The farm business has always played a very important part of our country's economy, and if the shortage of fuel has any bearing on the restriction of raising crops, the results will be very disastrous, and many of the things that we now accept as commonplace in our diet will be premium items in cost availability. We began this crop year with about 30 percent of our fall plowing completed. Normally this work would be done during the fall or late in the spring, to work the ground that couldn't be plowed and to plant the crops. This year the weather factor did not allow this to happen. Thus, early allocations were not used and, therefore, losses to the farmers. This crop, too, brought a burden on the American farmer more than ever before. He was and is being asked to increase production far greater than ever before. The increased demand for land to be worked means that fuel requirements will be increased proportionately. The estimated increase on fuel demand is 25 to 30 percent, up considerably from the national average of 6 percent. To be realistic on the needs of the farmer, it is impossible to do more fuel-consuming work on less fuel. It appears that our voluntary system of allocation has not been the answer to farmers. Farmers' work is seasonal and cannot be completely calendarized; 40 to 45 percent of all cooperatives have used up their allocations for May, and many independent suppliers, too, are in a similar position and the farmers will be affected. Our crops now are in the process of being planted with the usage of fuel being as heavy as it was, our budgeted usage would have been taken care of this past week. But with the river opening for barge traffic, we did get fuel; not extra fuel, but fuel from our June allocation. This means that instead of having enough fuel to last me through May, we will be out of fuel about the last 15 days of June. Our allocation for June is 86 percent of the gasoline, 66 percent of diesel. This compares to a year when the planting of corn is not complete and most of the soybeans still have to be planted, compared to last June when planting was completed. Our most important task now is that the Government set a mandatory system that will recognize the need of farmers, one that will be workable and enforceable. The fuel crisis will not be over after the crop is planted, nor even after this year's harvest is completed. The energy needs of farmers is seasonal, but very needed in short essential times. If all parts of agriculture are not done in this time, the planting, the fertilizing, the harvesting, and properly storing, the year's crop could be ruined. I feel that there should be some protection for the suppliers of fuel to the farm industry so that it can be a continued and uninterrupted source of supply of fuel. I do not ask that the farmers' storage always be full, but that it never be empty. I would like to close with a quote from Mr. E. B. Stevenson, executive vice president and general manager, F/S service stations, which appears in the American Farmer, a publication of the American Farm Bureau magazine. He says: If it becomes necessary to establish national priorities for various forms of energy, the needs of agriculture should be fully recognized. Farmers need specific products at specific times. Farmers have limited ability to substitute one form of energy for another, or to wait for supplies at critical times. Farmers have a vital stake in finding the best possible answers to the energy crisis. That concludes my statement, Senator. Mr. Cecil. STATEMENT OF KEITH CECIL, EXECUTIVE VICE PRESIDENT, CENTRAL MOTOR FREIGHT ASSOCIATION, INC., OF ILLINOIS I would like to submit, in cooperation with your request, my written statement. Senator STEVENSON. Your statement will be entered in the record. Mr. CECIL. With one reservation, that we have just today received the Office of Oil and Gas guidelines and we haven't had a chance to study them. Accordingly, we have not established an industry position on them at this time. We have been working closely with the Office of Emergency Preparedness in Illinois, and we do have a critical situation in Chicago as far as our industry is concerned. Senator STEVENSON. Have the suppliers cut the truck terminals? Mr. CECIL. Yes, completely cut off, allocated as low as 50 percent. Senator STEVENSON. What effect is that having on the trucking industry? Mr. CECIL. We are just to the point where it is going to start to jeopardize service, just_now. Senator STEVENSON. Is there any hope in sight that you know of? Mr. CECIL. Only if the priorities established possibly become mandatory priorities. Senator STEVENSON. Is the trucking industry faced not only with a cutoff of gasoline, but also increased costs of gasoline? Mr. CECIL. Yes, double to triple the price they were paying in December and January. Senator STEVENSON. Thank you, Mr. Cecil. (The statement follows:) STATEMENT OF KEITH CECIL, EXECUTIVE VICE-PRESIDENT, CENTRAL MOTOR FREIGHT ASSOCIATION, INC., OF ILLINOIS My name is Keith Cecil. I am executive vice-president of Central Motor Freight Association, Inc. of Illinois. Central Motor Freight Association is a State trade association representing the trucking industry in Illinois. We are the Illinois affiliated association of the American Trucking Associations, Inc., Washington, D. C. who in aggregate represents every type of truck operation both for-hire and private carriage in the United States. I am most appreciative of the opportunity to appear before this hearing and participate in the discussions of the fuel shortage as it affects truck transportation in Illinois and in general. The fuel shortage in Illinois has been evident, serious and at times even critical since early in December, 1972. The trucking industry is highly concerned about its ability to continue to serve the public if current circumstances continue. As an association, we started receiving complaints from our membership and other interested parties with regards to the fuel shortage in December 1972. These complaints have been continuous to-date. Truck operators receive their fuel supply primarily through contractual arrangements with either major petroleum companies or independent fuel distributors who in turn depend on the major petroleum companies as a source of supply. Many of these arrangements have expired since last December and have not been renewed. In other instances, suppliers, both major and independent have notified our members of their inability to continue to supply fuel in any degree or that they must allocate fuel cutting the availability to as little as 50% of last year's purchases. Motor carriers have anticipated increased service demands in the future of up to 20% above current levels. This need is reflected in an ever expanding economy of increased consumer purchases. The increased demand for services coupled with the cut-backs in fuel has indeed reflected heavily on the ability of the trucking industry to serve the public in the most economical way possible. Central motor freight association in addition to cooperating with the Federal Government, the State of Illinois and local agencies on behalf of the trucking industry has attempted to cooperate with both the major petroleum companies and the independent distributors. The courtesies we have been extended have been gratifying in all but one instance. This incident occurred about the first of March when we requested a meeting with several major petroleum companies on the association level with the thought in mind of seeking advice as to how best advise the trucking industry regarding the problems involved in the fuel shortage. The firms contacted refused to meet with us stating emphatically that determinations made by them were not negotiable. Illinois carriers have faced the fuel shortage in a calm determined manner. When confronted with either an allocation problem or having been notified by current suppliers, whether major petroleum company or independent distributor, of their inability to continue to service or fulfill their gasoline or diesel fuel needs the carriers have followed a program outlined by the association. We believe that this program is to the best interests of all concerned. 1. The carrier is asked to re-affirm the suppliers position and if the problem remains as outlined to the association the carrier is requested to seek an alternate source of supply or an additional source of supply, whichever the occasion calls for. If the carrier is not successful in this instance he is advised to follow the program further. 2. The carrier will then notify the association of the failure of #1 and the association will in turn inform the American Trucking Associations in Washington, D. C. who is in constant contact with all Federal agencies with regards to the problem. 3. Next, the carrier is asked to contact the Region 5 Chicago Office of Emergency Preparedness (Federal agency) 312-353-1500 and the State of Illinois Department of Agriculture via a hot line, 217-525-2444 at Springfield. Illinois which is the State agency handling this problem. 4. After having notified the petroleum industry, the Federal Government and the State government of the problem it is then suggested that the carrier write a registered letter to his supplier of record giving the following information. The letter should first cover past history relating to contracts, purchases, credit etc., as well as information received regarding allocation or refusal to supply the product. Then, the effects such action will have on the economic condition of the company. The effect it will have on its employees (unemployment) and its customers and their employees, and also the possibility of the loss of its certificate of public convenience and necessity, again ask for reconsideration of whatever notice has been received (allocation at least gives a base to start from). Then upon advice of counsel stipulate determination to seek economic recourse for the suppliers failure to comply with the Emergency Fuel Allocation Act and various other reasons. The fuel shortage in Illinois seems to be more critical in the northern one-third of the State than in other parts of the State. This area is of course more heavily populated than the rest of the State and includes Chicago and the Rockford area for the most part. The Rock Island area has not experienced the critical problems that Chicago and Rockford have although their problems have been increasing to serious proportions. Also, some problems have been brought to our attention in the Peoria-Quincy areas. We have had no serious complaints from southern Illinois. A personal opinion of the earlier problems encountered in the Rockford area seems to reflect that independent distributors failed to heed the allocations set up by the major petroleum companies supplying them and then when out of fuel they sought to place the blame on others. Since that time, close adherence to allocations has been followed and while the situation remains tight it is not as critical. Our personal observation of the problems in the Chicago area is that the independent distributors in most instances are doing a tremendous job in allocating the fuel they have available while the major petroleum suppliers continue to announce further reductions of fuel deliveries, allocations, a desire not to renew contracts or furnish fuel under any circumstances. An incident which happened early this year revealed that a major petroleum company notified a Chicago carrier whom they had been supplying gasoline under contract for some time of their inability to continue to furnish the fuel. Their contract price was 11.2¢ per gallon. The carrier in seeking an alternate supply contacted an independent distributor which later turned out to be a wholly owned subsidiary of the same major petroleum company who had refused to furnish further fuel. The independent distributor volunteered that he had no fuel problems and would gladly furnish fuel upon demand. His price was 18.4¢ per gallon. Another example in the Chicago area is an interstate operator who although not domiciled in Illinois maintains one of the larger terminals in this area. On May 1, 1973 they received notification from their supplier, a major petroleum company, that when the current contract expires on May 31, 1973 it would not be renewed and that they would be unable to furnish fuel after that date. This contract called for 155,000 gallons of diesel fuel and 35,000 gallons of gasoline per month. This company has not been able to find an alternate source of supply to date or any indication of compliance with the Emergency Fuel Allocation Act to-date from the current supplier. Unless this company receives immediate relief the economic condition of the company will be quickly affected since the operation of its Chicago area terminal compliments the total success of its coordinated operations systemwide which extends from Minnesota to the East Coast. Their operations also includes terminals in Indiana, Ohio, Pennsylvania, New York and upper New England States. Here in Chicago alone more than 500 employees will be affected and since all other terminals in the system are dependent on Chicago their employees and customers will be affected also. The above two examples, one of a local nature and the other of a widespread nature, are just samples of the total area problem. Currently, truck operator fuel inventories in this area are completely depleted. Truck operators are forced to use less equipment and to curtail service. This also means unemployment. At the same time they are forced to purchase fuel at truck stops and service stations at highly inflated prices. Unless immediate relief is forthcoming the total economic stature of the State of Illinois and surrounding States in the Midwest is in imminent danger. The basic shortage of fuel needs in Illinois and the Midwest, regardless of cause, must be rectified immediately. This can be accomplished only through conservative efforts by consumers and stronger governmental controls or mandatory priorities. This should include the relaxing of environmental controls under the Clean Air Act of 1970 and State environmental controls or regulations. This would permit public utilities to convert back to the use of 3% sulfur content fuels making millions of barrels of distillate fuel available for other purposes. Here in Chicago alone a public utility company burns 1 million gallons of distillate fuel every day. We are indeed vitally concerned with regards to the fuel shortage and its effect on the economy of the State of Illinois and the United States in general. Accordingly, we urge support of all constructive suggestions which may contribute to the eventual solution of this serious problem. Senator STEVENSON. Mr. McCarron. STATEMENT OF W. EUGENE MCCARRON, GENERAL MANAGER OF THE ILLINOIS MOTOR TRUCK OPERATORS ASSOCIATION, CHICAGO, ILL. Mr. MCCARRON. My name is Eugene McCarron. I am the general manager of the Illinois Motor Truck Operators Association. Our association is composed of essentially Chicago metropolitan trade area truck users and Illinois intrastate truck users. The Illinois Motor Truck Operators Association represents approximately 500 employer truck users operating approximately 20,000 trucks in Illinois. The fuel shortage is growing worse day by day with no improvement in sight. Commercial and bulk users are being told that they can no longer be supplied and that the best thing for them to do is buy retail from a gas station. This represents, generally, a 50-percent increase in price within the last 60 days. Independent fuel jobbers and suppliers are being forced out of business by the major oil companies, forcing commercial users to be serviced at retail pumps is obviously designed to achieve price increase up to 50 percent or more from them. Truck users must have fuel supplies accessible to them in bulk quantities to ensure their continued economic function. Truck users cannot put a truck in service with possibly $100,000 worth of cargo and expose the truck and cargo to running out of fuel and consequent risk of loss. Truck users do not and cannot operate in this way. The Federal Government's fuel allotment program is not working. We feel Federal intervention of the impending fuel disaster is imperative. We have asked before and we are asking now that a priority allocation of fuel for commercial users be established at once guaranteeing industry and businesses continue to function. Senator STEVENSON. Mr. Cecil and Mr. McCarron, we have addressed primarily during this hearing to the gasoline shortage. Are supplies of diesel fuel also being cut off for truckers? Mr. MCCARRON. Yes. Mr. CECIL. My statement deals with both products. Mr. CECIL. Yes, sir. Senator STEVENSON. Do you have any explanation for it? I am told that unlike gasoline inventories, diesel inventories have been increasing and as a matter of fact diesel inventories now stand at about 12 percent over the diesel fuel inventories for a year ago. Mr. MCCARRON. This is explainable to some extent, that the ecology problems that have presented themselves to the economy insofar as engines are concerned. I have read figures not long ago that said that ecology or that the emission controls on automobile and engines in general, there was remarkable progress being made, that the harmful emissions had been cut 50 percent and more. That to me is a very shallow statement because automobile are using twice as much gas and so are trucks, for that matter. So if they are cutting the pollutants by 50 percent, yet we are using 50 percent more fuel, where is the improvement in ecology? Mr. CECIL. If I could add my 2 cents to that, Senator, the inventory of the diesel today versus a year ago are probably up because of the inserted effort that the major companies have had to distilling diesel oil. Heating oil and No. 2 diesel fuel are practically the same product, maybe one little additive difference. Something like that. I think that is the reason, because they concentrated so heavily on heating oil problems early. Senator STEVENSON. And then we have the relatively mild winter? Mr. CECIL. Then we had the relatively mild winter and this is the advantage of the increased inventory now, I believe. |