THE IRANlAN OIL SHORTFALL

Why? A number of factors have combined to cushion the blow. Of the 5 million b/d that Iran used to pump, Saudi Arabia has taken over 3 million, by which it is now exceeding last year's average, and other producers are pumping an extra half million. The remaining deficit of 1.5 million is unlikely to make itself felt at the users' level by the end of the winter, unless the US still gets a winter like Europe is having (-40° in Moscow; trains buried in 12 foot drifts of snow in Germany).

Sluggish growth has made the west (especially outside the US) somewhat less oil-dependent per percentage point of growth; the new oil fields in Mexico and the North Sea have begun to produce; and not even in the US can a technophobic, Naderite infiltrated administration stop the inexorable logic of progress. While genius Lovins has been celebrating the death of nuclear power, it has in fact grown from almost nothing prior to the 1973 oil embargo to almost 10 quads in 1978, or the equivalent of 1.7 billion barrels of oil (4.6 million b/d, or 90% of Iran's normal output). There are now 67 reactors in commercial operation, and 88 more have construction permits.

All of which gives one the comfortable feeling of flying on a sunny day just before hitting the sidewalk. When the winter is over the West's stocks will haste been drawn down, and the ensuing slack period should be used to replenish them. But what slack period if Iran's production does not resume? Or if the Saudis, now pumping at 10.5 million b/d cut back to achieve their planned 1979 average of only 8.5 million b/d?

OPEC wills, in any case, laugh in President Carter's face again, just as they did last December when he humbly pleaded for only moderate punishment in raising their prices. Their seemingly untenable position is made secure by the US policy of stifling domestic energy sources and drifting toward the Lovinsian energy strategy: There is little need for energy in an economic depression

And what about the $25 billion strategic oil reserve planned three years ago to reach 1 billion barrels of oil by 1985 to protect the country against new oil embargos? Read all about it in the Wall Street Journal of Jan. 11. Estimated costs have doubled, and little oil has been stored, but the DoE assures us that soon everything will begin to work right and by September as much as 16% of the planned total could be in place.

The reason for such optimism may be a lesson learned from the US Postal Service, which sometimes hires the private UPS to deliver its parcels. Similarly, the 19,000 employee, $9 billion/year DoE may try to hire private industry to organize and store the strategic oil reserve.