The Energy Crisis - A Call for United Action

Abstract

"If something can go wrong, it will go wrong," so says Murphy's law. In the light of the current energy crisis in the U. S., may I submit an amendment to Murphy's law which goes like this: "If a number of separate but interrelated things can go wrong, sooner or later they will all go wrong at the same time." It is a regrettable fact that all major energy supply sources in the U. S. today are experiencing shortages simultaneously. Some of these shortages, fortunately, are clearly temporary in nature and are already on the way to solution. Others are much more difficult and will be with us for a long time. Here are some of the things that have gone wrong and that contribute to the current national energy crisis. Coal is in short supply and prices on the spot market have been climbing sharply during the past year and a half. The major cause of this was the fact that the coal industry curtailed its expansion a few years ago in the belief that it would lose part of its traditional electric power generation market to nuclear fuel. This did not happen. There were unexpected delays in the completion of nuclear power plants. To further complicate the coal problem, the Japanese have greatly stepped up their coal purchases from the U. S. Also, a new federal coal mine safety law presented problems for some mines. There was a serious shortage of railroad coal cars last winter when certain shippers found it more convenient to store coal in railroad cars than in dockside coal piles. Coal inventories dropped to dangerously low levels at many electric generating plants. Recently the coal car shortage has eased somewhat and coal inventories at electric plants are back to normal. Yet the over-all plants are back to normal. Yet the over-all coal shortage and high spot prices persist, and there is no assurance that next winter will not see another coal crisis, which could be triggered by coal or rail strike action, extreme cold weather or by some combination of these occurrences. The spot price of coal has risen 56 percent in the last year and a half. This is a phenomenal increase not matched by any other commodity listed on the Dept. of Labor monthly wholesale price index. Such an increase is only partially explained by cost factors. The shift from a buyers' market to a sellers' market in coal is probably more significant. Another set of unforeseen events has created a serious problem for heavy fuel oil. The U.S. demand for residual fuel oil has accelerated at an unprecedented rate, primarily as a result of coal-to-oil conversions and new oil-burning power plants being placed in service designed to meet new air pollution control requirements. The cost on a Btu basis of heavy oil delivered to east coast ports has risen about 75 percent during the past year and a half, and this does not include desulfurization costs required to meet the new air quality standards. The U. S. is dependent on imports for heavy fuel oil since the refineries of the domestic industry are not geared to producing this increasingly important form of energy.