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The litmus test is provided by three refineries: Texaco Trinidad, Amerada Hess on St. Croix and Bahamas Oil Refining Co. (Borco) on Grand Bahama Island. Together they have a refining capacity of more than 1,000,000 bbl. a day, most of which is shipped to the U.S. Before the cutoff they depended on the Arabs for almost half their crude; if the embargo were fully effective, they should be cutting production drastically by now. Yet the Texaco refinery has reduced by only 60,000 bbl. a dayto 140,000 bbl.the amount of petroleum products it ships to the U.S. Amerada Hess has cut residual oil production a mere 10% or so.
More Crude. Borco has actually doubled its normal output of 250,000 bbl. a day, more than making up for the declines at the Trinidad and St. Croix refineries. Borco officials say that they are using more crude from Nigeria, Iran and the U.S. They adamantly deny that they are still getting ample supplies from Libya, officially a full participant in the boycott. Yet a check with brokers who manage Borco's tanker operations indicates otherwise.
Presumably the last ships out of Libya before that country joined the embargo Oct. 19 would have completed the two-to three-week journey to the Borco refinery at Freeport by early November. Yet records at Marbrok Marine Brokers in Freeport show that between Nov. 1 and Nov. 29, no fewer than 13 tankers out of the Libyan port of Ras Lanuf discharged crude at Borco. As recently as Dec. 8, the tanker Heythrop out of Ras Lanuf unloaded 513,135 bbl. of crude at the Borco refinery, according to Robert Bunford, executive vice president of E.H. Mundy & Co. Ltd., another Freeport marine broker, which arranged the transaction. No one will talk about whether additional Libyan shipments have come in since then.
All this is good news for the U.S. Eastern Seaboard, especially New England, which relies heavily on tropical refineries for its supply of residual oil to run electric power plants, factories and ships. The little-known New England Petroleum Corp. (Nepco), which owns 65% of Borco (Standard Oil Co. of California owns the rest), is a leading supplier of residual oil and other petroleum products to electric utilities in the Northeast, including New York City's Con Edison. The company also owns a string of 250 gas stations in Eastern Canada, operates wells in Abu Dhabi and Texas, and claims to have posted 1972 sales of $1 billion. Nepco President Edward M. Carey founded the company 38 years ago and remains sole owner.
Cutbacks at the island refineries had been expected to reduce fuel supplies to New England by as much as 30% or 40% below demand. Now Alan Greenspan, a member of TIME'S Board of Economists, estimates that the region's fuel supplies for the first quarter of 1974 will be short only about 3%. He adds that the whole U.S. seems to be getting "half a million bbl. a day more than we should be getting if the [Arab] embargo were effective."