Fuel Shortages

Report Outline
Threat of National Heating Crisis
Development of Fuel Resources
Planning for Future Energy Supplies
Special Focus

Threat of National Heating Crisis

Developing Shortages of Major Heating Fuels

A shortage of heating fuel and electricity threatens to envelop the nation this winter. Demand for the three lead-ins fuels—coal, natural gas and residual oil—is running well ahead of current production. The shortage could be especially severe in the case of an unusually cold winter. Colder-than-average temperatures have been forecast for the eastern and southern states and warmer temperatures for most of the West. Barring unforeseen developments, rapidly rising fuel bills and disruptions of utility service appear in the offing.

The pinch may be felt the hardest in the electric utility industry, which burns more than halt the nation's coal supplies and large amounts of other fuels for electric power production. Utilities all over the country are reported to be dipping into their coal stockpiles and paying astronomical prices for new fuel supplies, if they can get them at all. Small municipal utilities have been paying up to $11 a ton for steam coal—more than twice the average 1969 price of $5.25. The Tennessee Valley Authority, the nation's largest electric power system, reported in mid-September that its coal stockpile had dwindled to a 10- to 12-day supply, far below normal stockpiles of 60 to S)0 days. Citing a recent doubling of coal prices in its service area. TVA on Oct. 1 increased its wholesale electric rates by 23 per cent. Other electric utilities in many parts of the nation are requesting rate increases totaling an estimated $1 billion.

One industry group, the American Public Power Association, has asked President Nixon to impose controls on fuel prices and to ration fuel supplies this winter. The APPA, an organization of 1,400 publicly owned electric utilities, wrote the President Aug. 31 that some small utilities had been unable to line up adequate fuel supplies at any price. Reports of escalating fuel prices were confirmed in an “inflation alert” issued by the President's Council of Economic Advisers on Aug. 7. The council found that coal prices had increased at an annual rate of 56 per cent in the first half of 1970 and at an annual rate of 81 per cent for the second quarter alone. Residual oil prices had shot up by 47.6 per cent in the first half and natural gas prices by 3.1 per cent.