Full text of Review (Federal Reserve Bank of Dallas) : July 1971
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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,