Hon. FRANK M. CLARK, Dear MR. CLARK: On March 12th, Mr. Stanley Ruttenberg testified before the Subcommittee on Merchant Marine in support of H.R. 8193. Since his testimony conflicted with that of the American Petroleum Institute presented on February 21st we believe that it would be useful to the Subcommittee if we commented on Mr. Ruttenberg's testimony. There is attached a review which challenges some of his more important assumptions and conclusions. We hope that these comments will be helpful. Enclosure: Sincerely, FRANK U. ISAREL. COMMENTS ON TESTIMONY BY STANLEY RUTTENBERG BEFORE THE SUBCOMMITTEE ON MERCHANT MARINE ON H.R. 8193 Mr. Stanley Ruttenberg's testimony before the Subcommittee on Merchant Marine of the Committe on Merchant Marine and Fisheries on March 12th was both misleading and in several respects inaccurate. Since his testimony conflicted with that of the American Petroleum Institute on February 21st we believe that it would be useful to the Subcommittee if we commented on Mr. Ruttenberg's testimony. Mr. Ruttenberg does recognize and accept the fact that U.S. ship construction and operating costs are and will continue for the forseeable future to be higher than foreign costs. With this as a basic premise, it must follow that under cargo preference these higher costs must eventually be paid for by the owner and operator of the vessels. In turn, he must recover these costs along with a reasonable profit from the customer. Thus use of U.S. flag tankers can only result in higher prices to U.S. consumers. No amount of elaborate economic evaluation can alter this fact. The following comments bear directly on various aspects of Mr. Ruttenberg's testimony. TRANSFER PRICING Mr. Ruttenberg's charge that the price to ship oil is "whatever price the oil companies who import the oil decide to use" is nonsense. Section 482 of the Internal Revenue Code gives the Commissioner of I.R.S. board authority to allo |