relief appropriate to each would be provided by granting the following allocations: Northville Dock Corporation is granted an allocation to import 905 b/d of No. 2 fuel oil, 716 b/d for the current allocation period beginning January 1, 1967, and the remainder of 189 b/d for the allocation period beginning January 1, 1968. Cirillo Brothers Oil Company is granted an allocation to import 1927 b/d of No. 2 fuel oil, 1524 b/d for the current allocation period beginning January 1, 1967, and the remainder of 403 b/d for the allocation period beginning January 1, 1968. Northeast Equities, Inc., is granted an allocation to import 502 b/d of No. 2 fuel oil, 397 b/d for the current allocation period beginning January 1, 1967, and the remainder of 105 b/d for the allocation period beginning January 1, 1968. The division of the Board's awards is necessary by reason of the fact that the sum of the Board's awards exceeds the quantity of finished product allocation available to the Board for grant respecting the current quota period. The carryovers to the 1968 quota year, set forth above, does not prejudice the petitioner's right to file a petition for the 1968 allocation period should any of these petitioners be so disposed. Each petitioner shall file such reports as are requested by the Oil Import Administration. Member. Member. GLEN D. JOHNSON. Dated: September 27, 1967. APPENDIX 1. NORTHVILLE DOCK CORP., P-15 (FP) The petitioner requested an allocation of 1,850,000 barrels (5,206 b/d) of No. 2 fuel oil and a hearing before the Board, which was held April 28, 1967. Northville has been in the fuel oil business since 1951. For the greater part of this period it has been a wholesale marketer of Nos. 2, 4 and 6 oil, operating an ocean terminal at Riverhead and three barge terminals, also on Long Island. Aside from relatively small sales to industrial plants and institutional consumers, Northville's No. 2 oil sales are to dealers who resell in Brooklyn, Queens, Nassau, and Suffolk counties. Over 55 percent of the company's gallonage (and a much higher fraction of its gross revenue) is derived from No. 2 oil business. In the past two heating seasons Northville has sold approximately 8 million barrels (22,000 b/d) of No. 2 oil. Its competition in the Long Island market area is primarily, if not exclusively, with major oil companies. Northville has been profitable in selling No. 2 oil (and other fuel oils) until recently. It now faces staggering losses unless it can secure the roughly 25 percent of its requirements for the 1967-1968 heating season, which are not covered by contract, at competitive prices. One major supplier has reduced its commitment to Northville by 600,000 barrels as compared with the 1965-1966 season. Another has cut 500,000 to 650,000 barrels from its 1966-1967 deliveries. A third cut its 1965-1966 deliveries of roughly 600,000 barrels by more than 50 percent last year and has offered none at the posted cargo prices for 1967-1968. Northville has had little or no No. 2 oil in storage at times when it normally would have in excess of a million barrels and it has borrowed a substantial quantity. Last year accounts aggregating 17 million gallons (about 400,000 barrels) were lost for lack of supply, some of it to major oil companies which sell to Northville, Northville states that ten refiners turned down its request for supplies. The spot market is no longer a source of supply. No. 2 oil is available from Gulf Coast sources but at prices which would inflict a loss of one cent or more per gallon when ocean transport and handling costs are included. If Northville attempted to hold its customers by buying Gulf Coast oil, its losses would exceed $400,000 for each million barrels purchased. Finally, Northville describes its hardship in terms of loss of reputation for reliability for No. 2 oil supply and the compounding of its loss by the threat to its sales of No. 4 and No. 6 oil. Some of its customers take all three types of fuel oil and will favor purchase from marketers who can meet their complete requirements. This petitioner requested an allocation of 912,500 barrels (2,500 b/d) of No. 2 fuel oil for the current quota year and 2,190,000 barrels (6,000 b/d) for the year 1968. He also asked for a hearing, which was held April 24, 1967. Cirillo has been in the No. 2, 4, and 6 fuel oil business in the New York metropolitan area for more than two decades. In 1961 the firm acquired a deepwater terminal in Manhattan; the company also has a deep-water terminal in Albany and six barge terminals in the metropolitan area. Cirillo has approximately 200 pieces of delivery equipment (trucks), about one-half of which are devoted to its No. 2 oil trade. Approximately 60 percent of total dollar volume is derived from No. 2 oil. About 85 percent of this product is sold to some 300 resellers and the balance to 10,000 final consumers. In each of the past two heating seasons, Cirillo has sold approximately 3.75 million barrels (10,000 b/d) of No. 2 oil. It competes in the New York market with oil companies and several large independent marketers. In 1965 the company made a profit of $504,000 on light oil sales. In 1966 the profit on this business was wiped out and the company suffered a loss of $213,000, reflecting a sharp rise in the cost of oil sold. For the calendar year 1967, Cirillo projects a loss on No. 2 oil of about $500,000. Cirillo has lost the greater part of its assured supply of No. 2 oil. Four prime suppliers have cut their commitments to Cirillo by an aggregate of 2.1 million barrels. Cirillo has been unable to replace any important quanity of this loss by committed supplies from major oil companies or independent refiners. It is no longer possible to secure significant quantities of No. 2 oil on a spot purchase basis. Cirillo describes his plight in securing No. 2 oil at competitive prices (without access to foreign supplies) as desperate, portending the destruction of the company. With respect to Petitioner's request for 2,190,000 barrels for the year 1968, the Board was not persuaded that this request should be considered at this time. Accordingly, it is denied. However, this denial is without prejudice to the timely filing of a petition covering this request for the next allocation period, January 1-December 31, 1968. A petition for an allocation of 730,000 barrels (2,000 b/d) of No. 2 fuel oil was made in the name of Northeast Equities, Inc. for its subsidiary, Northeast Petroleum Corporation. The appeal hearing was held by the Board on May 10, 1967. Northeast Equities, Inc. is the parent of several operating companies formed in 1958, 1960 and 1965, which market Nos. 1, 2, 4, 5, and 6 fuel oil and gasoline in the New England area from three deep-water terminals located at Chelsea and Revere, Massachusetts, and Providence, Rhode Island; from a barge terminal located at Sandwich, Massachusetts; and from various inland bulk storage plants. Northeast states that sales of No. 2 fuel oil, 90 percent of which are to resellers, account for 80 percent of total sales volume. In 1967 Northeast has been unable to maintain an inventory of No. 2 fuel oil sufficient to cover operations. By late April two of Northeast's storage terminals were shut down because of lack of product. A third was open only through emergency supply measures. On April 30, 1967, Northeast states its inventory of No. 2 oil stood at minus 2.5 million gallons (reflecting borrowings), some 6.4 million gallons below the supply carried on the same date in 1966. Sales of No. 2 oil in the year ended June 30, 1967 were estimated at 9.2 million barrels. Northeast, which had made profits in its No. 2 operations, now faces substantial losses. In its efforts to obtain product to meet customer demands, Northeast states that it had been forced to pay prices in excess of its selling price to dealers. Barging and other transport expenses from February through April 1967 were about nine times the figure for the same period in 1966. Claims for contaminated product have been made against the company because lack of inventory had forced the sale of fuel oil which had not had sufficient time to settle. Prospects for the 1967-1968 heating seasons are for worsening supply. Of the 9.2 million barrels Northeast will need, only 8.2 million have been promised (and only 5.6 million barrels have been pledged in writing). One prime supplier reduced its commitment to Northeast for the 1967-1968 season by more than one million barrels below the 1966-1967 volume of deliveries; another successively cut its supply from 700,000 barrels to 320,000 barrels to zero; a third offered to sell only at a prohibitively high price. Northeast relates that contacts were made with sixteen other major suppliers without positive response. 43-328-70-9 U. S. DEPARTMENT OF THE INTERIOR, CONSOLIDATED INTERIM DECISION ON THE PETITIONS OF: 1. United Oil Manufacturing Company, Q-3 (fp) 2. Cirillo Bros. Oil Co., Inc., Q-4 (fp) 3. Burns Bros. Incorporated, Preferred, Q–5(fp) 4. Patchogue Oil Terminal Corporation, Q-9(fp) 5. Blue Ridge Fuel Company, Q-13 (fp) 6. Howard Fuel Corporation, Q-14 (fp) 7. Heating Supplies, Inc., Q-16(fp) 8. Mid-Hudson Oil Company, Inc., Q-17 (fp) 9. Sears Oil Co., Inc., Q-21 (fp) 10. Scranton & Leigh Coal Company, Q-22 (fp) 11. Northeast Equities, Inc., Q-32 (fp) 12. Max Waller, Inc., Q-24 (fp) 13. Union Oil Company of Boston, Q-30(fp) 14. George Hall Corporation, Q-33 (fp) 15. Central Petroleum Corporation, Q-34 (fp) 16. Northville Dock Corporation, Q-36 (fp) 17. New England Petroleum Corporation, Q-37 (fp) 18. Deepwater Oil Terminals, Inc., Q-38 (fp) Secretary of the Interior Udall, by letter of February 12, 1968, requested the Oil Import Appeals Board to give urgent consideration to the petitions then pending for allocations of No. 2 fuel oil. The Secretary advised that his request was made because “some independent distributors do not now have access to adequate suplies at competitive prices. On a short-term basis, we believe that this problem can best be resolved by the Oil Import Appeals Board. I am aware that you have a number of petitions from independent distributors of No. 2 fuel oil now pending before you. I would appreciate it greatly if the Board would process these petitions on an urgent basis so that in cases where the Board believes an award is merited, an allocation can be made during the current heating season." The Board decided that it would accede to the Secretary's request and promptly announced that it would expedite its consideration of the 18 No. 2 fuel oil petitions before it. With only two months, approximately, remaining in this heating season the Board felt constrained to depart from its customary procedures in order to act with dispatch. The Board decided that it must break with precedent in two significant respects: (1) The privilege of petitioners to have formal hearings on their appeals would be set aside for the immediate, urgent review of No. 2 oil petitions, and (2) the Board would issue interim awards and not final decisions at this time on those petitions meriting immediate relief. In its announcement on February 12, 1968, the Board stated that the interim decisions would be based upon information then in the hands of the Board plus additional data to be secured from the petitioners within a week. The announce ment further stated that subsequent to the issuance of the interim decisions and prior to its final decisions, the Board would hold hearings at the request of the petitioners. In response to requests by telegram from the Chairman, the Board received additional information from the petitioners regarding their supply-requirements positions for the period January 1 through April 30. The Chairman's request for this additional information stated that its accuracy and validity must be attested to by a responsible company official in a certification such as that used by the Oil Import Administration. A few statements were filed with the Board in opposition to its interim ac tion on No. 2 oil petitions. The basic contention of these statements was that there is no physical shortage of No. 2 fuel oil. This consolidated decision is based on the record as outlined above. These petitioners have each separately requested a finished product alloca tion to import No. 2 fuel oil. None of them is eligible for a finished product quota issued by the Oil Import Administration by reason that none was an importer of finished product in the year 1957. Their petitions to this Board are based on claims of exceptional hardship. These petitions have a number of similarities in respect to the operations of the companies and in respect to the nature and origin of the difficulties which caused them to appeal. The Board is issuing this consolidated interim decision in order to expedite its business. The final decision on these petitions will contain the usual résumé of each petitioner's contention and evidence, rebuttal statements (if any) and the Board's evaluation of each case. The six petitioners listed below were not given interim allocations, for one or the other of the following reasons: (1) Some requested that they not be considered at this time, stating that their problem was not acute during the January-April period but would become so later. (2) Other petitioners did not clearly demonstrate the need for immediate relief: In neither circumstance is the petitioner's right to request a hearing and to receive a favorable final decision on his petition, if merited, prejudiced by his absence from the list of recipients of awards in this interim decision. 1. United Oil Manufacturing Company, Q-3(fp) 2. Blue Ridge Fuel Company, Q-13(fp) 3. Heating Supplies, Inc., Q-16 (fp) 4. Sears Oil Co., Inc. Q-21 (fp) 5. Max Waller, Inc., Q-24 (fp) 6. George Hall Corporation, Q-33 (fp) The Board finds that each of the remaining 12 petitioners listed below has presented persuasive evidence of exceptional hardship afflicting its No. 2 fuel oil business. Each is apparently faced with the choice of losing customers or losing money, although the market for light fuel oil is expanding. The Board set forth in its consolidated decision of September 27, 1967 on No. 2 oil petitions the circumstances which justified attribution of a substantial measure of the hardship found in those cases to the Mandatory Oil Import Program. (Consolidated decision on the petition of Northville Dock Corporation, P-15 (fp) et al., September 27, 1967.) The Board takes the position that the circumstances therein stated (of tight supply, inflexible controls on imports of finished products, and uneven impact of these conditions on fuel oil marketers) are present with equal or greater effect in this period. The Board has carefully assessed the extent of the hardship of each of the petitioners listed below, individually, in terms of past and present supply and requirements at competitive prices, and finds that interim relief to each would be provided by granting the following allocations. These companies shall be issued licenses to import the stated number of b/d of No. 2 fuel oil for the allocation period beginning January 1, 1968 and ending December 31, 1968, and such licenses shall expire on the latter date: 1. Cirillo Bros. Oil Co., Inc., Q-4(fp) – 2. Burns Bros. Incorporated, Preferred, Q-5(fp) – 3. Patchogue Oil Terminal Corporation, Q-9(fp) 4. Howard Fuel Corporation, Q-14 (fp) 5. Mid-Hudson Oil Company, Inc., Q-17 (fp). 6. Scranton & Lehigh Coal Company, Q-22(fp). 7. Northeast Equities, Inc., Q-23 (fp). 8. Union Oil Company of Boston, Q-30(fp). 9. Central Petroleum Corporation, Q-34 (fp) 10. Northville Dock Corporation, Q-36 (fp). 11. New England Petroleum Corporation, Q-37 (fp). 12. Deepwater Oil Terminals, Inc., Q-38(fp) __ b/d 661 131 846 37 74 45 1,993 257 390 2,225 170 144 The above awards are interim awards only and will be followed by hearings, if requested by petitioners, prior to final decisions (covering the entire allocation period) by the Board. Each petitioner shall file such reports as are requested by the Oil Import Administration. Member. Dated February 27, 1968. Member. Chairman. U.S. DEPARTMENT OF THE INTERIOR, DECISION ON THE PETITION OF BURNS BROS. INC., PREFERRED Q-5(FP) Burns Bros. Inc., Preferred, filed a petition requesting the grant of an allocation to import 1,370 b/d of finished product (No. 2 fuel oil) into District I-IV, on the ground of exceptional hardship. The Board is authorized to grant an allocation on this ground to persons who do not qualify to receive an allocation from the Administrator. A hearing was held on the petition on June 19, 1968, and the decision is made on the full record before the Board. Petitioner sells No. 2, 4 and 6 fuel oil and some coal in Metropolitan New York, plus Suffolk and Nassau Counties on Long Island. Sales of No. 2 oil account for 22% of fuel oil receipts. Approximately 65% of its No. 2 oil gallonage is sold at retail, the balance at wholesale. Burns operates a deepwater terminal at Astoria and a fleet of trucks. Petitioner's claim of exceptional hardship is in essence that it has been unable to secure an adequate supply of No. 2 fuel oil at competitive prices. Burns states that an exhaustive canvass of all potential sources of supply has been unproductive. This petitioner stresses that prohibitive price was not the cause of its rejecting supply offers; rather that negotiations never reached the question of price because no oil was offered. The Board views the following circumstances as significant. Petitioner's assured supply for 1968 is substantially less than its current requirements and its 1967 volume of sales. The Company has suffered a succession of losses on No. 2 oil that cannot be carried by its other business, which is also unprofitable overall. Burns Brothers was granted an allocation of 131 b/d (approximately 2 million gallons) by Consolidated Interim Decision, United Oil Manufacturing Company, et al., dated February 27, 1968. Petitioner contends that its hardship for this year has not been relieved by this award. The Board has examined this contention with extraordinary care and sympathetic consideration in spite of the intemperate and baseless criticism leveled at the Board by the Petitioner's attorney. Nevertheless, the Board does not find that the record supports an additional allocation to the Petitioner for the 1968 allocation year. The Board has addressed itself to those aspects of the No. 2 fuel oil market situation which are relevant to the 1968 petitions. The substance of the views and conclusions of the Board are set forth in its decision on Patchogue Oil Terminal Corporation, Q-9(fp), dated September 30, 1968, culminating with this statement "In summary, the Board takes the position that lack of adequate supply on economic terms constitutes, in severe instances, exceptional hardship and that such inadequacy is attributable, directly or indirectly, to the Mandatory Oil Import Program." The Board's position is applicable to the petitioner. It is the opinion of the Board that the record indicates Petitioner's circumstances for the year 1968 are characterized by exceptional hardship attributable to the Program. However the relief which has been made available by the Board in allocating Petitioner 131 b/d in February, 1968, is sufficient to relieve this hardship. Accordingly, Burns Bros., Inc., Preferred Q-5 (fp), is granted an allocation to import 131 b/d of finished product (No. 2 fuel oil) for the allocation period beginning January 1, 1968 and ending December 31, 1968 (already granted by Consolidated Interim Decision, dated February 27, 1968). Further relief during this allocation year is not warranted. Member. Member. Chairman. |