World Production.
Conditions have been such during 1942 that world production of petroleum has been forced to decline, despite the heavy demand for greater supplies among all the belligerents. The loss was only about 1 per cent during the first half of the year, but increased materially in the second half. The factors leading to the decrease were loss of producing areas to the enemy, leading to destruction of the producing facilities, especially in Netherlands East Indies, Burma and Borneo, and the submarine hindrance to tanker transportation, which cut production in the United States and the Latin American countries exporting to the United States.
United States Production.
Production in the United States declined by 1 per cent in 1942, as compared with an increase of 4 per cent in 1941 and 6 per cent in 1940. The year started well ahead of 1941, the January total exceeding that of the preceding January by 16 per cent, but by March this surplus had dropped to 2 per cent, and in June there was a deficit of 6 per cent, improving to 1 per cent in August, and increasing again in the later months. Thus restriction in output was due solely to limitations in tanker transportation, and not to any difficulties in production itself. Data available at the time of writing indicate a total output for the year of 1,390,000,000 bbl. Average daily production during the week of Dec. 12, 1942, as reported by Oil and Gas Journal, was 3,857,820 bbl., as compared with 4,029,700 bbl. during the first week of the year; barring the handicap of transportation, it had been anticipated that production would rise to something like 5,000,000 bbl. daily during 1942. The December quota set by the Office of the Petroleum Coordinator was 4,015,900 bbl., while production was slightly lower; in general, these quotas have run behind consumption, with a consequent reduction of stocks.
Well completions as reported by Oil and Gas Journal were only 17,383 to Dec. 12, 1942, as against 30,113 in the same period of 1941; no division of these between oil wells, gas wells and dry holes was reported. Additions to the reserves were greater than production in both 1941 and the first half of 1942, total reserves as of July 1, 1942 being 20,302,549,000 bbl., against 20,299,543,000 bbl. of Jan. 1, and 20,099,258,000 bbl. on Jan. 1, 1941.
Stocks have declined all along the line. Crude stocks rose from 244,440,000 bbl. at the beginning of 1942 to 263,208,000 bbl. at the end of March, and had declined to 232,982,000 bbl. by Dec. 12. Gasoline stocks rose from 92,989,000 bbl. to 107,229,000 bbl. at mid-March, and dropped to 77,622,000 bbl. at Dec. 12. Fuel oil stocks have had an almost constant decline throughout the year, from 95,857,000 bbl. to 74,785,000 bbl. on Dec. 12, most of the drop being before the end of April. Gas oil and distillate stocks declined from 49,357,000 bbl. to 29,240,000 bbl. on April 25, and then increased to 47,794,000 bbl. at Dec. 12. All of these data are as reported by Oil and Gas Journal.
Transportation Problem.
The bulk of oil transportation between the producing areas and the heavy consuming areas of the Atlantic Coast has long been by tanker, supplemented in part by pipe lines. With tanker transport handicapped by submarine activities along the coast, the 1,400,000 bbl. of petroleum products required daily by this area must be carried by other means. The load was far beyond the capacity of existing pipe lines, and even the new line from Texas to Illinois, which was about ready to go into operation as the year ended, will fill only a fraction of the need. Rail transport by tank cars has filled much of the gap, but there is still a marked shortage of supply in the coast area, and to a lesser extent in the mid-western area. This shortage brought in its wake a succession of steps to curtail demand — rationing of gasoline in the coast area, of fuel oil in both the coast and midwest areas, and finally the extension of gasoline rations to the entire country, the latter however, being primarily for the saving of rubber, and only incidentally affecting the gasoline distribution problem, although the restriction of consumption will release transportation facilities for use in supplying areas of shortage.
Oil Utilization.
There has been a decided shift during 1942 in the utilization of petroleum. In the first 10 months of the year the motor fuel production was 45.8 per cent of the volume of crude run to stills, as compared with 48.7 per cent in the same period of 1941, representing a 16 per cent decrease; at the same time the proportion emerging as fuel oil increased from 37.6 per cent to 41.2 per cent, a 10 per cent change, while lubricating oils rose 6 per cent.
Motor Fuel.
To the end of October, production of motor fuel in the United States totaled 508,193,000 bbl., against 566,142,000 bbl. in the same period of 1941, and the relative decrease for the full year will presumably be still greater, with the effects of nationwide gasoline rationing acting to reduce the December output. Rationing in other parts of the country is expected to reduce gasoline consumption by about the same 35 per cent that was found earlier in the year in the Atlantic Coast states, but these decreases in local civilian consumption are to a considerable but unknown degree offset by increased military demands in camps at home and abroad and in lend-lease shipments, as well as by increased demands for aviation gasoline.
Aviation Gasoline.
Naturally the demand for aviation gasoline has been enormously expanded, as the airplane construction program has been increased. The last official report on output was approximately 70,000 bbl. daily in November 1941; it is reported that production is scheduled to reach 250,000 bbl. daily early in 1943, and will probably continue beyond that point. With 49,000 planes built in 1942, and probably twice that number in 1943, plus lend-lease shipments, an increasing supply must be maintained.
Rationing Program.
The United States has so long led in petroleum production that plentiful supplies for all comers has come to be taken for granted; hence, the stringent rationing of petroleum products to which we now are forced to submit was hardly to be anticipated, though it was foreseen that there would have to be a certain amount of adjustment and control between production and consumption. The first real impact came when submarine losses of tankers, superposed on heavy transfers of tanker capacity to lend-lease duty, made it impossible to maintain a normal supply of motor fuel in the Atlantic Coast area, and gasoline rations were imposed in this area effective on May 15, 1942, on an emergency basis and converted to a broader regular system on July 22. Under this system the ordinary car was assigned eight A coupons good for 4 gal. each for each two-months period of the ensuing year, while those cars used for a moderate amount of driving for work or business were allowed additional B coupons; if the additional mileage exceeded 470 miles per month, C coupons were assigned instead of B, but all three had the same redemption value of 4 gal. Motor cycles were issued D coupons good for 1½ gal.; non-highway uses E coupons for 1 gal. or R coupons for 5 gal., depending on the size of the requirements, while commercial vehicles received S coupons, of 5 gal. On Nov. 22 this system, combined with certain regulations with respect to tire registration and use, was extended on a nation-wide basis, as a move to promote tire life, rather than as a measure of conservation for gasoline.
Further restrictions in supply led to a reduction of the value of the A coupon from 4 gal. to 3 gal. on Nov. 22 in the Atlantic Coast area, and during the period Dec. 18-20 redemption of all types of coupons except those for commercial vehicles was suspended to offset heavy shortages caused by withdrawals from the coast area to supply needs for the North African campaign, as the needed supplies could be secured there in several days less time than from the producing areas. When sales of gasoline were resumed on Dec. 21, the value of the B and C coupons was cut to 3 gal., to correspond with the A value.
During the summer of 1942 sales of fuel oil for domestic water heating were restricted to one-half the amount delivered to the customer during the corresponding month of 1941. With the beginning of the heating season in the fall, the use of fuel oil for domestic heating and hot water was placed under a rationing system, with an allotment to each customer of two-thirds of the consumption during the base period July 1, 1941 to May 31, 1942, except that the maximum ration allowed could not exceed the amount determined by formula from the number of square feet of area heated, while if two-thirds of the base period consumption was less than that computed from a similar formula, the ration allowed was raised to the minimum formula figure or 85 per cent of the base period consumption, whichever was the smaller.
The variation between the maximum and minimum formula calculations was designed to cover the varying efficiencies of operation of the heating units, with the maximum about one-third higher than the minimum. As with the gasoline rationing system, the year is divided into periods, in this case five instead of six, the length not being set on a uniform time basis, but scaled to give approximately equal fuel consumption in each period. Since heating requirements vary widely in different areas, basic data for the formula were supplied for 33 subdivisions of the entire area covered by rationing, but even so it has developed that there is a great deal of variation in the heat requirements for the different periods in some sections, although this and unpredictable variations in weather are partly compensated for by permitting the redemption of coupons from any given period during the first two weeks of the succeeding period or by drawing in advance on coupons for the succeeding period up to one-half of the total gallonage for the period.
As this is written, near the end of the year 1942, the whole problem is being discussed in official circles, in the hope of finding a solution that will at the same time serve the needs of the war program and of the civilian consumer entitled to a fair share of the available supply, and much depends on the decisions that are to be reached.
Axis Oil Supplies.
While 1942 has not brought any great changes in the oil supplies immediately available to Axis Powers, the Netherlands East Indies, Burma and Borneo were lost to the United Nations, as well as some minor areas in the western Caucasus. All told, the Axis has gained control over territory having a past production considerably greater than all that under Axis control previous to the active entry of Japan in the Axis operations, but this does not mean that Axis oil supplies have more than doubled, either actually or potentially. Production and refining equipment in these areas were pretty well demolished before abandonment, and even though the Axis controls the area, it will be so long before production can again be put back on any material basis that the control can be of little value. Handicapped by shortage of material and trained personnel, the time required to put an appreciable proportion of these areas back into production is likely to be longer than the prospective continuation of control of the areas in question. The gain to the Axis has therefore been only an indirect one, to the extent that operations of the United Nations have been hampered by loss that has been inconvenient, but not at all irremediable.
