Word: crude
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Until now the Administration has given the impression that the U.S. could ride out the loss of Iranian oil without mandatory cutbacks until late spring or summer. The 900,000 bbl.-a-day shortfall in crude supplies resulting from the Iranian shutdown has so far been made up by increasing imports from other countries and drawing down domestic reserves. But Schlesinger said that the Government would move more quickly than expected to cut consumption so that stockpiles for next winter can be replenished over the spring and summer...
Schlesinger reported that his department is preparing "a variety of measures" to curb demand after April 1 if such moves become necessary. The most likely step: limiting the crude oil and gasoline made available to refiners and dealers. Another possibility is the mandatory closing of gasoline stations on Sundays and evenings. However, Schlesinger ruled out, at least for now, any resort to outright rationing of motor fuel...
Even before the Iranian crisis became acute, spot shortages of gasoline were occurring, largely because of tightened supplies of unleaded gas, which must be used in newer car models produced to meet federal antipollution laws. Unleaded gas requires about 10% more crude to produce than ordinary fuel, and the industry lacks the sophisticated refinery capacity needed to keep up with runaway demand...
...Construction work is far behind schedule at the massive underground salt domes along the Louisiana and Texas Gulf Coast, where approximately a one-month supply of oil, or 248 million bbl., is supposed to be stored by year's end. So far only about 80 million bbl. of crude-little more than a week's supply-has been stockpiled. What is more, Energy Department technicians are still struggling with technical problems regarding the seemingly elementary task of getting the oil out of the ground. These difficulties, as well as the ever rising cost of the imported oil involved...
...nothing about is the prospect of yet another increase in oil prices. Even a small scarcity in such a valuable commodity can produce large jumps in cost, and that is exactly what is now happening on the so-called spot market. There, oil companies bid for any available crude that is not already committed to customers under long-term contracts. Though the quoted long-term OPEC price currently stands at about $13 per bbl., spot-market oil last week was trading for as much as $17 per bbl. Warns Energy Economist John Lichtblau of the Petroleum Industry Research Foundation...