s 1890 CONGRESSIONAL RECORD-SENATE February 19, 1974
Mr. JACKSON·. I yield myself such
time as I may require.
Mr. P~esident, the administration's
failure to impose ceilings on crude oil
prices is incomprehensible for a wide
variety of reasons.
First, it is costing consumers $20 million
a day, $7.7 billion-a year, in overcharges.
Second, it is bad economic policy. Uncontrolled
oil prices at artificially high,
cartel-set levels feed inflation.
Third, the administration's decision to
deregulate one-third of all domestic
crude oil is illegal. Section 4 of the
Emergency Petroleum Allocation Act requires
that all crude oil be under price
Today the Senate will h'lve a chance
to reverse this policy that overcharges
consumers, that benefits only the oil industry,
and which violates a law Congress
adopted only 4 months ago.
Mr. President, ii firm and decisive action
is not taken to roll prices back to
reasonable levels, this unconscionable
overcharge will cost American consumers
$7.7 billion over the next year. This
is $35 for every man, woman, and child
in the country. For the average family,
this will mean an additional $140 to
$200 a year increase in their fuel bill for
gasoline, heating oil, and propane. This
increase is over and above, and in addition
to, the major increases in fuel prices
which were experienced late last year.
CUrrent domestic price levels for unregulated
crude oil of $10 per barrel
and up are totally artificial prices. These
prices are not determined by the forces
of competition. These prices are rigged.
They are being dictated by an international
cartel of Arab nations. These are
the same nations that imposed the oil
embargo against the United States in
retaliation for our aid to Israel.
Respected oil analysts on Wall Street
and elsewhere say that these price levels
will not buy increased supply . . The real
constraint on supply today is not price.
At $5.25 a barrel, there is plenty of incentive
to bring in new supply. This is
32 percent higher than the price of crude
oil last May, less than a. year ago. The
constraints today are 'Shortages: shortages
of trained manpower, tubular goods,
drilling rigs, and practically every other
material a. high technology industry
The unregulated and artificially high
price of domestic crude oil is counterproductive.
It is retarding exPloration for
and development of new oil discoveries.
Instead of encouraging the development
of new wildcat acreage, the present price
structure does the opposite. It encourages
the drilling of new wells on old reservoirs
that are already in production.
These new wells divert scarce drilling
rigs, pipe, other equipment, and manpower
away from new exploration for
the sole purpose of taking advantage of
major loopholes in the price system.
These loopholes enable the unscrupulous
to take advantage, to double the value of
their ""ld" oil-thE'ir presently producing
fields-by simply drilling and l'umPin~
the oil through new wells.
Pw;suit of this loophole enriches owners
of producing fields. It does not produce
more oil. There iS no requirement
uiJ.der the administration's program that
1 cent of this windfall be put back into
the ground to develop new supplies. And
the facts are that precious little is being
put back into tpe ground.
Second, as noted above, these artificial
cartel price levels serve no economic
purpose. They are, in fact, counterproductive.
They reduce longer tenn supply.
They compel cynical and foolish dis
tortious in the allocation f1l capital, material,
Third, the Congress a.t some point will
act to protect the public by rolling these.
prices back by legislative action.
Mr. Simon, the FEO Administrator
recognizes that present price levels are
unreasonable. Reports in the national
press and in trade journals contend that
within the administration he bas advocated
a price rollback but has been
turned down by Roy Ash, Herbert Stein.
and the White House palace guard.
The trade associations for the oil companies'
own studies and data recognize
that current dereiliJ.I}ated prices are $3 to
$5 per barrel above long-term price levels
required to achieve domestic self-suffi.ciency
and to bring in alternate sources
of energy such as oil shale, coal liquefaction
and gasification, and geothermal
The Federal Government's studies also
conclude that there is no justification
for average oil prices of $10 per barrel.
The FEO says:
The long-term supply price . .. Is $7 per
barrel. .. . (Ja.nuary 1974.)
The Department of the Trea«ury says:
Our best estimate is that It would "e ln the
neighborhood of $7 per barrel within .noaY D:r.BCL08U81l or OIL INDUB'l'Kll" DATA
The bill requires, for the first time, the
mandatory dil!closure by the oil Industry
of reliable data. and Information on
reserves, production levels, refinery runs,
stock levels, imports, prices, and other
Information essential to understanding
and dealing with the energy shortage.
Information furnished under the bill is
to be made available to the Administrator,
the Congress, the States, and the
public. This new authority will bring to
an end the comedy of errors !IJld the confusion
of the present .Yoluntary reporting
systems. Present systems find the oil industry
and the Federal Government hundreds
of_ thousands, and sometimes miilions
of barrels, apart on the volume of
oil imports and other vital categories of
STRWGENT ANTITRUST SAF'J!:GUARDS
The bill contains mandatory standards
and procedures designed to insure that
agreements among and common courses
of action by the oil companies to deal
with the shortages oo not result in permanent
violations of the letter and spirit
of the antitrust laws. In recent years, the
oil industry has experienced a - whole
series of major adjustments and market
realinements which pose serious threats
to competition. Under shortage conditions
these threats can become reality as
the big companies grow stronge1· and
more profitable and the small companies
grow weaker, more dependent and more
vulnera,ble. This pJ:Ovision of the Energy
Emergency Act will insure tbSt this does
A UTHORITT I"OB. IU!:G"OLAB. GAS STAUOK OPEBATIl'(
G SbUXS, ENERGY C0NSERVATION1 PLANS,
AND GASOLINE .RATIONING
The bill provides the basic legal authority
for a wide range of actions dep
signed to- conserve scarce -energy resources
in a manner that is fair to all
classes of consumers and all regions of
the country. These actions must be proposed
in specific terms and are subject to
Congressional review and veto. One of
the most important actions contemplated
is a program to.provide the American
people with certainty and regularity as
to service station hours.
The bill als9 provides authority for the
establishment of a national, stand-by
gasoline rationing program. Implementation
of rationing may prove inevitable
in the months ahead if shortage~~ persist
and if other State and Federal programs
do not serve to bring some sense of order
to the chaotic situation which exists In
many regions of the country. "#;_
ADDITIONAL AUTBORttY -~
Other m~or 'provisions of the bill
which are vttal to elfectively dealing w1lli
shortages include statutory authority
Allocation of fuel!> a.nd essential mate-rials
to those engaged in developing new
Convention of stationary powerplants
from oil and natural gas to coal in a
manner consil!tent with the goals of the
Clean Air Act;
Accelerated domestic oil production:
Insuring tbat all emergency actions are
taken In an equ:tta.ble manner which prevents
arbitrary and unreasonable action;
Restricting exports of needed fuels;
Increasing the use of carpools;
Grants-in-aid to assist State and local
Low-interest loans to home owners
and small businesses to assist in 1mprovement
projects which are designed
to conserve energy. -
Mr. President, the Nation is looking
to Congress for leadership and action.
We are in a national emergency, make
no mistake about it. The Gallup poll
shows Congress at its lowest level in history
so far as its standing with the
American people is concerned. We are
now confronted with a grave emergency. -
If this Congress sends this conference
"report back to conference so that it is
there for a thfrd time, I know what the
American people are going to say. They
are going to sa;y that Congress cannot
deal with a national emergency, and they
will be right in saying so. Every provision
in this bill relates to things happening
to people each and every day. To
:my, "Leave things alone and everything
will be fine," provides no answer; that
is what is going on now. Prices are going
up and the supplies available to meet the
needs are going down. We are having fist
fights in gas stations and we will soon
have riots in the streets unless we pass
this emergency legislation.
Mr. President, I ask unanimous consent
that a telegram from Mr. Leonard
Woodcock, the president of the United
Auto Workers, be printed In the RECORD.
There being no objection, the telegram
was oroered to be printed in the
RECORD, as follows:
FEBRUARY 18, 1974.
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