The two War Emergency Pipe Lines were built by the United States Governmentto meet the serious transportation shortage caused by the diversion of thetanker fleet from the Gulf to East Coast run. The estimated 140-million dollarcost of these pipe lines approximates that of two battleships; however, becausethe lines have been so widely publicized as national defense measures, andfurther because their utility is so closely linked with the daily convenienceand welfare of the civilian population, their importance in the public mind isprobably magnified beyond that of two ships of the line. Thus, there may bestrong demand by the public, Congress, and the executive branch of theGovernment to maintain these lines in operating condition after the war.
Probably the simplest means of maintaining them in good condition is tocontinue them in operation. In keeping with American principles of privateenterprise, it will be desirable if they can be shown to have a place in theeconomic life of the country and can be operated by industry.
The most obvious use for the lines would be the movement of crude andproducts from Texas to the East Coast; for this business they will have tocompete with tankers. Their location enables them also to handle movements intoDistrict 2, for which business they must compete with existing privately ownedpipe lines and with barges. This paper attempts to analyze economic factorsthat bear on the use of these two big lines in the postwar period and todevelop through estimates the competition they may offer to other forms oftransportation.
The writer has purposely refrained from making recommendations as to theutilization of the War Emergency lines for petroleum transportation because itseems likely that prospective purchasers would be one or more operating oilcompanies, each of which would analyze the utilization of the lines in light ofits own business requirements. It is doubtful whether the lines would beacquired by a non-petroleum financial group for operation as commercialcarriers because interstate common carriers are prohibited from contracting tofurnish services to shippers, a restriction that implies that carriers, inturn, cannot expect to obtain guarantees of traffic from independent shippersin great enough volume to ensure return of their investments.
T.P. 1757