Heavy fuel oil glut no help to drivers
Washington — Price cuts are showing up in one sector of the world oil market, but this is unlikely to lower costs for American motorists and for those who heat their homes with oil.
Heavey, or residual, fuel oil -- burned chiefly by utilities, factories and large office and apartment buildings -- is a glut on the market, leading to price cuts and lower production.
Venezuela has slashed by up to 9 percent the price of the residual fuel oil it sells to the United States. Exxon, at the marketing end, has trimmed its prices as well.
Venezuela and Kuwait, meanwhile, have announced production cutbacks on this type of oil, while Iran -- without announcing it -- also is producing less.
To the extent this shaves fuel costs for utilities and factories, these moves might slightly benefit consumers of electricity and manufactured goods in general.
Such a gain, however, would be more than swallowed up -- for most Americans -- by the steadily rising cost of gasoline.
Gasoline is not made from residual oil, but from the more highly prized, low sulfur-content, light oils, which --though in adequate supply -- are not a glut on the market.
Gasoline also is subject to special rising cost pressures, stemming in part from two moves by President Carter -- a new oil import fee and his progressive decontrol of domestic American oil.
Each of these programs, according to Department of Energy analysts, will add at least 10 cents a gallon to the retail price of gasoline this year, bringing the final cost to motorists above $1.50 a gallon.
Although some industry experts predict a price close to $2 a gallon by the end of the year, White House officials cling to $1.50 to $1.60 as a more likely norm.
"Unless gasoline consumption drops further," says Lawrence Goldstein of the Petroleum Industry Research Foundation Inc., "the price of gasoline will not come down."
Americans now are chalking up significant conservation gains in their use of gasoline, home heating oil, and residual fuel oil.
Partly these gains, according to analysts, stem from the impact of high prices and, especially in the burning of home heating oil, from a relatively warm winter.
Massive switching from oil to natural gas also has cut into the burning both of residual oil in large plants and in many individual homes.