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This description occurs in Chapter 4, when Ponyboy and Johnny are menaced by a group of Socs late at night. 'Reeling' means stumbling about or staggering about unsteadily, and 'pickled' is slang for being drunk. Therefore this description simply means that that this particular group of Socs are extremely drunk which makes them all the more dangerous. Their drunken state increases their hostility towards Ponyboy and Johnny as Greasers. They also have a special grievance against Ponyboy and Johnny as they blame them for picking up Cherry and Marcia, a couple of Soc girls. Ponyboy and Johnny are on their own, it is late at night, and the scene is set for a terrifying confrontation and escalation of violence.
In the event, although the Socs make the first attack, targeting Ponyboy, it is Johnny who ends up killing one of the Socs, Bob. This is an unexpected twist, as Johnny generally comes across as the most timid of all the Greasers. However, he has been savagely beaten by Bob in the past, so that he has taken to carrying a switchblade around. When Ponyboy is attacked on the present occasion, he does not shrink from using the blade. Therefore, we might say that at one stroke he saves his friend and also gets revenge on Bob - although it is true that he never actually appears vengeful. Rather, he appears utterly shocked by what he has done:
He was a strange greenish-white, and his eyes were huger than I'd ever seen them. "I killed him," he said slowly. "I killed that boy."
However, he also shows himself quite resourceful as he plans to hide out for a while with Ponyboy, enlisting some help from Dally also. Ponyboy is appalled by the whole turn of events; he has already run away from home, and this just seems to have made a bad situation much worse.
Ponyboy means that the Socs are totally drunk and it foreshadows something important is going to happen (when johnny kills bob) and this is one of bob's greatest failures, because according to cherry, "But you didn't know his other side. He could be real sweet", which indicates that on the whole he's not drunk, he's a nice person, which ponyboy doesn't believe.
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