to 579 at the end of 1976, the aggregate cargo 
capacity of this fleet increased from 14.4 million to 
15.6 million deadweight tons, In addition, average 
speed increased, average age declined, and the pro- 
portion of intermodal vessels expanded substantially. 
Al) of these factors have contributed to a steady in- 
crease in the aggregate delivery capacity of the fleet 
and to the reliability of U.S. commercial carriage. 
Major Current Issues 
Over the next few years several identifiable issues 
are likely to be of major concern in the development 
and execution of Federal maritime promotional pol- 
icies and programs. This section considers these 
emerging issues. 
First, a number of special demands for U.S. tanker 
capacity will be imposed on the U.S. merchant fleet 
as a consequence of Alaska oil trade requirements 
and preference requirements associated with estab- 
lishment of the Strategic Petroleum Reserve. These 
demands are likely to require continuing Federal at- 
tention to assure the appropriate allocation of avail- 
able tonnage to meet these requirements. A brief 
discussion of these and other potential sources of 
U.S. tanker demand is included in the paragraphs 
below. 
As Alaska pipeline production expands beyond 
the 706,000 barrel-per-day level sometime early in 
1978, the quantity of Alaska oil which will be surplus 
to West Coast needs is expected to increase signifi- 
cantly. To dispose of this regional surplus, a large 
number of tankers will be needed to transport this oil 
via Panama to other U.S. markets until such time as 
a pipeline to accommodate the surplus can be de- 
veloped (probably not before 1980). Because this 
is a domestic movement subject to the cabotage pro- 
visions of the Jones Act, only U.S.-flag tankers will 
be eligible to participate in this trade.** Assessments 
by the Maritime Administration indicate that the 
Alaska trade requirements (including surplus dis- 
position vie Panama) will be within the aggregate 
capacity of the U.S. fleet after full consideration of 
other domestic carriage requirements. However, 
some augmentation of the non-subsidized tanker fleet 
will be necessary in order to meet fully the Alaska 
trade requirements. 
As a consequence of these findings, the Maritime 
Administration published regulations in the Federal 
Register on June 29, 1977, specifying the terms and 
conditions under which certain large U.S. subsidized 
tankers may be authorized to temporarily engage in 
the carriage of oil from Alaska to the western en- 
trance of the Panama Canal. In compliance with the 
requirements of the Merchant Marine Act, eligibility 
°* Because the Jones Act does not currently apply to trade 
between the U.S. and the Virgin Islands, it may be possible that 
some Alaska oil could be transported by foreign-flag vessel to be 
Tefined in the Virgin Islands and the product subsequently 
transported to the mainland via foreign-flag vessel. (See material 
to follow for further discussion of this issue and the general 
issue of Jones Act applicability to other elernents of the Virgin 
Islands oil trade.) 
for such domestic carriage will be limited to 6 
months in any given year and will require the repay- 
ment of a portion of any construction subsidy prev- 
iously received. Tankers in the authorized size range 
(100,000 dwt and over) do not receive operating 
subsidy. So far, several tankers have been granted 
Alaska trade eligibility under these special provi- 
sions. In administering this program, careful consid- 
eration will be given to meeting the Alaska trade 
requirements while at the same time protecting the 
interests of non-subsidized domestic operators. 
Establishment of a National Strategic Petroleum 
Recerve (SPR) will present U.S. tanker operators 
with another important trade opportunity over the 
next few years. Under the cargo preference pro- 
visions of the Merchant Marine Act, 50 percent of 
the oil imported for the SPR must be carried by U.S. 
tankers to the extent such vessels are available at 
fair and reasonable rates. Preliminary MarAd as- 
sessments of SPR fill demand indicate that full 50 
percent U.S. participation may not be possible in all 
periods of the fill cycle because of peaks in the FEA 
fill schedule, rising Alaska trade requirements, ard, 
in the near term, the nonavailability of a number of 
US. vessels still under construction. 
Under the terms of their operating subsidy con- 
tracts, some 22 U.S. ODS tankers are precluded 
from participating in the carriage of preference car- 
goes. However, in order to avoid losing part of the 
petroleum reserve preference opportunity, the Mari- 
time Subsidy Board has recently granted special eli- 
gibility to several ODS tankers to participate in the 
carriage of SPR preference oil. Owners of these ves- 
sels have in turn agreed to forego ODS during per- 
iods of such preference employment. 
An additional demand for U.S. tanker tonnage 
would have been imposed had commercial oil cargo 
preference legislation been enacted. Under the pro- 
visions of the measure, which was defeated in the 
House of Representatives on October 19, 1977, a 
portion (rising to 9.5 percent by 1982) of U.S. com- 
mercial oil imports would have been reserved for 
carriage by U.S. flag tankers to the extent such 
vessels were available at fair and reasonable rates. 
Although this is the third time that efforts to enact 
some form of legislation for commercial oil cargo 
preference have failed, proponents are not likely to 
abandon the issue. References have already been 
made to another attempt at enactment. 
A final source of added U.S. tanker demand would 
follow enactment of legislation to bring petroleura 
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