14.1
11.5
1973 (estimated)
10.0
21.3
15.5
Reports prepared by the Federal Trade Commission indicate that petroleum
refining has earned a lower return, on average, than the total of all
manufacturing industries in the United States during the past 10 years.
11) Why did the energy crisis hit us all at once -- who was responsible?
The Arab embargo triggered the petroleum shortage --- but it has been
developing for several years.
The fault does not lie with petroleum alone. Other forms of energy used in
the country have peaked out or even declined in the last few years. Coal, our
most abundant natural resource, has dropped in use over the past few years--
partly because of environmental restrictions, partly because increased costs
no longer made it economic to produce from some mines. Low natural gas prices
stimulated consumption and discouraged exploration. As a result, natural gas
production has peaked out. Environmental considerations delayed nuclear power
plants. As the economy grew, oil was called upon to meet virtually the entire
growth in energy, and is now required to meet nearly half of our country's energy
requirements. Pollution abatement controls were further increasing petroleum
consumption.
At the same time, environmental pressures delayed the Alaskan pipeline. If
it had been started when initially proposed, it could now be supplying volumes
equal to nearly one-half of our current shortage.
Moratoriums in 1959 and 1970 on offshore exploration on our continental shelves
denied the U.S. of further supplies which would now be coming on stream.
It seems to us clear that the blame cannot be placed in any single place. The
oil industry warned of some of the dangers, but did not foresee the magnitude
or the timing of problems that would be forthcoming. We believe the most
important single failure of the nation has been the absence of any consistent
Federal policy to ensure the adequacy of all energy supplies.
12) Does the United States have enough refineries in the U.S. to process our
crude?
In terms of the crude oil available right now during the embargo, the
answer is yes. However, we do not have enough refining capacity for all the
crude oil we produce here, plus what we normally import.
Assuming the Arab embargo is lifted, we expect demand for petroleum products
in 1974 and 1975 to grow faster than announced refinery additions. We will
have to supplement imported products -- as we have in the past.
However, by 1977, the U.S. can begin to reduce its reliance on imported product,
if we have stability of government import and price policies and better public
acceptance of the fact that our nation's own best interests are served when we
are permitted to locate refineries close to market areas.
The shortfall in U.S. refinery capacity has resulted primarily from past U.S.
government policies. Many areas outside the U.S. have welcomed refineries.
Some also had natural deepwater ports or have encouraged the construction of
superports to accommodate tankers far larger than can be handled at any U.S.
port.
To some companies, the attractions of building refineries abroad to supply
U.S. markets has been very great. As for Mobil, we have chosen instead to
expand our refinery capacity here at home to meet U.S. demand. In 1973, we
completed a new 160,000 barrel/day refinery in Joliet, Illinois.
The new U.S. energy policy announced last April encourages locating refineries
in the U.S. by making it economically advantageous to import crude oil rather
than finished products. In response to the new program, the oil industry has
announced more than 3 million barrels/day of refinery expansions. Mobil has
announced the intention to more than double the size of our Paulsboro, New
Jersey refinery.
13) What is the longer range outlook for the U.S.?
The long lead time required for the development of energy resources will,
we believe, preclude any quick achievement of energy self-sufficiency.
Increased use of nuclear power and our abundant coal resources will provide
one means of increasing self-sufficiency. However, it now takes us seven to
eight years from planning to completion of a nuclear plant. Coal mines take
three to five years to complete.
The development of an offshore oil field may take five years from initial
exploration efforts -- and we, as a nation, have not as yet agreed to proceed
with offshore exploration in areas with potential such as the Eastern Seaboard.
Recovery of oil from the shale-oil deposits of the West and production of
synthetic oil from coal will take even longer. Research and small-scale
plant operation must yet be completed before a commercial plant can be
constructed. It is unlikely that these sources of energy can make a significant
contribution to our needs before the mid-nineteen eighties.
In this situation, we believe obtaining energy self-sufficiency by 1980 is
unrealistic. Even by 1985, self-sufficiency may well prove to be optimistic.
Clearly, the United States urgently requires an energy policy that establishes
our goals within the framework of other national priorities. The petroleum
and other energy industries must have a stable regulatory climate with clear
groundrules established if they are to provide the investments which will be
needed to provide the required energy resources.
Marketing Data
I. Mobil Market Position: Gasoline a. 8.6%
No. 2 H.O. - 1% (est.)
II.
Mobil Retail Outlets (As of 12/31/73) :
Company Owned/Leased
(1)
1372
Dealer Owned/Leased
872
Distributor Supplied
8
Total
2252
(1) of which 51 are Mobil Operated on a
salary basis-
III. No. Of Mobil Stations Closed In 1973:
92
Annual Volume:
17,404,000
IV. No. Of Mobil Stations Opened In 1973:
19
Annual Volume:
14,750,000
Last 6 Mo. 1973: 10
V. No. Of New Station Openings Expected In 1974: 4
VI.
Gasoline Sales Volume Mix:
OG&L
Distributors
Commercial
N
Agriculture
VII. How Do We Market Heating Oil In The State?
1 Distributor
46 Consignees
VIII. Severity of Gascline Shortages On Motorist
A.
AAA Fuel Gauge Reports
Week Ending
1/20/74
1/27/74
2/10/74
2/17/74
& OF Outlets
State U.S.
State
U.S.
State
U.S.
State
U.S.
Open Mon.-Fri. After 7pm
55
44
45
43
18
31
25
28
Open Sat. After 7pm
56
43
39
38
16
28
21
26
Open Sunday
30
14
25
14
23
12
14
11
Limiting Purchases
15
19
16
22
28
28
24
29
Out Of Fuel
1
3
3
6
8
10
5
10
CALIFORNIA SHARE DE MARKET REPORT
DECEMBER, 1973
THIS
* OF
LAST
PERCE
YEAR
TO
DATE
YTD CHANGE
OF
YTD
PERIOD
REGION
YEAR
CHAN
THIS
LAST
GALLONS
PERCENT
THI
LAST CHANGE
STANDARD OF CA
141,411
17.38
144,034
- 1.82
1,704,635
1,636,247
+68,388
+ 4.18
16.55
16.38
+
.1:
SHELL
127,674
15.69
116,897
+ 9.22
1,553,045
1,399,845
+153,199
+10.94
15.08
14.01
+ 1.07
ATLANTC RICHELD
90,530
11.13
85,557
+ 5.81
1,091,541
1,053,941
+37,599
+ 3.57
10.60
10.55
+
.05
UNION
76,020
9.34
78,298
- 2.91
1,025,161
906,545
+118,616
+13.00
9.95
9.07
+
.81
MOBIT
67,194
8.26
71,961
- 6.62
887,001
889,941
-2,940
I
.33
8.61
8.91
-
.31
TEXACO
65,965
8.11
71,819
- 8.15
883,340
861,692
+21,649
+ 2.51 +
8.57
8.62
-
.05
GULF
39,417
4.84
37,582
+ 4.88
567,933
501,698
+66,236
+13.20
5.51
5.02
+
45
PHILLIPS
36,593
4.50
46,699
-21.64
524,481
501,100
+23,382
+ 4.67
5.09
5.02
+
.07
EXXON
28,376
3.49
31,018
- 8.52
412,664
373,489
+39,174
+10.49
4.01
3.74
+
.21
MAJOR TOTAL
673,181
82.73
683,865
- 1.56
8,649,800
0,124,498
+525,302
+ 6.47
83.91
81.31
4 2.66
DOUGLAS
32,410
3.98
29,113
+11.32
317,092
333,310
-16,218
- 4.87
3.08
3.34
-
.26
GOLDEN EAGLE
17,350
2.13
17,308
-
.22
215,769
200,987
+14,783
+ 7.36
2.09
2.01
+
.OE
POWERING
16,292
2.00
17,876
- 8.86
215,166
198,301
+16,864
+ 8.50
2.09
1.98
+
.11
MOHAWK
13,175
1.62
16,114
-18.24
160,714
134,519
+26,195
+19.47
1.56
1.35
+
.21
FLETCHER 0 & R
11,948
1.47
13,066
- 8.56
117,253
153,363
-36,109
-23.54
1.14
1.53
-
.39
BEACON
11,600
1.44
15,446
-24.39
154,847
163,321
-8,474
- 5.19
1.50
1.63
1
.13
TOSCOPETRO
9,340
1.15
5,290
+76.57
80,267
38,962
+41,306
+106.02
.78
.39
+
.39
MACMILLAN
7,181
.88
14,773
-51.39
108,111
190,823
-82,712
-43.35
1.05
1.91
-
.86
SIGNAL 0 & G
4,440
.55
15,440
-71.25
97,378
151,370
-53,992
-35.67
.95
1.51
-
.56
TIME
4,040
.50
8,403
-51.92
48,180
91,531
-43,351
-47.36
.47
.92
-
.45
SUNLAND
3,339
.41
3,125
+ 6.85
40,599
31,195
+9,404
+30.15
.39
.31
+ .08
NEWHALL REF
2,783
.34
0
5,949
0
+5,949
.06
.00
+
.06
KERN COUNTY REF
2,638
.32
951
+177.44
15,112
13,575
+1,537
+11.32
.15
.14
+
.01
EDGINGTON
2,120
.26
5
9999 +
20,611
18
+20,593
9999 +
.20
.00
+
.20
AUTOTRONIC SYS
1,348
.17
0
2,264
0
+2,264
.02
.00
+
.02
SIMAS/ASHLAND
236
.03
554
-57.39
7,234
49,578
-42,344
-85.41
.07
.50
-
.43
NORRIS SUPPLY
50
.01
111
-54.67
934
688
+ 246
+35.68
.01
.01
+
.00
R C M PET
44
.01
0
54
0
+
54
.00
.00
+ .00
LOCKHEED AIR
40
.00
0
96
0
+
96
.00
.00
+
.00
HERBST
37
.00
64
-42.59
825
407
+ 418
+102.68
.01
.00
+
.01
FULL CIRCLE
15
.00
0
163
0
+ 163
.00
.00
+
.00
MCNEECE
10
.00
0
10
0
+
10
.00
.00
+
.nn
WHITE JAMES
9
.00
0
18
0
+
18
.00
.00
+
.00
CHEM OIL & TIRE
2
.00
0
2
0
+
2
.00
.00
+
.00
FRANCISCO LAB
0
.00
0
0
0
+
0
.00
.00
+
.00
CARIBOU
0
.00
0
8
0
+
a
.00
.00
+
.00
BLOCK MILTON
0
.00
0
0
0
+
0
.00
.00
+
.00
SEASIDE
0
.00
7,539
-100.00
24,759
80,917
-56,157
-69.40
.24
.81
-
.57
FREDERICKSEN
0
.00
9
-100.00
36
27
+
9
+33.72
.00
.00
+
.00
COATES WM JR
0
.00
0
0
0
+
o
.00
.00
+
.00
GOLDEN GATE
0
.00
9
-100.00
123
414
- 291
-70.20
.00
.00
+ .00
STERRA ТЛНОЕ
0
.00
0
4
0
+
4
.00
.00
+ .00
COASTAL STATES
0
.00
0
0
19,471
-19,471
-100.00
.00
.19
-
.19
PACIFIC SUPPLY
0
.00
14
-100.00
11
163
-
152
-93.52
.00
.00
+
.00
SOUTH TERMINALS
0
.00
0
4,274
0
+4,274
.04
.00
+
.04
NEWHALL
0
.00
1,812
-100.00
13,243
13,307
-
64
-
.48
.13
.13
+
.00
WHITE
0
.00
0
36
0
+
36
.00
.00
+ .00
MISCELLANEOUS
2
.00
91
-97.26
686
1,143
-
457
-39.97
.01
.01
+
.00
INDEP. TOTAL
140,528
17.27
167,191
-15.95
1,651,831
1,867,391
-215,560
-11.54
16.03
18.69
-
2.66
GRAND TOTAL
813,710
1007
851,056
- 4.39
10,301,631
9,991,889
+309,743
+ 3.10
100%
1007
CA
REPORT DATE
-
2/22/74
LUNDBERG SURVEY, INC.
GALLONAGE FIGURES ARE ROUNDED TO THE NEAREST 1000
12041 STRATHERN ST.
NO. HOLLYWOOD, CA. 91605
&
How is Mobil required to allocate product?
A. 1. Allocation of crude is the first step in the Mandatory Program. Crude
supplies are adjusted through obligatory sales so that all refiners
are operating at nearly the same percentage of refining capacity. For
February through April of this year, the indicated operating level
is about 76% of capacity. Because Mobil completed a new refinery at
Joliet, Illinois, in 1973, Mobil crude runs for the four-month period
will be about the same as in 1972.
2. The second step in the allocation process is determination of the pro-
duct mix which the refineries will produce. The F.E.O. has not exercised
this authroity. Mobil is now operating on a maximum gasoline made.
3. The allocation of refined product available is calculated based the
priorities established by F.E.O. Agricultural customers and the military
are to be supplied 100% of thier current requirements. A State set-
aside of 3% (gasoline) - 4% (distillates) of supplies available is made
each month. Other customers (e.g. emergency services, energy production,
sanitation, telecommunication, transportation, trucking) receive an
allocation based on current requirements. Other customers, including
service stations, receive an allocation based on purchases for the corres-
ponding month in 1972.
4.
The allocation fraction used to determine a customers allocation is
arrived at by subtracting from the total available supply (1) total
military requirements, (2) total agricultural requirements, and
(3) State setaside volumes. The net remaining supply total is divided
by the total maximum volume authorized by the FEO (less agriculture
and military requirements). The resulting percentage is the allocation
fraction used to calculate a customers monthly allocation of ruei.
2.
An example of a service station calculation for March is provided
below:
Base
Period
Allocation
Allocation
Allocation
Monthly
Product
Volumes (1) X Level(2) = Requirements X Fraction (3) = Allocation
Gasoline
20,000
100%
20,000
0.87
17,400
(1) Base period = March 1972
(2) Set by FEO
(3) Available supply divided by maximum volume authorized by FEO
There are provisions for the allocation level to be adjusted if there are
unusual growth or hardship cases.
CALIFORNIA
ALLOCATION FRACTION
GASOLINE
HEATING OIL
DIESEL
February
87%
100%
95%
(1)
March
87
100
100
VOLUMES MOBIL SUPPLIED TO THE STATE
(000)
GASOLINE
HEATING OIL
DIESEL
February 1972
66,294
551
13,811
February 1973
64,334
40
7,343
March
1972 Actual
71,917
479
13,405
March
1973 Actual
74,365
43
7,525
March
1974 Allocation
67,465
500
12,453
(i) We are now reviewing our supply program in light of the recent 10% supplemental
gasoline allocation given by the FEO to 28 states in late February to determine
if it will be possible to continue allocations at the 87% level throughout March.
East of Rockies
In 1972, Mobil sold 5.2 billion gallons of gasoline and 3.1 billion
gallons of distillate. This increased in 1973 to 5.6 billion gallons of
gasoline and 3.2 billion gallons of distillate.
Mobil operates in all States east of the Rockies with minimal coverage
in Mississippi and Alabama.
Mobil supplies these areas from refineries at Beaumont, Faulsboro,
Buffalo, August and Joliet - East Chicago. Input to these refineries
consists of a combination of crude delivered in from Canadian, South American,
African and Mid-East sources plus domestic United States crude and gas
liquid production.
Product is moved from these refineries in the largest economic bulk
shipments possible to intermediate redistribution points where again
reshipments are made in the largest quantities possible and so on to minimize
freight, handling costs and inventory throughout the distribution system.
Example: Beaumont loads tankers of 10 million gallon capacity for
delivery to New York. Product is pumped ashore and reloaded into barges
of 1 1/4 million gallon capacity and delivered to the Brooklyn terminal
where it is loaded into 3,000 gallon capacity trucks for delivery to New
York City service stations.
The transportation facilities used consist of a fleet of owned and
chartered tankers and barges, tank cars, trucks and common carrier pipeline.
Mobil uses 217 loading transchipment terminal sources of supply East
of the Rockies to meet customer demands.
Mobil's tankage facilities and reserves East of the Rockies are as
follows:
(MDb1s)
(MBbls)
Gasoline
Distillate
Gross Tankage
17,211
26,722
Available Tankage
15,490
24,050
1972 Sales
123,809
73,809
Annual Turnover
8 Times
3 Times
Peak Month Demand
12,381
11,071
Days Reserve - Tankage Full
37
65
- Tankage 50% Full
18
32
Distribution Facilities
February 26, 1974
West Coast
Mobil's West Coast area includes all sales made within the states
of Washington, Oregon, Idaho, California, Nevada, Utah, Arizona and
Alaska.
In 1972, Mobil sold 1209 million gallons of gasoline and 400 million
gallons of distillate throughout the West Coast area. In 1973, the
gasoline volume increased to 1258 million gallons and the distillate
declined slightly to 360 million gallons.
Mobil supplies these demands from refineries at Torrance, California
and Ferndale, Washington. Input to these refineries consists of a
combination of foreign and domestic crude and gas liouid production.
Product is moved from these refineries primarily through common
carrier pipeline systems and some chartered marine equipment. Redistribution
from terminal sources is made by a combination of owned and hired truck.
Mobil uses 34 loading/transshipment terminal sources of supply
in the West Coast area to meet these customer demands.
Mobil maintains the following tankage and reserve position in the
West Coast area.
(MBbls)
(MBbls)
Gasoline
Distillate
Gross tankage
3,561
1,552
Available tankage
3,205
1,397
1972 West Coast sales
28,786
9,524
Annual Turnover
9 times
7 times
Peak Month Demand
2,879
1,200
Days Reserve - tankinge full
33 days
44 days
tankage 50% full
16 days
22 days
Distribution Facilities
February 26, 1974
CALIFORNIA
Mobil's primary source of product to meet California demands
is the Torrance Refinery in the Los Angeles Basin.
From Torrance, product is moved by Mobil, Southern Pacific and
San Diego Pipeline systems to terminals in Southern California and
into Arizona.
The second main source for product is in Oakland area where
product is shipped via Southern Pacific Pipeline to terminals in
Central California and Western Nevada. Product is also barged northward
to Eureka and Crescent City where it is redistributed by truck to
Northern California and Southern Oregon customers.
Bakerfield and Fresno sources supply customers in the San Joaquin
Valley and into Western Nevada.
Crescent City
LIGHT PRODUCTS DISTRIBUTION FLOW MAP
California
Eureka
Chico
So. Pac. P/L
Sparks
Refinerles
Sacromento
Terminal Sources
METHODS OF DELIVERY
Pipeline
Tanker
OStockton
Barge
Oakland
Brisbane
San Jose
Fresno
a
So. Pac. P/L
&
Las Vegas
Bakersfield
Calnev P/L
Vernen
Colton
Atwood
Torrance
So. Pac., P/L
San Diego P/L
Niland
Mission Valley
CALIFORNIA
(MBbls)
(MDbls)
Gasoline
Distillate
Excluding Torrance Tankage
Gross Tankage
1,021
224
Available Tankage
919
202
1972 Sales
20,743
3,919
Annual Turnover
23 times
19 times
Peak Month Demand
2,074
784
Days Reserve
13
7
Including Torrance Tan age*
Gross
2,558
683
Net
2,302
615
1972 Sales
20,743
3,919
Annual Turnover
9 times
4 times
*Torrance Refinery also delivers product into Arizona and Nevada
EXCERPT FROM JACKSON, MISSISSIPPI, FUNDRAISER (11-15-73) Q and A
Q
Looking at another side that California has led the field,
in September of 1972, the Rand Corporation published a report they
had prepared for the California State Assembly called "California's
Electricity Quandry
Slowing the Growth Rate", a tax free series
on California's Energy Problems. Contained therein was a series
of recommendations, such as revising utility rate schedules, provid-
ing minimum efficiency standards for appliances by virtue of state
law, shifting a greater part of the energy burden to solar, and
upgrading buildings, etc. First off, what has the legislature done
to implement those recommendations?
A
Well, I can't actually recount at this time, out of some 1,200
bills that were passed in the last session, 756 of them in the last
48 hours
Q
That's par for the course
A
I don't know
administratively, we have been conscious of the
energy crisis for quite some time. I have to tell you that some of
our legislative leadership out there, up until just recently, were
not taking it seriously; they were out being a little demagogic,
making big statements that the whole thing was a phoney, devised
by the oil companies and so forth, and that there wasn't really a
crisis.
We've had briefings at governor's conferences before by experts
and we were convinced (I think most governors were) that the energy
crisis was for eal, and we know it's for real in California. We do
have some plans going forward, and we think that many of those
things that were proposed are long needed and long overdue, eg.,
better insulation of houses to minimize heat waste.
-1-
If there's one thing in the energy crisis that we've learned,
it is that if you had a bar this wide (demonstrated) going across a
chart, indicating how much of the natural resources it took to
produce, or how much electricity came out of those, you would find
that the bar would be this wide (demonstrated) in natural resources.
It would only be half that wide for the actual energy you're getting;
the other half is waste the waste of heat resources, etc. An
atomic power plant uses hundreds of millions of water a day for
cooling, and then that boiling hot water is allowed to cool and go
to waste. Couldn't that heat energy be applied?
The most extreme example of what could be applied is a town in
Sweden near the Arctic Circle. Here is a town with an atomic power plant
in a cave underneath the town, which uses that hot water piped into
the homes and the business structures of the town. They don't have
to have furnaces and they don't have to burn oil, coal or gas. They
heat themselves with the hot water that was used for cooling the
atomic energy plant.
Q
Klamath Falls in Oregon uses geothermal energy in their schools
and apartments up there.
A
Yes, we have experimented. We're producing power from geothermal
sources in California, and are exploring a whole new field down on the
desert (Imperial County).
Q
Do you think the prospects are good for completing that program
down there and bringing that electricity on up?
A
Yes. I am fascinated, also, with the development of solar
energy. I think that that has been a long-neglected field.
-2-
2
Do any of the state universities have any major programs to
move forward in that area?
A
Yes, they're working in connection with us on that, on the
research end of it. It isn't all as easy as just simply finding a
hot spring, and saying this will work. For example, we find some
of our geothermal fields contain too many minerals in them. There
is no metal used today that would not create a problem of corrosion
in pipes, pumps, etc. It would be impossible to use them.
- -3-
CONTACT:
Earl C. Parker
Press Secretary
Sacramento, Calif,
(916) 445-0680
news
FROM THE OFFICE OF
LT. GOVERNOR
eD Reinecke
JANUARY 11, 1974
NOTE TO THE MEDIA: Copies of the report can
PH-2
be obtained from the Energy Planning Council,
Room 704, 11th and L Bldg., Secramento 95814
FOR IMMEDIATE RELEASE
SACHAMENTO -- A report today by the State Energy Planning Council
shows that California has become dependent on out-of-state sources
for well over half of its total energy supply.
Lt. Gov. Ed Reinecke, chairman of the Energy Planning Council,
said. in 1973. California obtained about 58 percent of its gas
requirements from the southwestern states.
Last year. the state's rate of consumption of natural gna was
about 1.12 million equivalent barrels of oil per day.
Foreonated delivery rates for the first quarter of 1974 are
.750 million equivalent berrels of oil per day.
Beinecke said this reduction in delivery of natural gna will require
greater use of fuel oil by public utilities.
California's dependence is further complicated by the fact that
the state has no significant supply of commercial coal readily available
no an alternative fuel for gas or 011.
Also complicating the state's energy situation are the Areb nation's
oil embergo, deolining production of oil and gas within the state,
abnormal military demands for products from Celifornia, and
enticipated natural gas deliveries from Canada which did not materialize.
Relnecke said the report, projecting California's energy belance
for the first quarter of the new year, sees a petroleum product deficit
of 535,000 barrels per day or 25 percent of the demend.
(more)
-2-
Wesley G. Bruer, coordinator for the Energy Planning Council,
sold, "Demend for petroleum products in California will exceed supplies
st least until adequate availability of crude oil enables refineries
to return to near-capecity production."
The most immediate and critical fuel shortage is in residuel
fuel oil supplies. Low sulfur crude and residuel fuel oil are used
for direct burning in power plants and industrial plants. A net
15 percent statewide conservation in electrical use would stretch
existing inventories into mid-April.
Reinecke said, "The steps taken thus for by the council will enable
business and industry to set guidelines for the coming months."
This report, according to Heinecke, forecests possible shortages in the
coming months, and will assist the state in taking measures to
alleviate economic lags in specific industries or state communities.
thus. preventing drastic job losses.
Heinecke also said gasoline demands in January will probably be
brought into balance with supply by n combination of increased
conservation measures. allocation programs. and higher prices.
According to Bruer, "The total energy picture is very complex and
the present situation for both supply and demand is extremely fluid.
New date becomes available daily and this report should be regarded
as preliminary.
....