THE SHEIK OF ARABY and BLUE SKIES

Do you remember when OPEC initiated an oil-embargo? I do. Here's my recollection of those days. 03/10/2016

THE SHEIK OF ARABY

When the Oil Producers Exporting Countries (OPEC) began its oil embargo in the early 1970s, the United States encountered a chilling reality, a monopoly it could not control. Our nation became hostage to the oil producing regions of the world. As shortages in supply arose, motorists waited in long lines fill up. Tempers flared. Prices soared.

At a cocktail party, I said to the host, “We’ll soon be paying a dollar or more per gallon.” He laughed at my prediction. Within weeks, prices passed that barrier with impunity.

As the shortage continued, the government prioritized the supply of natural gas, ranking residential home heating needs ahead of those electric utilities. SRP’s local power plants burned natural gas year round. The company now had to switch to burning either diesel or a very heavy tar-like fuel known as Bunker C on a continuing basis. Prior to this emergency, it stored small amounts of these fuels on site, used once a year while training personnel how to run the plants with them on a temporary basis, should the need arise.  No plans had been made to operate the plants indefinitely without gas.

Prior to this situation, I had routinely purchased small amounts of these two fuels to replenish the amounts consumed in training exercises. Now, I had to spend day and night trying to purchase both, in huge quantities, competing with numerous other utilities across the country. Demand far outpaced supply.

 Each product presented unique delivery problems. Two pipelines brought diesel fuel to Phoenix from refineries located in California and Texas refineries. The size of these lines dictated the amount that could be pumped in any given time frame. The same pipelines carried gasoline and other fuels as well. All these products had to be delivered to storage tanks located at pipeline’s terminus. Their were an insufficient number of them to hold the amount of diesel fuel SRP ordered, requiring the company to build four new tanks for our exclusive use.

As an interim step, we employed a fleet of trucks to haul diesel from California to our power plants. These measures helped alleviate the wide swings in usage and supply that varied with fuel oil consumption rates. Sometimes our plants could obtain natural gas which they would use before burning diesel. I found myself in at the center of a three-ring circus act, either trying to acquire more fuel or attempting to divert deliveries of supplies already in the pipeline for which we had no storage capacity.

The viscosity of Bunker C precludes refineries from shipping it by pipeline. Rail tank cars are required to transport this fuel. Soon, utilities found themselves facing a nation-wide shortage of tank cars. I helped SRP order the fabrication of 350 new ones to meet its needs. As these cars came off the assembly line in Pennsylvania, we routed them to various refineries to pick up oil we had purchased. No one supplier could meet our needs. I had to shop around, buying small quantities from a variety of sources.

 Many middle men appeared on the scene, trying to take advantage of the turmoil that prevailed. One memorable phone call from a New York based firm I recall vividly. The seller said, “Are you sitting down?  The deal I have to offer will knock you off your feet.”

“Tell me.” 

“I am prepared to sell you the entire contents of an oil tanker at an extremely attractive price. The ship is now sailing toward a U.S. port.” The astronomically high price he mentioned made me laugh.

“No deal, Charlie. Arizona remains a land-locked state, and in addition, we have decided to stop burning oil in our boilers. Instead, we have elected to toss our paper money into the furnace, as it burns cleaner and gives off just as much heat as fuel oil.” 

He laughed for about ten seconds and then hung up.

Shortly afterwards a big cowboy showed up in my office. “Just give me a purchase order number and you’ll soon have gobs of oil flowing your way. As you know, I am quite friendly with many SRP board officials.”

“What are the fuel’s specifications, in particular, the sulfur content?”

"Wadda you need to know that for?" 

"When we burn this oil in our power plant furnaces, sulfuric acid might form.” I explained the consequence this might have for our equipment and the environment.

He made an awful face, and then spat out, "You gotta be kidding me. This ain't no burnin’ oil. This here is sellin’ oil."  He seemed astonished that anyone would want to consume a product that had such an ongoing sales life.

Rail cars became the bane of my life. Some cars fell off tracks while others left a refinery and simply disappeared from the railroad’s monitoring system for months at a time. Some cars arrived carrying the wrong product, closer to asphalt than Bunker C. The sulfur content frequently exceeded the amount our specs permitted, but we had no way of returning the stuff. Through it all, we were able to keep the juice flowing to our customers.

In time, natural gas became more readily available and operating conditions changed. The company found it could buy energy from other utilities cheaper than generating its own. We did not wish to burn up all our high priced and high sulfur content fuel oil.

Bad news trumped this good news. As these new economic conditions prevailed, the fuel oil shortage turned into an abundant supply, then an unmanageable surplus. Within days, we filled every one of our storage tanks to their capacity. We had little flexibility when dealing with oil refiners. Most contracts contained a "take or pay" clause. I looked up one day and found we had 350 railroad tank cars, loaded with oil, headed toward our plants. It puzzled me. What were we going to do with all this unwanted fuel?  We could not afford to burn it, and we could not find a place to store it. All the other local utilities were up the same creek. They had filled all their storage tanks. We decided to divert the cars to various spurs and sidings all over the state. So did the other companies. Rail storage space became a premium and tank cars could be seen wherever one drove around the metropolitan area.

The railroad companies charged prohibitive freight and demurrage costs to accommodate the glut. It took a number of years, but our traffic consultant recovered hundreds of thousands of dollars from two different railroad companies through court action. The railroads were greedier than OPEC members.

Afterwards, SRP established a Fuels Department that assumed control of all the company’s fuel requirements, including coal. Coping with the oil embargo proved to be the most challenging and enjoyable part of my entire work experience. However, it did not displease me to relinquish my role.

Years later and happily retired, I came to a halt at a Tempe rail crossing, watching a freight train roll past including an SRP oil car. My mind flashed back to when the need to purchase and transport fuel consumed every minute of my working day. My immediate reaction was to sing, Tanks for the Memory.         

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BLUE SKIES

Oil was not the only bane of my life in 1973. At that time, Jamie, Laura and Ellen, ages 17, 15 and 14, were all students at nearby Saguaro High School, to which they could and did walk. We had considered sending them to a Catholic high school (there were two choices), but opted for the convenience offered by the public system. One visit to Saguaro convinced me to send my children there. I had just managed to convince SRP to provide my secretary with an IBM “Selectric” typewriter, the newest thing on the market. It cost upwards of $1500, a huge sum in those days. When I walked into Saguaro’s typing classroom, I saw at least forty of these machines ready to train students. Obviously the public school system had far more money to spend on education than did parochial schools.

Jamie disliked high school from the outset. Saguaro boasted an enrollment of about 3,400 students. She felt lost after her days in a small parochial elementary school. Adding to her angst, she was younger and smaller than almost all her classmates. The word, “petite,” always described her physique.

Laura cultivated a wider circle of friends than Jamie, and enjoyed her years there. Some of the students came from affluent homes, and drove their own cars. Ellen disliked the “rich kids”. While Jamie and Laura had no difficulty in passing their classes, Ellen excelled and achieved very high grades.

An organization called the “All American Softball League” formed in 1973, and our oldest three girls joined the Scottsdale club. Laura was named an “all-star” and played in a tournament game in California that we attended. She was a very good player, Jamie not so much. Called into an early season game as a replacement, the coach told her to take over in right field. Jamie jumped up from her seat on the bench, grabbed her glove, ran toward the pitcher’s mound, turned and shouted back, “Where’s right field?”

When they each turned sixteen, I helped teach the three oldest girls to drive. They practiced on weekends in the empty high school parking lot before venturing out on the city streets. They laugh when recalling those lessons, as I had no compunction in letting them practice parallel parking between other parked cars. They all became proficient in no time.

Jamie and Laura chose not to attend college after graduation. Ellen did, but not before she spoiled her driving record. One Saturday morning she drove my commute car, a 1972 Plymouth four-door sedan, to another high school to take an SAT exam. Running late, she pulled into a narrow parking spot, struck the rear bumper of the car on her left, plowed straight ahead anyhow, gouging the driver’s side of the car from stem to stern. Fortunately, her high SAT score enabled her to be accepted at a number of colleges.

“Which one do you have in mind?” I asked Ellen.

“The University of Alaska.” I rolled my eyes to heaven and then burst out laughing. I had attended a few classes at this school while stationed at Fairbanks back in 1946/47.

“Have you any idea how impossible it would be for us to send you there?” I asked.

“No.”

After explaining the meaning of snow, she agreed to attend the school where I had earned my MBA, Santa Clara University. The sky above returned to blue.

It was a good decision, although she could have used some sheik’s oil money to help with tuition.

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