Communications submitted by-Continued Isarel, Frank U., letter to Congressman Clark dated March 22, 1974 enclosing comments on Mr. Ruttenberg's testimony.. Johnson, William A. Letter in reply to Hon. Frank M. Clark's letter of October 25, Letter of reply to Hon. Frank M. Clark's letter of December 11, Page 653 242 228 488 127 Letter of May 17, 1973, to Hon. John H. Dent. 266 Letter to Hon. John H. Dent dated May 31, 1973– 604 Letter dated March 19, 1974 enclosing answers to Mr. Clark's 566 Maskin, Alfred— Letter of reply to Hon. Frank M. Clark's letter of February 7, 361 Letter of March 11, 1974, to Hon. Leonor K. Sullivan with an- 358 Powell, Stanley, Jr. Letter of December 12, 1973, to Hon. Frank M. Clark....... Pritchard, Hon. Joel, letter dated March 13, 1974, to Mr. James W. Kinnear Rudick, Albert J., letter of November 12, 1973, to Mrs. S. A. Smith.. Steinberg, David J., letter of March 6, 1974, to Hon. Frank M. Clark__ man_ Stringer, Herald E., letter of October 5, 1973, to Hon. Leonor K. Sullivan with enclosed resolution _ _ _. 312 519 466 596 523 524 741 ENERGY TRANSPORTATION SECURITY ACT OF 1974 TUESDAY, OCTOBER 9, 1973 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MERCHANT MARINE OF THE COMMITTEE ON MERCHANT MARINE AND FISHERIES, Washington, D.C. The subcommittee met, pursuant to call, at 10:10 a.m., in room 1334, Longworth Office Building, Hon. Frank M. Clark, chairman. Mrs. SULLIVAN. The subcommittee will come to order. This morning we are starting hearings within the Subcommittee on Merchant Marine and Fisheries on a piece of legislation that I think is of great importance, and this critical legislation will be heard before the Subcommittee on Merchant Marine. In a few minutes I will turn over the Chair to Congressman Clark, who is Chairman of the Subcommittee. However, because of the importance of this bill, which would require that a percentage of U.S. oil imports be carrier in U.S.-flag vessels, I wanted to make an opening statement. My remarks in opening these hearings are to indicate some of the reasons why we have commenced these hearings, and also to voice some of the problems which I see arising with respect to this important legislation to which we must eventually have answers. As Chairman of the House Committee on Merchant Marine and Fisheries, I am dedicated to the improvement and ultimate success of the U.S.-flag merchant fleet. I am also determined to see that the national policy set forth in the Merchant Marine Act of 1936 is fully and effectively implemented. Unfortunately, all too often in the past, the peacetime role of the U.S.-flag merchant fleet has been seriously downgraded with the result that valuable time and many lives were lost in the early days of past conflicts while the merchant marine was being prepared and rebuilt. The Vietnam conflict is only the latest example of a long series of unhappy episodes with respect to this problem. One of the most effective ways of preventing a recurrence of this situation, and at the same time providing many other benefits to the United States, may be to pass legislation which would mandate that 20 percent, rising to 30 percent by 1977, of U.S. oil imports be carried on U.S.-flag vessels. At this time in our national history, for a variety of reasons, we are dependent on foreign nations for massive amounts of oil imports. Unfortunately, the prognosis is to the effect that at least for the next 10 years our oil imports will increase even more sharply. This (1) situation not only drains U.S. balance of payments, but leaves us in a perilous security position. Because of geopolitics, we cannot be certain that this oil supply will always be available, and it is always subject to blackjack tactics. In view of this situation, it seems doubly unacceptable for this Nation to depend on foreign-flag vessels to carry this imported oil to the sinews of our Nation. By importing our oil needs on foreignflag rather than on U.S.-flagbottoms, we are needlessly sacrificing the opportunity for thousands of new jobs, new U.S. industrial production, tax and wage earnings for the United States and the assurance of a large and efficient U.S. tanker fleet. In order to help end this squandering of America's economic resources, and to improve the U.S. economic and national security position, I have introduced this legislation, along with some 200 other members of the Congress, who also feel that such legislation should make a lasting contribution to the Nation's well-being. The use of U.S. tankers to import at least a percentage of our petroleum needs, saves our balance of payments position the cost of buying tankers abroad, which can range from $20 million for a small vessel to $80 million for a very large crude carrier. The use of U.S. tankers reduces not only the amount of oil carried on foreign ships, but insures that the premium shipping rates being paid today would be paid to U.S. operators. This cannot be said for the outflow of dollars paid to foreign shippers to carry our imported oil. It has been estimated by the administration that U.S. oil imports will cost this Nation $24 billion in 1980. This staggering outflow of dollars would be reduced by as much as several billion dollars. if U.S. tankers were used, as this legislation intends, for 20 to 30 percent of U.S. oil imports. We are all aware of the tide of nationalism that has been sweeping the world's shipping community, and this trend has extended to the underdeveloped nations, especially those upon whom we rely for oil. In just the last few years we have seen the commitment of these oil-producing nations to building their own fleets, and many of them have tankers already on order or in operation. Obviously, when these nations have viable fleets, they are going to demand that at least a portion of the oil which they are exporting be carried in their flag vessels. Unless the United States has a strong tanker fleet that can respond by also carrying a portion of this vital trade we will find ourselves being squeezed out. What we must be concerned about is that we will find ourselves with no control whatsoever over the oil import trades, and the control of United States oil transportation will be assumed by the oil-producing nations, and to a lesser extent third flags. Only a strong competitive U.S. tanker fleet can counter effectively this threat which has such grave economic and military implications. I think it is clear that we in the committee want a strong merchant fleet as much as anyone and that we understand the reasons for, and the necessity of, a strong U.S. tanker segment of this fleet. The type of legislation under consideration may contribute significantly to this goal. However, there are many problems and questions raised by this controversial legislation which must be probed and examined in order to get the proper answers. For example, I perceive one of the basic issues associated with this legislation to be the ultimate cost to the U.S. consumer of importing this percentage of oil into the United States on American-flag vessels as against carrying the same amount of oil in foreign-flag bottoms. We must be assured that if in fact there will be an increased cost to the consumer, it will be minimal. After all, we are all consumers, and the U.S. consumer has certainly been burdened with additional costs for products and services over the last year alone. I think it is essential that the evidence adduced at the hearing indicate that the carriage of oil imported into the United States in U.S.-flag bottoms will not result in another substantial cost burden being imposed on the U.S. consumer. There are, of course, many other questions which must be answered by these hearings, such as present and projected United States oil import needs, present U.S.-flag tanker capacity, projected shipbuilding capacity to produce the necessary tonnage, national security implications, and the many tax considerations relating to the existing and projected tanker fleets. We in the committee must be sufficiently prepared to answer satisfactorily the many hard questions regarding this legislation which may be put to us in the Rules Committee and on the House floor. I am not unalterably wed to the precise language of H.R. 8193 and others. At the same time, I cannot conceive that the interests of this country are best served by complete reliance on foreign-flag vessels to supply our energy needs. I would like now to yield to Mr. Clark, the chairman of the subcommittee, who would also like to make a short statement. Mr. CLARK. Thank you very much, Madam Chairman. I share your concern, and I am also concerned with the dual dependency of the United States on foreign nations, not only for the production of needed oil, but also for its transportation. I understand that about 95 percent of our oil imports are carried in foreign-flag vessels. In this regard, it is interesting to note that during this past August, the 125 foreign-flag tankers entering the Port of New York were of at least 16 different registries. It is also worthy of note that these foreign-flag vessels were operated by 4,539 men of 55 different nationalities. This is just a small sampling of the foreign-flag vessels that carry about 95 percent of our oil imports, but it is enough to make me wonder whether we could rely on these vessels for oil if the chips are down. Before I call the first witness, the Chair wishes to note that the record will remain open after these hearings in order to give the Members and staff and opportunity to analyze the testimony. Should the Committee determine that further information is required, the witness or his designee will be requested to meet with. the staff to go over various points deemed to be of interest to the committee. |