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&deral Reserve Bank of Da]las

Business Review
-

Electric PowerEconomic Uncertainties
Hamper Plans for Growth

July 1971

'.

- ''''''-

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

Electric Power -

-~--~------~---~-~--~~

Economic Uncertainties
Hamper Plans for Growth

~i~eak de~and for electricity
c
s up thIS summer, there is
a~n~ern that power shortages could
Pa~n become a problem in some
a r s. of the country. Severe shortlag~S In the North and Northeast
ins year sharply reduced the lightthg and Power available in some of
ca~ ~ation's most populated areas,
ands~~g consi~erable inconvenience
reatemng to slow industrial
Out put.

ch~he pr?b~em is clearly not
ind acterlstlc of the electric power
inv u~try as B: whole. Substantial
haves bments m generating capacity
e
Count een made all across the
.
lUost rY.I.n. recent years, allowing
growtut~tles to stay well ahead of
The' h In peak-load requirements.
and ~nd~stry's outlays for plant
lev I iUlpment reached record
pa:: ~ ast year, for example, exing : g t.he nation's total generatTh paclty by about 9 percent.
alon et~upplY problem centers
acr g e Eastern Seaboard and
oss
.
a sudd th e Upper MIdwest. There,
equi en hot .spell or series of
SuchPkent .f~lures could still leave
New ye y CIties as Washington,
elect . ~rk, and Chicago short of
hav ~Clty. Utilities in these areas
the ~ ad to accommodate not only
and astest growth in population
war eco~omic activity in the postin u penod.but also a belated surge
ho se ~f au-conditioners. Where
lU
estab .au co~ditioning has been
the lished m warmer climates of
laritCo~ntry for 20 years, its popurec/tIn northern states is a fairly
Nn development.
the E~e of the electric utilities in
Dist . eventh Federal Reserve
su~ct face the possibility of a
_ _ er shortage in capacity. In

fact, plant expansion in the Southwest over the past 20 years has
brought the available supply of
power in this part of the country
to a level exceeding peak-load requirements by more than 15 percent. And with growth in demand
more predictable here than in the
more populated centers of the
North and Northeast, utilities in
the Southwest should be able to
easily maintain a favorable balance between supply and demand. 1
Adding further to the problem
facing utilities in the North and
Northeast last year was a severe
shortage of fuel to drive generating
plants. Several utilities felt the
effects of this shortage, but hardest
hit were those least able to stand
a setback. As late as October, in
fact some northern utilities were
still'seeking adequate fuel supplies
in competition with industrial
users when seasonal demand for
heating fuel began to rise.
Since then, much of the problem
of fuel supplies has been relieved.
Mining companies and railroads
have improved their deliveries of
coal, and new efforts have been
made to tap the nation's enormous
coal and lignite reserves, Price
agreements with petroleumexporting countries have largely
stabilized the world oil situation,
freeing tankers to resume deliveries
of residual fuel oil to tlle East
Coast from refineries in the Caribbean, And although supplies of
natural gas are still short, high
transmission costs make natural
gas too expensive for most northern utilities in any case.
But while only a few utilities
face a current shortage of generating capacity and none of them face

a critical shortage of fuel all
utilities are confronted with the
longer-range problems of planning
for the types of generating capacity
that will best fit public needs.
Efforts to anticipate changes in
technology, to predict the cost and
availability of alternative fuels
and to overcome growing ecolo~cal
restraints-all these are matters of
continuing concern to all electric
utilities.
Immediate and long-run needs
A generating plant is a major
industrial installation usually
taking at least five years and often
as long as seven years to plan
build, equip, and put into oper~tion
-at a cost, of course, running into
the millions. Once in operation, the
plant has a long service life.
Because of the long lead time
required to bring a plant on line,
utilities must be able to project
demand for electricity far into the
future, pacing their construction
programs accordingly. Otherwise,
they cannot respond fast enough
to changes in load requirements to
avoid falling behind in reserve
capacity. And once they slip in the
race against demand, it is hard for
them to catch up.
But because of the long service
life of a power plant, utilities must
also build the types of plants that
cost least to operate, not merely in
the near term when construction is
first completed but also in the long
run of many years to come. And
comparative projections of fuel
costs and technological changes
complicate the choice of plants.
Nuclear plants cost much more
than conventional plants to build.
But over the long life of a plant, the

1. See E
1970 ~~ar L. McClelland. "Elect r ic Utilities in Texas F ace Challenge of Rising Demand," Business Review. Federal R eserve Ba nk of Dallas. August
8d
• .,.,. -10.

nUs'llless Review I July 1971

1

~

(

LOAD-SUPPLY SITUATION FOR ELECTRICITY-SUMMER 1971

Region

Northeast ..
East Central
Southeast . . . . . . . . .
West Central
South Central . ..
West . . . . . . . . . . . . .
48 states .. . ... . .

Net
Estimated
dependable
peak
capacity
load
Megawatts

57,198
47,727
58 ,872
36,937
42,702
52,788
296,224

68,119
54,355
65,979
42,621
49,147
64,196
344,417

Capacity
available
for
reserves
Percent
Megawatts
of peak

10,921
6,628
7,107
5,684
6,445
11,408
48,193

19.1%
13.9
12.1
15.4
15.1
21 .6
16.3%

I
J
I

l

Additional
capacity scheduled
for service
during
June-July-August
Percent
Megawatts
of peak

1,006
177
2,640
867
2,894
1,286
8,870

1.8%
.4
4.5
2.3
6.8
2.4
3.0%

SOURCE : Federal Power Commission

cost of operating a nuclear plant
may be less, especially in areas
where fossil fuels are scarce.
Eventually, nuclear plants are almost certain to account for a growing proportion of the nation's
power generation, but siting problems and difficulties with thermal
pollution make projections of the
rate of changeover difficult.
Roots of the shortage
Shortages in generating capacity
built up over several years, essentially as a result of unforeseen
changes in urban demand for electricity and unexpected delays in
nuclear plant construction. Roots
of the shortage extend back to the
1950's. In 1956, for example, consumption of electrical power was
expected to almost double over the
following decade. During that time,
nuclear generation of electricity
was expected to increase steadily.
Where nuclear plants accounted
for less than 0.1 percent of the
nation's total generating capacity
in 1956, they were envisioned as
accounting for 5 percent by 1970
and 17 percent by 1980.
But by 1964, after the many
delays in building nuclear plants,
the Federal Power Commission
and the Atomic Energy Commission agreed that nuclear production of electricity would account
for only 0.3 percent of total generating capacity in 1966. They
estimated that by 1980, however,
nuclear power would provide 19
2

percent of the nation's generating
tuation in demand. If it is fairly
capacity.
permanent, utilities will have to
Actually, by 1966 nuclear plants expand their reserve capacitie~
furnished 0.6 percent of total proeven more to avoid falling behmd.
duction. But by 1970, with demand
Meanwhile in the 1960's, techfor electricity rising faster than
nical problems in the manufacture
expected and construction of nuof nuclear generating equipment
clear plants running slower, reacslowed deliveries, delaying Comtors accounted for only 1 percent
pletion schedules and adding furof the total. Projections continued ther to construction costs that .
favorable, however, showing that- already tended to skyrocket. Utihbarring any further delays-the
ties had difficulties finding suitable
proportion of total capacity acplant sites. And with the predicted
counted for by nuclear plants
swing to nuclear power failing to
would reach 20 percent by 1980.
gain the momentum expected, deProjections of electrical demand mands on fossil-fueled plants
are based on the most recent actual increased faster than these more
data available. But because of the
conventional plants could be
long time required to build a
brought on line. Furthermore, be-.!
plant, generating equipment being cause of dwindling reserves of fosSI
installed today was ordered several fuels, costs of operating convenyears ago from projections based
tional power plants rose.
.
on the then-current experience
One result was a marked shift In
of the early 1960's, when conthe tone of advertising by electriC
sumption of electricity increased
utilities in some parts of the counan average of 6.5 percent a year.
try. Where utilities had once
Recently, however, Paul W.
sought to expand their markets
McCracken, chairman of the
through the promotion of hom~
Council of Economic Advisers-and air-conditioners (one of the major
probably more important in this
sources of the increase in summer
context, chairman of the Presiconsumption of electricity), they
dent's Commission on Fuels and
turned to advertising heating ff
Energy-told a meeting of the
equipment and other forms of 0 Independent Petroleum AssociaP eak electric use to better balance r
.
tion of America that growth in
their load over the year. One majO
demand suddenly increased to an
utility recently urged its customers
annual rate of 9 percent about
to use less electricity.
1966. It is yet to be determined
Lag in nuclear power
whether this much faster rate of
increase is part of a long-term
Equipment manufacturers have
trend or merely a short-run flucsince worked out some of the tech-

I

I
.

nical problems that once delayed
production of nuclear generating
equipment. Site selection remains
a problem, however, causing some
utilities that once saw nuclear
capacity as a practical alternative
to plants based on fossil fuels to
return to conventional steam gen~ration as the fastest means of
Increasing the reserve margin betWeen the supply and demand for
electricity.
Not only have acceptable sites
for nUclear plants become hard to
fin~-because of the opposition of
en~lronmental groups fearing radiatIon-but conservationists concerned about possible thermal
Pollution of lakes and streams have
~es~s~~d construction of all nuclear
aCilitIes, regardless of the site.
Most electric generating plants
USe water for condenser-cooling
PUrposes, and when the heated
Water is discharged back to the
source, the ambient temperature
of the reservoir rises. But nuclear
reactors generate more heat than
conventional plants fired by fossil
fUels. Plants based on nuclear
energy use more water, and the
tehtnperatures of their water disc arges are much higher.
Cooling towers can be used to
reduce heat emission, and they are
~equired at some locations. But
hese additional facilities can add
a; tnuch as 10 percent to the cost
~ a ~uclear plant. Depending on
he SIze of the plant, this increase
~hn add $15 to $25 per kilowatt to
e cost of a plant.
Controversy over standards of
bCOlogical safety continues, partly
ecause effects of increases in the
~ater temperatures vary from re~on to region. Until the environtnental problem is resolved, some
nUclear plants ready for operation
tnay have to be run at less than
~pacity. Starts on others will have
be postponed until suitable sites
are found.
t" With the long delay in construcIOn of nuclear plants, utilities in
areas where demand has pressed
llusiness Review I July 1971

hardest on generating capacity
have been forced to make greater
use of existing equipment. By having to keep most of their equipment in operation for longer periods, these companies are not
able to perform routine off-peak
maintenance, and the equipment
wears faster. In some cases, maintenance is not performed until
equipment actually breaks down.
In fact, most blackouts and
brownouts so far have resulted
from breakdowns.
The rush to catch up
Utilities, unable to delay construction of additional capacity any
longer, began building more conventional steam-powered plants in
the late 1960's. Although these
new plants lessened the immediate
need for nuclear facilities, they
were not enough in some areas to
meet the still-rising demand for
electricity.
Meanwhile, to the uncertainty
of future growth in demand were
added uncertainties about the
cost of new plants and the availability of nonnuclear fuels. Utilities
were again forced to reconsider
their plans for investment in generating capacity.
Costs of plant construction have
climbed rapidly in the years since
utilities first began considering the
use of nuclear generating plants.
From 1963 to 1965, the rise in the
index of construction costs compiled by Engineering News-Record
magazine averaged 3.8 percent a
year. The rise from 1965 to 1969,
however, was almost twice as
fast, averaging 7 percent a year. In
1970, the advance averaged 8.6
percent. So far this year, it has
climbed at an annual rate of about
11 percent.
All industrial construction has,
of course, been affected by these
increases. But some industries have
not been able to postpone construction in the face of rising costs-and
one of these has been the electric
utility industry.

Because of the long lead time
required to bring a new power
plant on line, the sharp rise in
building costs has thrown off cost
estimates of new generating plants.
And with delays in starting construction, estimates have been
thrown off even more.
Delays in starts have sometimes
postponed financing to periods of
higher interest rates. The additional costs of financing power
plants were particularly significant
during the credit crunch of 196970. Where market yields on public
utility bonds averaged 5.36 percent
a year in 1966, they averaged 8.67
in 1970.
But even in the face of rises in
building and financing costs, electric utilities had no choice but to
continue increasing their investment in plant and equipment.
Where utility outlays for plant
and equipment totaled $3.6 billion
in 1960, they totaled $4.4 billion
in 1965 and $10.7 billion in 1970.
Forecasts of capital expenditures
by electric utilities this year are
running about $13 billion.
The sudden rush to build conventional plants caught fuel industries unprepared for the increase
in demand for their products.
Available coal supplies were
quickly bought up, and prices
soared. At the same time, international oil markets were threatened with shortages overseas that
limited domestic imports of fuel
oil. And the market for natural gas
was strained by the rapid increase
in demand for this cleaner-burning
fuel.
Some utilities burning fossil
fuels found they could not buy the
coal, fuel oil, and natural gas they
needed at the prices they had
expected to pay when they built
their facilities. Confronted with
fuel shortages that faced many
large users, some utilities were
forced to draw down their own
stocks, as well as the stocks of their
suppliers-eventually to levels that
threatened the continued opera3

Pushed along by gains in oil and gas output,
nation's total fuel and energy production
increases almost twofold since World War II
QUADRILLION BTU 's

30

20

10
1945

1950

1955

1960

1965

1969

SOURCE: U.S . Bureau of Mines

tion of their generators. To keep
operating, some were forced to
ignore increasingly string~nt antipollution standards, burmng fuels
with higher sulfur content than
they would perhaps have ordinarily
considered. And some were forced
to pay higher prices for fuel than
they would previously have
thought they could afford.
The availability of coal ...
The shortage in coal was a direct
result of earlier miscalculations of
the extent to which nuclear plants
would replace conventional generating plants-miscalculations that
seemed consistent with historical
trends. Over the years, coal-once
by far the nation's most important
energy source-has steadily lost its
share of the energy market to fuel
oil and natural gas. Where it accounted for more than 70 percent
of the energy consumed in the
4

United States in the midtwenties,
.
It now accounts for little more than
20 percent.
Some of the most notable shifts
away from coal have been to
natural gas in residential heating
and fuel oil in powering ships and
trains. Now, electric utilities provide the coal industry with its
largest domestic market, buying
more than half the coal produced
in the United States. In fact, only
in the steam grades used by electric utilities has coal consumption
shown any rapid growth in recent
years.
Projections of shifts in the composition of electric generating
capacity led the coal industry to
expect further market losses to
nuclear-powered generators in the
1960's. Investments in the mining
of steam-grade coal were curtailed,
and marginal mining operations
were closed down. Seeking other

markets, the industry concentrated more on increasing the production of metallurgical grades- ld
eventually mining more than co u
be absorbed in domestic markets
and entering long-term commitments for export sales.
When electric utilities began
adding conventional steam plants
in the late 1960's, they found coal
producers, having accepted t~e
common view that the power lDdustry would shift almost entirely
to nuclear energy, were no longer
in a position to provide steaIIl- d
grade coal in the quantities neede
to maintain the higher levels of
generating capacity required.
Steam coal came into such short
supply that some utilities ha~ to
burn higher-priced metallurgIcal
rod
s
The problem of coal supplies wa
further compounded by a shorta%e
of hopper cars that prevented rall-

Nation's production of residual oil slides
as refiners improve their processes,
allowing imports to make up the difference
MILLION BARRELS

500 -------------------------------------------

400 -------------I -----------------\------------~

300

200 ------------------------------~/--------------

100

---------------------1·------------------------

o I
1932

I
1938

I

1944

I

I

1950

1956

1962

I
1969

SOURCE: U.S. Bureau of Mines

~oads from maintaining a smooth

ow of coal to generating plants.

~ost of the transport problem was
th e result of cars being tied up at
e docks waiting for coal to be
unloaded into freighters for shiptnent Overseas.
(\s coal prices rebounded and
U~Ilities sought long-term contracts
~th coal companies, mine operat rs once again expanded their
s ~am-grade operations. And as
raIlroads added new hopper cars
~nd facilities were built for dumpbng coal at the docksides, the
ottleneck in transportation eased.
st With adequate production of
eam coal reestablished and the
foal industry geared for further
ncreases in demand, coal offers
on .
ot e Important advantage over
p her fossil fuels: there are enough
t rOVed coal reserves in this councry to supply consumption at the
Urrent rate for at least a century.
llUs'

llless Review I July 1971

By contrast, available oil and gas
reserves can be measured only in
decades.
There are several offsetting disadvantages to coal, however. The
steam grades now being mined
have a high sulfur content and are
comparatively expensive to produce. Much of the coal could be
mined more economically by stripping away surface rock and soil
and mining the exposed beds from
the surface. Conservationists,
however, are firm in their opposition to this type of mining. The
industry also suffers from recurring
labor problems that could shut
utilities off from this source of
energy. Utilities burning coal
usually carry large stocks of the
fuel, but a prolonged strike would
exhaust their supplies.
There are abundant reserves of
low-sulfur coal in the Rocky Mountain states that would be compara-

tively cheap to mine. But these reserves are too far from large utility
markets for the coal to be transported economically by rail. It
might be pumped more efficiently
through pipelines as slurry. As an
alternative to the development of
cheaper transportation, improved
power transmission systems would
allow distant reserves to be converted into electrical energy near
the mine.
Economically feasible solutions
to the problems of distance and the
ell:vi.ronment~l problems of stripmmmg and au pollution could
make conventional steam plants
fueled by coal highly competitive
with nuclear-powered plants for
some time to come.
... residual fuel oil •••
Like much of the shortage of coal
the shortage of residual fuel oil al~o
resulted from transportation prob5

lems-in this case, the availability
East Coast utilities are not as
of tankers. The residual fuel oil
concerned about domestic crude
burned in generating plants on the reserves as they are reserves of
East Coast is ordinarily imported
natural gas, but they are concerned
from Caribbean refineries as a sub- about the continued availability of
stitute for low-sulfur coal. The
foreign oil at favorable prices. Inclosing of the Suez Canal and a
terruption of the established flow
break in the Trans-Arabian Pipeof tanker traffic last year caused
line interrupted the normally short transportation costs and eventuflow of oil from North Africa and
ally foreign crude prices to soar,
the Middle East across the Mediwiping out for the time a $1.25 difterranean to markets in Europe,
ference in East Coast prices of
forcing European supplies to be
foreign and domestic crude.
shipped around the tip of South
To cut costs by increasing their
Africa. The longer route created
economies of scale, shipping comthe need for more tankers to meet
panies stepped up their purchases
European demand for oil, and ships of supertankers. But demand for
were pulled off other trade routes- Middle East crude was so great
including those in the Caribbean- that deliveries of these giant new
to carry oil to Europe.
ships could not keep up.
Demand for low-sulfur residual
Adding further to the supply
fuel oil soared as utility companies problem in residual fuel markets
tried both to comply with increason the East Coast was the plant
ingly stringent air pollution stanand storage capacity of Caribbean
dards and to overcome the short
refineries. Capacity of these resupplies of coal and growing
fineries put a ceiling on the amount
scarcity of natural gas. For a
of residual fuel available from this
decade, demand for residual oil
source, and although refiners in the
had risen at an annual rate of only United States tried to help by in2 percent. But consumption last
cr~asing their residual output,
year surged 10 to 15 percent in
prIces of even high-sulfur residual
some localities, and demand for use ro~~.
.stretch the short supplies,
in generating electricity was
utIlItIes m some areas mixed highboosted 34 percent. Most of this
priced distillate and sometimes
sharp increase was, of course,
even low-sulfur crude with the
along the Eastern Seaboard, where high-sulfur residual in an effort to
import prices make residual oil
lower the average sulfur content of
most competitive with other
the fuels available to them.
utility fuels.
But also, apart from the rise in
A residual product of petroleum transportation costs, crude prices
refining, this fuel usually sells for
themselves have risen. The growing
less than the crude oil from which
dependence of industrial countries
it is derived. The more volatile
on imported crude oil gives producgrades of distillate are used priing countries increased leverage in
marily in home heating, leaving the negotiating higher prices. Although
less desirable residual oil to be
some co.ncessions for price stability
sold as industrial and utility fuel.
were gamed by major international
Domestic refiners have been
oil companies insisting on longfairly successful in reducing their
term contracts with producing
production of residuals, leaving
countries in North Africa and the
most of the domestic utility needs
Middle East, the tax and posted
to be met by foreign refiners. Beprice increases negotiated with
cause of their proximity to the East these countries set a rising trend
Coast, refineries in the Caribbean
in crude prices. Other petroleumfurnish 93 percent of the residual
exporting countries, of course-such
fuel oil consumed in this country.
as Venezuela, which supplies most

:0

6

of the crude refined in the Caribbean-quickly achieved parity..
With the upward movement In
negotiated crude prices, utilitie.s
must expect to pay more for reSIdual oil. With demand for energy
also rising in other parts of the.
world, competition for oil supplies
could become intense. Some experts interpret the price negotiations between oil companies and
producing countries as meaning a
sellers' market in world oil could
eventually eliminate the price differences between foreign and domestic petroleum products.
..• and natural gas
The shortage in natural gas is the
result of a sharp decline in reser~es
relative to demand. Natural gas IS
the second most important utility
fuel, and its importance continues
to increase. Gas accounted for
about 20 percent of the electricity
generated in 1950. In 1969, it
accounted for about 28 percentand this relative gain was in the
face of a sixfold increase in the
amount generated by gas.
This growth exaggerates the
importance of natural gas to areas
threatened by fuel shortages, hoWever. Because of the high cost of
transmitting gas to distant markets, this fuel is most attractive to
utilities near gas-producing areas.
Power companies in Texas, Louisiana, and California-all major
gas-producing states with few
problems in power generation-uS~
more than half the gas consumed In
the production of electricity.
The outlook, in fact, is probablY
for a decline in the proportion of
the nation's total capacity fueled
by gas. Most obse,rvers consider t~e
only possibility for a change in thIS
outlook to be a major breakthrough either in the cost of tranSporting liquefied natural gas frOID
overseas or in the cost of manufacturing gas from coal or oil productS.
Consumption of natural gas has
increased dramatically since War!d
War II, but the discovery of neW

With increased production of natural gas,
relative availability of reserves falls
and total reserves finally turn downward

are also bleak, even though some
areas abroad have abundant gas
reserves. The problem, again, is
tra~sportation costs. More cryoTRILLION CUBIC FEET
YEARS AT CURRENT CONSUMPTION
gemc tankers are being built and
300
50
se~eral compa~ies have plan~ for
usmg them to Import liquefied
natural gas. To increase overseas
240 _ _ _ _ _ _ _ _ __
imports significantly, however,
- - - - - - 40
large fleets of these new ships will
have to be operated at a cost low
enough to narrow the gap between
domestic and import prices.
180
Gas manufactured from coal or
petroleum has been suggested as
a possible supplement to natural
_______________
gas ~eserves. But while technically
feasI~le, such conversion would be
consIderably more expensive than
the production of natural gas and
______________________________ 10
for the foreseeable future would '
60
not. be competitive. shouid gasificatIon processes become economically feasible, plants would probo 11r------~Ir-----~-----~-------.I-- o ably be located near consumer
~arkets to ~e~uce the cost of pipe1918
1931
1944
1957
1969
lme transmIsSIOn. That assumes
SOURCE' A merlcan G as ASSOCiation
.
. .
.
of course, that gasification could'be
done without creating pollution
problems.
Despite the outlook for a decline
in the ~~portance of natural gas
reserves has not kept pace. In the
interstate sale of gas, has mainst few years, in fact, the gas inas a utIlity fuel, the possibility of
tained that in event of a gas shorta breakthrough in prices that
try has drifted from a position
age, residential users should be
given preference over other users. ' might reverse such a trend cannot
o gradually expanding reserves to
be discounted. Given the very
one threatened by declining reAnd already some gas companies
marked advantage of natural gas
serVes. And unless there is a
are having difficulties meeting their
as a clean-burning fuel and the
current commitments and have to
~arked ~I?provement in gas supcontinued possibility of shortages
turn away some customers.
1.1 es, utIlitIes and other industrial
in other utility fuels, natural gas
Unlike oil, which can be imt Sers are at a potential disadvange in competition with residencould retain its share of the utility
ported, almost all natural gas
market for some time-and even
lal Users.
must be supplied from within the
continue to expand it. Last winter
country. There is very little natr For one thing, utilities some'
ural gas imported from Mexico and for example, utilities in New
i~tnes buy gas with the understandEngland-which is totally depenCanada. The situation with Mexr g that their service can be interico is not expected to change in the dent on imports for fuel-were
Up ted when the gas is needed to
forced to buy liquefied gas from
~eet demands of residential users. near future, and any increase in
Algeria. The high prices and limimports from Canada will depend
trnder ~hi.s arrangement, gas
ited availability of other fossil fuels
ansmISsIon companies can allow
on the development of reserves
had made the purchase of what is
and markets in that country. So
~onsUmption by utilities to help
probably the most exotic of these
far, the only reserves Canada has
t~~oth out the flow of gas through
fuels entirely practical.
been willing to commit to U.S.
oftr Pip~~nes and, therefore, can
r u~lhtles a lower price than
markets have been those surplus
oth
Outlook for planners
erwIse.
to its domestic needs.
Forecasters-viewing, on the one
Prospects for significant inC For ~n?ther, the Federal Power
otnnussIOn, which regulates the
creases in imports from other areas hand, the rising costs and declining
llUs·llless Review / July 1971

----------30
~

-------

20

--

d

r

t

(

i

I
t

i
I

I

7

Trends in power generation to shift,
availability of fossil fuels and, on
with nuclear energy driving most new plants
the other, the almost certain conand coal increasing its share of the market
tinued sharp rise in demand for
electricity-again see nuclear power
PERCENT
as the important component in
future generating capacity. Their
100 ~~~~~~~~~~~~~----~~
NUCLEAR
outlook is significantly different
from that of the 1950's and early
ENERGY
1960's however. Where projections
80
then ~ere for nuclear facilities to
supplant conventional plants, they
are now for nuclear plants merely
to supplement convention~ p~ants.
60
In line with these new proJectIOns,
the increase in investment in
nuclear plants is not expected to
affect plans for investment in
40
plants based on fossil fuels ..
According ,t o current proJections, the nation's daily consumption of energy is expected to reach
20
the equivalent of 100 billion barrels
of crude oil by the year 2000.
Nearly half that will be electricity,
and more than half the electricity
o
will come from nuclear plants.
1900
1980
1920
1960
1940
Already this year new orders for
SOURCES: U.S. Bureau of Mines and Federal Reserve Bank o'f Dallas
nuclear equipment have begun to
increase.
The future continues to challenge the planners, however. Not
only is the future of fossil fuels
Much of the belief that nuclear
ther to the uncertainties in foreuncertain, but there are also
plants can be a major help in
casting that already plague
uncertainties in nuclear powermeeting future demand stems from planners.
both in the public's acceptance of
the expectation that breeder
Meanwhile rising fuel costs, I
'
nuclear plants and in the availreactors will be available to take
persistent needs to transpor t f ue S
ability of reserves of fissionable
the pressure off ore supplies in 10
over ever-greater distances, anId
materials. Recent discoveries of
to 20 years. Recently, in announcgrowing ecological restraints a SO
new uranium deposits have been
ing a broad Government program
make it hard for utilities to plan
encouraging. But some geologists
of nuclear development, the Presi- expansion of their conventional
are still concerned that there may
dent emphasized the importance
capacities.
not be enough uranium reserves to of efforts to develop a breeder
support the nuclear generation
reactor. But counting on break-Stephen L. Gardner
needed to meet projected demands. throughs in technology adds furEdward L. McClelland

--

New par bank

The Northgate State Bank, Houston, Texas, an insured nonmember bank located
in the territory served by the Houston Branch of the Federal Reserve Bank of
Dallas was added to the Par List on its opening date, June 9, 1971. The officers
are: L~onard Rauch, Chairman of the Board; Sterling Emens, Jr., President;
Eric M. Hilton, Vice President (Inactive); and Thomas W. Custer, Cashier.
8

Research Department
Federal Reserve Bank of Dallas
Station K, Dallas, Texas 75222

Federal Reserve Bank of Dallas
July 1971

Statistical Supplement to the Business Review
!exas followed the nation in postIng a slight gain in industrial
production in May. At 181.7 percent of the 1957-59 base, the
:e~sonally adjusted Texas indusnal production index was 0.3
Percent higher than in April and 2.3
Percent higher than in May 1970.
!,he rise was due entirely to
?ams in manufacturing and min~g, Which posted month-to-month
Increases of 0.3 percent and 0.4
percent, respectively. Most of the
~crease in manufacturing was in
e output of durable goods, which
bose 0.6 percent. Aided primarily
Ya gain in the manufacturing
of Wearing apparel, production of
nondurable goods rose only
tnarginally.
t In the durable goods sector,
thansportation equipment was still
d e ~eakest industry group. Pro~cbon in this group slipped
;till further in May, dropping to a
eVel 21. 7 percent below a year
ago. But production of electrical
tnachinery, which had also been
eak
\Vd , showed a determined rise,
a vancing to a level only 9.1
Percent below a year ago.
I Continued advances in petrothUIn. production accounted for all
e rIse in mining output. Crude
production reached a point 5.7
Percent higher than in the previ~u~ May. Output of utilities,
Ii hile unchanged from a month earine~ "was 8.2 percent higher than
!vJ.ay 1970.

;~tal nonagricultural wage and
sa ary employment in the five
Outhwestern states increased
again in May-but only slightly
~nd less than in April. The ad\Vance, a gain of only 0.2 percent,
tnas due mostly to hiring by nonanufacturing industries.

Manufacturing employment,
while still far below last year's
level, continued its slow rise, gaining 0.1 percent. Although this
slight increase helped narrow the
year-to-year difference still further, manufacturing employment
was left a significant 4.6 percent
lower than a year before.
While nonmanufacturing employment failed to make an
impressive gain, rising only 0.2
percent over April, no nonmanufacturing industry group showed a
decline. The number of jobs in
construction and trade both advanced a significant 0.4 percent,
and employment in finance increased 0.3 percent. Other industry
groups showed increases of 0.2
percent or less, with employment
in transportation and public utilities showing essentially no change.
The Texas oil allowable was cut
again for the third consecutive
month. The reduction for J ulya drop of 6.7 points to 68.7 percent
of maximum efficient productionwas the largest single drop in two
years. Even at this reduced level,
however, the rate is still considerably above the 55.5 percent
allowed in July last year. As in
other recent months, the allowable
was reduced in response to lower
requests for Texas crude.
The flow rate in southeastern
New Mexico was also reduced for
July. Made to eliminate excessive
gas flaring, the cut to 70 barrels
a day at each well was in contrast
to an 80-barrel rate in effect
since January.
The allowable in Louisiana continues at 75 percent of maximum
efficient production. The formula
defining maximum efficient production was revised, however, to

encourage drilling in the state.
The change will allow a slight increase in actual production. In
Oklahoma, the allowable was held
at 150 percent.
Credit at weekly reporting commercial banks in the Eleventh District rose considerably more than
usual in the four weeks ended June
23. The expansion was accommodated mainly through an increase
in net purchases of Federal funds.
An increase in loans accounted
for nearly all the sharp rise in
bank credit. Bank holdings of
securities rose only slightly. And
more than half the increase in
loans went to businesses, reflecting perhaps financing needs associated with a buildup in automobile
dealers' inventories and possibly
some further stockpiling of steel.
Increases in other types of loans
were no more than in comparable
periods of other recent yearsand in some cases less.
Although less than the rise in
loans, the rise in security holdings
was more than normal for this
period. The advance resulted from
banks making greater than usual
additions to their holdings of
municipal securities. Their holdings of U.S. Government issues
actually declined.
Deposits rose less than usual
due largely to a small rise in '
demand deposits. Time and savings
deposits declined, but less than
is typical for this period. Large
CD's outstanding fell slightly less
than normal, and other time and
savings deposits rose contraseasonally. On balance, these banks
increased their borrowings from
nondeposit sources, particularly in
the Eurodollar market.
(Continued on back page)

CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS
Eleventh Federal Reserve District

-

(Thousand dollars)
May 26,
1971

June 24,

1971
63 1,408
6,950,763

565,545
6,785,257

537,750
6,039,34 1

3,3 10,580

3,207,089

2,949,883

125,734

121,77 1

106,133

500
57,056

540
62,5 15

500
34,3 13

5,195
427,458

5,22 6
426,885

1,265
391,563

June 23,

ASSETS
Fe d eral fund s sold and se curities p urcha se d
under agre e ments to resell • •• .• .... •• ... ••••
Other loans and d iscounts, gross • • • . . .•.• ..• . •• •

1970

June 23,
1971

LIABILITIES

Total deposits . . . . . . .. .. . . .... .. ..... . .. .. . . . 10,963,856

183,807
519,999
714,4 11
15,475
24,798
764,3 15

177,933
496,460
705,912
16,747
19,896
755,866

136,251
371 ,247
622,825
6,175
9,695
727,465

0
801,435
3,191,450

0
788,417
3,168,11 6

0
682,026
2,523,865

995,507
137,60 1
0

1,020,987
145,666
0

879,588
32,797
0

Oth. r • • • • •••• • •• •• •• •• •• • •• •• •• • .. •• • •

Rea l estate loans • • • . .•• . . •••• .. . . .• . ... •• .
loan s to dom estic commercial b a nks • .. . . •. . • ..
loan s to foreign banks• • • • . ••• .• . ••• .. • • •• •.
Con sumer in sta lment loan s. • .. •• .... ••• • • . .••
loans to foreign governments, offlcia l
institutions, centra l banks a nd internationa l
,
institution s.• •• .. ••• •• ... • .. . .. •••• • . •• .•

O th. r loans .... .. . . . ... .. .. .. .. .. .... ... ..
Tota l investments •• . • .• • •.• •• ... .••. ... ••.• • .
Total U.S. G overnm ent securities • . . . • ••• . . . .. •
Trea sury bill s .•• . . . . .. •• . . . • .... .. . •. • . .
Trea sury certiflca tes of indebtedness •••• • • • ••
Treasury notes a nd U.S. Government
bond s maturingl

Within 1 year .... .. .... .. .. .. .... • .. ..
1 yea r to 5 years• ••• . • •• .. •• • ••• .. • •••

Aft. r 5 years . .. .. . . .. .. .... ... •• •• • ••
Obligation s of states and political subdivisions:
Tax warrants and short-term notes and bill s • • •

All ather ... .. . .. ... . . . • .. ••• •• ••• •• • • ••
O ther bond s, corporate stocks, a nd securities:
e ertiRcotes re presenting pa rtici pation s in
f ed era l ag ency loans • . • •.. •• .... .• • • ..

All oth. r (including corparat. stocks )•••• • ••••
Ca sh items in process of collection ••• • . .. • ••••. • •
Re se rves with Federa l Rese rve Bank • • • •• . •. •••• .
Currency and coin • • • . •• • • •.. •••• ...• • • • • .. • •
Ba lances with banks in the United States • . .• •.. ..
Balances with b a nks in foreign countries • •• • ••••••
Oth er assets (including investments in sub sidiaries

167,385
544,996
145,525

157,206
539,771
178,344

137,249
607,571
101,971

94,507
1,871,874

72,3 19
1,823,427

6,268,588
4,299,058
384,642
188,057
1,282,324

2,321
34,603
107, 105
4,632,590

2,7 19
24,079
87,709
4,645,853

1,072,127
2,459,623
996,8 13
20,096
64,346

1,063,802
2,455,709
1,012,835
24,349
68,973

18,485
1,1 00

1,161,146
72,738
335,715
128,287
20,753
1,051 ,371

TOTAL L L ES, RESERVES, AN D
IA81 ITI
CAPITAL ACCOU NTS .... ... . .. . . .. . . .. . 14,046,973

13,684,451

108,623
142,760
1,207,695
864,754
91,305
529,633
8,430

82,513
69,348
1,11 3,923
670,182
89,486
423,800
8,256

--=-9059,979

5655,875
3'823,457
'335,653
219,113
1,179,025

19,085
1,100

1,420,1 26
91,1 16
369,782
130,137
20,753
1,051 ,203

-

Jun e 24,
1970

States and politica l subdivision s . •. . . . .. . ...
U.S. Governm e nt . . . .. .. . . . .... .... . ... . .
Banks in th e Unite d States . ..... ... • • • . • •• •
Forei gn:

Gove rnm ents, officia l institutions, ce ntral

banks, and interna tional institutions . . . .. .
Commercia l banks . •. . . . . . . . . •.•• .. .. . .
Certifi ed and ofAcers' checks, etc •• • ... ••••. .

Toto l time a nd saving s de posits • . . . . .. ... .. . . .
Individua ls, partn e rships, and corporations:
Saving s de posits .. . . .. . . . ...... . . . . . . ..
O th er time d e posits . . . . .... . . . . . . ......
States and political subd ivisions • . • •. .. . . •••
U.S. Governm ent (including po sta l saving s) ••• .
Banks in the United States • .• .• .•. •. • . • • • ..
Foreignl
G overnm ents, ofAcia l institutions, central
b a nks, and interna tiona l instit utions• • ••••
Comm ercia l banks• • •... . . ... . • •. .. .. • •
Federa l f un ds purcha se d and securities sold
und er a gree ments to repurcha se • • .. . ••• . . . • .•
O ther liabilities for borrow ed money • • • .. . •• • •..

Oth.r liabilities .. .. ..... . . . . . ... . ... . . .. .... .
Reserves on loans. • . .. • . . . •••. . . . . • . •••.. .•.•
Reserves on securities • • •• • • • • . ... ... •• • .. . •.• •
Tota l ca pita l a ccounts . • • • •• . •• • •• . .. . • ••• . . . .

----

3,982
23,308
71,337
3,404,104
923,39 8
1 703,95 4
'734,335
9,47 8
17,389
14,20 0
1,350
1 038,453
'219,766
471,309
133,883
14,290
992,974

--

~
~

12,612
1,479,804

93,883
135,679
1,264,067
926,983
91 ,689
510,028
8,756

10,9 14,44 1

6,331 ,266
4,3 19, 11 9
413,375
'l4 2,387
1,312,356

Tota l demand d. poslts .. .... . . . . . . .... . , •.. .
Indivi dual s, partn erships, and corporations• . . •

Comm ercia l and industrial loan s. .. ... . . •••• ..
Agricultu ral loans, excluding ecc
certincates of interest •• • .... . . •••• . • .. •...
loan s to brokers and d eal ers for
purcha sing or carry ing:
U.S. Governm ent se curities• • •.. • • .... •••• • •
Other securiti es • •• • •• . .. •.• .. . . •. •... • •••
Oth er loans for purcha sing or carrying :
U.S. Governm ent securitie s• • • . . • •.. . . •• ••• •
Other securities . ••• . .••. . •• .. . •..•• ..• . • •
loan s to nonba nk Anancia l institutions:
Sales flnanc e, p ersonal flnanc e, factors,
a nd oth er business cre dit companies . • • .••

May 26,
1971

CONDITION STATISTICS OF ALL MEMBER BANKS

47 1,829

463,7 16

524,051

TOTAL ASSETS..... . .. . .. ..... . ..... . ... 14,046,973

13,684,45 1

Eleventh Fede ral Rese rve District
(Milli on doll ars)

11 ,930,654

nat consolida ted) .... .. .... . ... .. . ........ .

RESERVE POSITIONS OF MEMBER BANKS
Eleventh Federal Reserve District
(Averages of dal ly figures. Thousand dol lars)

It.m
RESERVE CITY BANKS
Total res erve s held • • •. • .• •• .. . .

With F.d. ra l Rese rve 8ank • • • •
Currency a nd coin • • • •• . •• • ••
Required rese rves ••• • • •• • •• • • . •
Excess reserves• •. • • • •• ••••.• •.
Borrowings • • .• • . • • •• •. • • • .•• •
free reserves • • . • •• • •• •• . ••• ••

COU NTRY BANKS
Total reserve s held • • • . • . . ••..••

With Fe d.ral R.s.rve 8ank •• ••
Currency and coin . ••• .. • • •• •
Re quired res erves• ••• . . •• . . •• . •
Excess re serves•• • . • . • •• • •• .. . .
Borrowings • • • . • •••• •• • ••• • •. .
free re serves . • . • . . •••• . • • • .. •

ALL MEMBER BANKS
Total res.rves held ... .. ... •·•·•
With Fe d eral Re se rve Ba nk • •. •
Currency and coin • • • • ••• • • . • •
Required reserves •• . • • . •• · · • • · .
Excess rese rves . •. . • . .• . •• • • •• .
Borrowings • •.• . • •. • . . •• . • • . . .
free resorves • • . • ••• . ••. . • • .. .

4 w• • ks . nd.d
Jun. 2, 197 1

4 we.ks ended
May 5, 197 1

4 w• • ks ended
Jun e 3, 1970

816,747
761 ,206
55,54 1
825,994
-9,247
1,928
- 11,1 75

83 1,580
775,784
55,796
830,437
1, 143
0
1,143

734,308
680,488
53,820
736,306
-1 ,998
33,647
-35,645

875,439
682,960
192,479
844,281
31 ,1 58
48
31,110

883,753
689,558
194,195
855,712
28,041
243
27,798

782,505
601,303
181,202
754,778
27,727
12,986
14,74 1

1,692, 186
1,444, 166
248,020
1,670,275
21,91 1
1,976
19,935

1,7 15,333
1,465,342
249,99 1
1,686,149
29,184
243
28,941

1,516,8 13
1,281,79 1
235,022
1,49 1,084
25,729
46,633
-20,904

CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS

---

(Thousand doll ars)

It. m

June 23,
1971

May 26,
1971

Jun·7~A,

~

----------------------------------------369,386'000
To ta l go Id cerlo·ft co te r.serves. . • • • • • • • • • • • • •
329,974
454,7 14
78,0
Disco unts for memb or b an ks. . • • . . . . . . . . . . . .

14,700

0

O th er discounts a nd ad va nc.s . .. . • • • • • • • • • • •
U.S . Governm. nt s.curities.. . . . . ............
Tota l . arning a ss.ts . . . . . . ... ... .......... .
Member bank r.serv. deposits. .. . . . . . ... . ..
F.d . ra l Reserv. not.s in a ctual circulation. .. ..

0
2,940,793
2,955,493
1,532,1 68
2,029,833

0
3,0 13,420
3,013,420
1,457,6 12
1,986,396

5,0 ..

2,

463455
'555

2,52~~'827

I, 4'603
1,77 ,

------------------------------------~

BANK DEBITS, END-Of-MONTH DEPOSITS, AND DEPOSIT TURNOVER

SMSA's In Eleventh Federal Reserve District

-

(Dollar amounts In thousands, seasonally adjusted)

DEBITS TO DEMAND DEPOSIT ACCOUNTS'
DEMAND DEPOSITS'

Percen t change

Annual rate
of turnover

May 1971 from

May
1971
(Annua l-rat.

5 months,
1971 from

Standard m.tropolltan
April
May
May 31,
May
April
May
______
~--------~st~a~tI.~ti~ca~l~a~r~.a~------------------b-a-i~s)--------1_9_7________
s
1
19_7_0~------97-0------~--97-1---------~7~1------~1~9:7:______~19~7~0~_
1
1
19
1

~1~~I~~~:~son

I

.... --- .. - .. .... ............. ......
. onro................. . ............. ...
NEW
Shr.v.port............ •••.•• • •••••••••• .
TeXA MEXICO , ROsw.II ' ... ... .... .. .. ••.. ••••••• .....

$

7,722,432
3,484,596
10,707,684
969,312

3%
9
- 11
-5

$ 261,411
91,877
268,137
38,785

i~

J
~~

2~~:m

i!

il

~b~~~:':'::: : ::: :::::::::::: ::: :::::::,::::::
M~~II·dPhorr-Edinburg..

_g

2~

_~

C~ownsv~~.-Harllng en-San B.nlto.... .. ...........

B

6,673,080
2'm'm

,1

H~ vteston-T.xas City.... .... .. .. ........ . .. ...

11~'~~~'~;~

_~

• .. .. • .. . • . • . • . . .. . . . .

r

29.4
37.6
41.0
24.9

m:m

5~

s,

mont-Port Arthur-Orang.. .. • • • • . . . . . • • • • . . •

~

24%
20
14
2

~~t1)H::H:::: ':i:i~~ll -~l

j

~~~?I!~.:::::::::::::::::::: :::::::::::::::: J:m:1~~

29%
28
29
6

2,050,24g

~t~~iC::H H

T;iarkano (Texas-Arkansas)....................

~~ift~:;~li':':::::::::::::::::::: ::: :::::::::

~.nt.rs .. , .. .. ... ... .... ..................

0

1:g~~:m

12

1~

~~

g

,Hll:j!l

~i

~:m:m

=f

if
1~
l~

-1%

15%

~'m'm

$383,431,320

8

~H

253,778

~H

26.4

~U

~t~

26.7

~N

23.6

~~:g

~~:1

24.8

5g:g

5U

!l~ ~1

2,m:b~~

l~g:m

It

25.5
32.2
35.9
25.6

~g

'11m!

1~

28.7
34.1
48.0
25.9

1~

I~~:m

l!

~H

,l1111 111 iii

~

I::~

IH

I::~

16,7

iI

1~~:m

~~:~

~N

~~:~

$9,993,994

1~

~U

38,5

39.6

37.1

m:m

13%

~t~

~~:2

De
' CoPOSits of Individuals, partnerships, and corporations and of states and political subdivisions
Unty basis

I

WINTER WHEAT
ACREAGE
(Thousand acre.)
For harvest

BUILDING PERMITS

........

Crop of
1971

Crop of
1970

Crop of
1969

Crop of
1971'

Crop of
1970

Crop of
1969

Oklahoma •••••••
Texas ......... .

165
37
184
3,286
1,542

150
33
184
3,777
2,267

73
38
159
4,150
2,869

12,375
851
4,232
60,791
29,298

10,350
957
5,520
98,202
54,408

4,526
874
4,293
118,275
68,856

Total ••• ••••• •

5,214

6,411

7,289

107,547

169,437

196,824

Area

VALUATION (Dollar amounts In thousands)
Percent change

NUMBER

~

A~IZONA
Tucson
lO~ISIAN~' • , , , ,

May
1971

5 mos.
1971

from

May
1971

5 mos.
1971

April
1971

May
1970

Arizona ••.•.••••

Louisiana . •. ... ..
New Mexico •. ...

May 1971
5 months,
1971 from
1970

PRODUCTION
(Thousand bush.ls)

Harvest.d

I ndloated June 1
SOURCE : U.S. Department of Agriculture
1

440

3,710

$ 10,377

$ 41,959

109
481

495
2,657

1,233
5,841

8,941
23,253

250
677
2,565
770
449
4,232
9,510
185
2,395
2,092
339
19,338
246
1,139
344
445
356
329
7,043
345
198
1,308
405

2,262
2,325
9,553
809
379
9,122
26,355
175
11,362
27,743
947
55,220
1,126
3,420
961
966
1,322
708
6,491
395
407
1,893
2,250

61,822

$183,642

11% 140%

100%

0l1roe·West

Sh~onro ••. , . .
TEXAS port, •. ,
ove

Abll en •
A",arlll~ """
15 8
56
AUII I ••. " ,
Boou':,;o""'"
515
Brown. vU: • • . . •
157
Cor u •• ...
106
Dalk • Christi. .
807
Denl~~~' . • .• " 1,959
EI Pa •o : ··· . ..
31
Fort W •.•..•
517
Galves::,'th . • . .
419
~OUII
69
lar.don •• . .•.. 5,035
lUbb \......
59
Midl~~d' • • . . •
153
Odessa· ··.·.
72
Port A .......
95
Son A. rthur • . . .
59
Son ~9.lo... •
73
Shor",o~onlo. " 1,435
T" orka '" '"
43
~oco no... .
2~~
Ichlt~' F~li;.: :
99
Total
-~ .... , 13,293

n.....

14
158

32
90

246
247
3,944
91
24
12,835
62,291 -29 -43
24
4,666 -23
80
2,834 -60
706
74
28,766
23 -37
120,586
88
1,699 -72
128
33
49,966
490
362
49,922
168
53
7,073
23
263,668
-8
71 -48
4,010
6
32,412 -72
49
6,248 -74
-26
3,613 -10
975
278
2,905
83
4,503 - 37
47,195 -58 -16
3,498 -14 -29
195
5,051 -83
11,779 -67 -72
44
18
10,378

12
-39
25
7
123
126
-23
-3
27
57
128
44
6
49
242
-25
216

$813,995

-39
11

1%

23%

-9
16
-35
22
-38
91
23%

GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS

Eleventh Federal Reserve District
(Averages of dally figures. MIllion dollars)

GROSS DEMAND DEPOSITS
Reserve

TIME DEPOSITS

Country

Reserve

Oat.

Total

city bonks

banks

Total

city banks

Country
bank.

1969, May • •.• ••
1970, May ..••••

10,231
10,233
11,271
11,532
11,272
11,219
11,555
11 ,348

4,777
4,671
5,161
5,236
5,118
5,117
5,274
5,216

5,454
5,562
6,110
6,296
6,154
6,102
6,281
6,132

7,676
7,394
8,825
9,038
9,299
9,548
9,575
9,516

2,962
2,659
3,554
3,635
3,689
3,788
3,736
3,688

4,714
4,735
5,271
5,403
5,610
5,760
5,839
5,828

Decemb er • •

1971 , January ••••
F.bruary •••
March, . •••
April • ....•
May ... ...

VALUE OF CONSTRUCTION CONTRACTS

NONAGRICULTURAL EMPLOYMENT

(Million dollars)

Five Southwestern States'

-

Percent chango

January-May
Are a and type
FIVE SOUTHWESTERN
STATES' • . ••.•....••....
Residential building ••....•
Nonr esi d ential building ••••

Nonbuilding construction ••••

UNITED STATES . •. ...•• • ••.
Residential build ing •. •••..

Nonresidential building .. • .

Nonbuilding construction .•••

April
1971

May
1971

March
1971

1971

1970r
Type of em ployment

713
387
193
134
7,555
3,310
2,264
1,981

864
400
312
153
7,743
3,168
2,080
2,495

720
399
224
97
6,386
2,729
2,199
1,458

3,431
1,689
1,152
589
31,010
12,685
9,893
8,432

3,333
1,151
1,086
1,096
27,873
9,333
10,454
8,086

May
1971p

April
1971

May
1970r

wage and salary workers ••

Manufacturing ..•... . . ...

6,319,600
1,115,200
5,204,400
228,400
381,500

6,306,800
1,113,900
5,192,900
228,200
380,000

6,292,800
1,168,400
5,124,400
231,300
391,300

Nonmanufacturing .• • . ••..

Mining • • •....•.. . ..• . .
Construction •••• •.• •• ••
Trad e .•...... ..... .. .
Finance • •••••....•••••
Service ...............

448,600
1,483,600
328,200
1,020,000
1,314,100

448,500
1,477,500
327,300
1,018,200
1,3 13,200

444,900
1,450,400
318,800
1,002,700
1,285,000

Governm ent . • • .•.••• .•

~

0.2% 0.4%
.1 _4.6
2
1.6
'1 _1.3
_2.5

:4

Transportation and

1

M%

Apr.
1971

Total nonagricultural

public utilities .. .. .••.

Arizona, Louisiana, New Mexico, Oklahoma, and Texas
r - Revised
NOTE. - Details may not add to totals because of rounding.
SOURCE: F. W. Dodge , McGraw-HIli, Inc.

~

Number of person.

.0
.4

.8
2.3
2.9
1.7%
2.3

.3
.2
.1%

--------------------------------------------Arizona, Loui s iana, New Mexico, Oklahoma, and Texas
1

p - Preliminary
r - Revised
SOURCE: State employment agencies

INDUSTRIAL PRODUCTION
(Seasonally adlusted Indexes, 1957-59

Area and type of index
TEXAS
Total Industrial production .• .. • .
Manufacturing ••••...••••••• . ••

Durable .. . ...... . .. · .... •• · •
Nondurable . •.•• . ... •. .. .. • .•

Mining ......... . ..... · · ... ....
Utilities ••••

· o •••••••••• •• •••• •

UNITED STATES
Total industrial production .. .....
Manufacturing • •• • . • •• ••• • •••••

Durable •..• •• •••.••••••• · •• •
Nondurable . .. .... • . .. .••••. .
Mining .•• . ••..••...•••. ... ••••
Utilities •• . ••

o •••• ••• • •• ••••• ••

DAILY AVERAGE PRODUCTION OF CRUDE OIL

= 100)

--

(Thoussnd barre ls)

May
1971p

tf;\1

181.7
199.6
197.6
200.9
139.1
275.9

181.1
198.9
196.5

179.9r
198.2r
201.0

20o.s

196.4r
136.2r
275 .9r

March
197 1

~

May
1970
Area

167.3
165.1
158.8
173.0
137.1
248.0

138.6
275.9
166.2
163.9
157.4
172.0
138.8
246.0

165.5
163.5
157.7
170.7
138.7
242.2

p - Preliminary
r - Revised
SOURCES: Board of Governors of the Federal Reserve System
Federal Reserve Bank of Dallas

Agricultural conditions in states
of the Eleventh District remain
mixed and uncertain. Much of
Texas and Oklahoma received rain
in late May and early June, but
the rain was not enough to break
the drouth in Texas and came too
late to save small-grain crops in
Oklahoma. The wheat crop has
suffered setbacks in both states.
On June 1, the estimated yield in
Oklahoma was off 38 percent from
the harvest last year. In Texas,
it was off 46 percent. Range and
pasture conditions are substantially below ten-year averages in
all four western states of the
District, and many base herds are
endangered.
The outlook depends largely on
the adequacy of water supplies.
Most irrigated crops are doing well.

177.6
198.1r
212.3r
188.6r
133.8r

255.2r
169.0r
168.1r
167.6r

168.7r
134.8r
234.9

May
1971

April
1971

May
1970r

FOUR SOUTHWESTERN
STATES . . . . . . . • . . . . •. . . •

7,070.4

7,206.2

6,734.3

-1 .9%

603.9
3,484.8

616.0
3,536.1

628.4
3,332.3

228.8
67.9
818.8
9,797.2

232.0
72.0
828.0
9,913.6

1831
78:7
800.3
9,523.0

={; %

~7b

-1 .5

~OoekuwliSih~:;i~~:

::::::::::::
a oma.............. .
Texas.. ...... ..... . . .. .
~Ulf Coast,. .... .. ....
E .s~Texai " "·i"·"
..
:::::
est 0 state..... . .....
UNITED STATES............

~~~ha~~I: ~r.~~~r.

2,~~~:~
l,m:~

2'~~~:6

l,m:6

2'm:~
1,~~~:g

April
1971

=::~

--=J
14

-1.2

.:.---5.0%
9.4

:~:~
4.6
6.1
3.6

25.~
_1

~:3

2.9%
__

-----------------------------------------r - Revised
SOURCES: American Petroleum Institute
U.S . Bureau of Mines
Fe deral Reserve Bank of Dallas

Because of light snows last winter
and almost no spring rain, Arizona
and New Mexico face possible
water shortages. With Louisiana
and now Oklahoma out of the
drouth area, prospects for summer
crops in these states are good. The
most mixed situation is in Texas,
where the rains were scattered.
Some parts of the state had enough
rain to ensure normal crops.
Others, however, are still very
short on moisture.
Prices for most crops are holding up well, and livestock prices
are improving. Shortages due to
the drouth give farmers with even
near-normal yields the benefit of
higher than average prices. Many
farmers, however, face not only
the prospects of very low yields
but the near-certainty of having to

pay high prices for feed to sUp-. s
plement their inadequate supphe .
Registrations of new passenger th
automobiles in Dallas, Fort Wor B'
Houston, and San Antonio were.
percent lower in May than in April·
Registrations were 7 percent
greater than in May 1970, ho~- s
ever, and cumulative registratIon
for the first five months of the
year were 9 percent greater than
during the same period a year
earlier.
Department store sales in the t
Eleventh District were 9 perce;
higher in the four weeks ende g
June 26 than in the correspon din
.
period a year before. CumulatIve
sales through that date were 8
percent higher than a year before,