Chairman PROXMIRE. Mr. Nader, you reflect a very widespread public skepticism and you articulate it more emphatically and clearly than I have heard it. You say as I understand it, that you think the energy crisis is a fake. It is a phoney. You do not believe it. At the same time there do seem to be facts and figures which show that the availablity of imported oil from the Arab countries which is around 10 or 12 percent of our total consumption in the past has been at least partially interrupted. Leakage permits us to get 600,000, perhaps 1 million barrels a day but that is far less than the 212 to 3 million barrels that we got.

Now, given our wasteful practices, given all these other defects which you properly point to, would you agree that we do have a shortage in the sense that we do not have as much oil available as there is clearly a demand for at the present time?

Mr. NADER. Well, given the waste, as you say, I would not. There already is a reduction of demand due to conservation effects.

Chairman PROXMIRE. But it is a fact of life that a lot of the consumption is wasteful, I would agree.

Mr. NADER. That is right. As you pointed out, to analyze whether there is an energy shortage now, you have to ask how much is demand. decreasing which, of course, relatively increases the supply that is available, and how much is available. I think the demand is decreasing. The figures show that whether they are Consolidated Edison figures for reduction in electricity demand to other figures that have been displayed in newspapers around the country recently. But I also maintain that the Government has not proven its case that there even is an energy shortage of available supply, that they may be able to get information later on but they have not proven their case. In fact, in the last few weeks it has been just the opposite. They suddenly discovered a 70,000-barrel-a-day increase in imported oil that they did not allow for in their leakages in other areas as well.

For instance, let me give the most recent

Chairman PROXMIRE. Let me say what we have gotten, you see, is a public report from the oil companies, as I understand, which they are making regularly now which has indicated that they have a greater supply in many categories than they had last year at the same time. However, I think that while they specify that, they indicate that the availability of crude coming now into the pipeline is substantially less than it was last year and, therefore, if we maintain something close to the same consumption as we did last year, there is going to be a shortage this spring. That is what they are concerned for and prepared for.

Mr. NADER. That is exactly what they said in October would be the case for November and December.

Second of all, never underestimate their ability to store or withhold supplies or reallocate supplies in order to postpone their bringing these supplies to market. For instance, on January 1, I believe, or thereabouts, a massive tanker owned by Texaco took on refined gasoline from a refinery in the east, around the New Jersey area, and set sail through the Panama Canal to California with millions of

gallons refined gasoline. Here was the east coast supposedly thirsty for refined gasoline and they were taking this slow boat to California so that by the time this tanker reaches California, perhaps the prices will be higher and they can make more profit.

Secondly, the magazine Petroleum Economist which comes out of London, said that world crude oil output rose 8 percent or 1.6 billion barrels to nearly 20 billion barrels in 1973 despite the Arab production restrictions started in October. Here is the critical statement. It said, "The increase would have been closer to 10 percent without the restriction." That is, it was an 8-percent increase instead of a 10-percent increase. As you know, other countries have increased there output.

Chairman PROXMIRE. Increase in 1973 compared to 1972?
Mr. NADER. That is right.

Chairman PROXMIRE. Of course, world consumption has increased very rapidly, too. In this country it goes up, what, 7 or 8 percent a year and abroad it goes up even more rapidly.

Mr. NADER. Yes. You see, that is another point. The point I am making is that they have attributed a 2-percent decline in the increase. In other words, instead of a 10-percent increase if there was no embargo, there is now an 8-percent increase because other countreis such as Iran and Nigeria have been increasing their output. Chairman PROXMIRE. Let me get to what you think you see as our policy responsibilities here. Should Congress try to force the administration to control prices by spelling out in law a specific price control program?

Mr. NADER. Yes. I think for the short term there needs to be not only a price control, but there needs to be a price rollback.

Chairman PROXMIRE. Can you tell us what kind of data disclosure legislation should be required?

Mr. NADER. Yes. I think-I do not want to repeat what you have said this morning in terms of what is needed. Chairman PROXMIRE. Do you favor the

Mr. NADER. Storage, for example.

Chairman PROXMIRE [continuing]. Nelson bill?

Mr. NADER. Reserves, oil and gas reserves. The levels at which these reserves prevail underground, cost figures, refinery capacity, refinery output, storage tank levels, et cetera.

But I would have some more structural recommendations, Mr. Chairman. For example, are you aware that the Freedom of Information Act when it was passed a few years ago, had a specific exemption for data from the U.S. Geological Survey? Now, I would eliminate that exemption. That specific exemption came from the oil industry.

For instance, does it not outrage you that the information which the oil companies obtained on the leases that the Federal Government gives them is considered confidential? That is, the people cannot have this information and it is information on extent of reserves on Federal land, presumably owned by the people.

Secondly, I would require consumer and business user groups as well as independent representation on all advisory groups associated with the energy issue. That is an information issue. You

see, right now Mr. Simon has segregated advisory committees. He has one for the oil producers, the big ones, then one for the independents, and one for the consumers. I asked him, "Do you not think there would be a better exchange if they were all mixed so you could have consumers across the table from the majors and independents?" He said, "I will take that under consideration." But, you see, unless that occurs, we are going to have the typical symbiotic relationship between the Federal agency and these industry advisory committees and there is going to be a flow of secrecy both ways that is not helpful.

Chairman PROXMIRE. Let me ask you this. You have been very, very critical of Mr. Simon and the people he has advising him and the people carrying out policy in the Energy Office. Do you think Congress is in the process of turning over too much authority to the proposed Federal Energy Administration and how would you like to see the bill altered before it is enacted? I am talking about the energy bill that is still pending because we did not act on it at the end of the Congress.

Mr. NADER. Well, I think in a number of ways there is too much of a discretionary grant of authority to the Federal Energy Office. For example, I disagree strongly with the information disclosure requirement which I noted in my prior remarks. I do not think the public is given legal standing of sufficient clarity to challenge the agency's rulings in court. You will notice that we have that same problem with the Price Commission and unless people can challenge the Federal Energy Office's determinations in court, there is going to be government by fiat.

I think thirdly, there needs to be, and this is quite important, a consumer advocate's office right in the agency to represent the interests of the consumer and to represent the interests of Congress in finding out really what is going on inside that agency.

I think fourthly, there need to be tougher penalties for violations. In these acts, for example, they have one bite of the apple where they have a modest fine of a few thousand dollars before any criminal penalties apply for willful and knowing violation.

I think finally, and this is something that Congress cannot do very much about unless it really exerts its prerogatives, that is to make sure that the people who run this agency feel for the people in this country, feel for their interests in health and safety as well as in the economy of their purchasing power and that is what I do not see occurring in terms of appointments that are being made in that office.

Chairman PROXMIRE. You called for a price rollback, actually reduce the present prices of gasoline and oil. That, I am sure, consumers would welcome but do you really think that is practicable? Would that not have an immediate adverse effect on production if we actually reduce prices and how much of a rollback would you think is practical or possible?

Mr. NADER. Well, I think we need, first of all, a selective rollback to make sure that the foreign oil does not distort-the foreign price. of oil does not distort domestic price. By selective, I mean if we are going to have a rollback we had better have an export tax or a

control on exports of oil. Otherwise we are going to see the traditional pressure to get it sold overseas or to cycle it back by getting it overseas and bringing it back as imports which are not subjected to price controls. There needs to be a study made as to the precise amount of rollback that is necessary. But I think the answer is in the profit figures, Senator Proxmire. If they are receiving higher and higher profits and if Mr. Heller's predictions are right, then you need a rollback which is equivalent to to a kind of generic excess profits tax.

Chairman PROXMIRE. That prediction by Mr. Heller assumes there will be a very further sharp increase which Mr. Simon indicates he expects, too, this coming year, going from $5.25 to $7 a barrel, that the gas pump price will go up to at least 55 cents. Testimony this morning suggests to me it is likely to go substantially higher than that. So it seems to me the practical thing we ought to do is try hard to hold the line or at least not permit it to go up as high as it would go if they simply let their own preference take its course. Mr. NADER. You see, that is the position that the Federal Energy Office and the Cost of Living Council is putting you in. Chairman PROXMIRE. That is right.

Mr. NADER. They are putting us all in the position of saying let us first make sure it does not go higher rather than say, look, there have been fantastic windfall profits and consumer gouging here. I think Mr. Freeman and Mr. Allvine who will come this afternoon, will detail the extent of this.

Chairman PROXMIRE. Before I yield to Congressman Conable, let me just ask you this. There has been a lot of discussion and a lot of people around the country, a lot of people in my State, for example, have brought up the possibility of nationalizing the oil industry. A very powerful Senator has suggested we make it subject to public utility regulation. My own preference is for vigorous antitrust action to require competition. How do you come down in that area?

Mr. NADER. I come down in three ways. One, vigorous antitrust action to break the oil major up and to make a more competitive industry to the point, for example, of severing a pipeline's activities from the producing and refining activities and eliminating the vertical integration that has stifled the independents on both ends of the producer and retail area.

Second, I would advocate a Federal oil and gas energy corporation on the model of the TVA to be a yardstick, to make sure supplies will always be available for national contingencies and emergencies and for small refineries, distributors and retailers whose being driven out of business by monopolistic practices and to explore for and produce oil and gas on Federal lands where so much of the new oil and gas remains to be found.

And third, I would give the potential victims of oil industry policies and Government policies their full right to sue individually and under class actions. That means to sue not only for price rollbacks, not only for private damages, but also to sue for information. It is not enough simply to say you, Mr. Simon, should give this information. What if he does not? There has to be not only a con

gressional review function here but also the exposure to expeditious litigation.

I think with that combination of policies we will see the onset of what the Economist has called the coming energy glut, and I would like to submit for the record an article which has appeared in the Economist of London entitled "Too Much Energy." It is their case for predicting that there is going to be an energy glut over the next few years and the rest of the century.

Chairman PROXMIRE. We will accept that for that record. [The article referred to follows:]

[Reprinted in the Washington Star-News, Jan. 13, 1974]

TOO MUCH ENERGY

(From the Economist)

There is a case for arguing that the world is likely to be glutted with energy before the end of this decade. The present energy "crisis" is about the 15th time since the war when the great majority of decision-influencing people have united to say that some particular product is going to be in the most desperately short supply for the rest of this century. On each of the previous occasions the world has then sent that product into large surplus within 5-10 years.

The reasons for this are now quite logical and rather technical. In modern conditions of high elasticity of both production and substitution, plus surprisingly equal lead times for many investment projects, we now generally do create overproduction of whatever politicians and pundits 5-10 years earlier thought would be most urgently needed, because both consensus-seeking governments and profit-seeking private producers are triggered by that commentary into starting the overproduction cycle at precisely the same time.

In 1946-49, a agricutural experts forecast a permanent postwar shortage of dairy produce; this led to butter mountains within a decade.

In 1950-51, the Korean war boom was said to show that raw material prices would keep rising forever; instead, some took until 1970 to regain their 1950 peak. In particular, an international action group was set up in 1951 to deal with the world's "worst permanent bottleneck" of sulphur, shortly before the stuff became practically unsaleable.

The future chief economic adviser to the British Treasury published his book on the world's lasting dollar shortage in 1953-54, which was the first of the world's 20 consecutive years of dollar surplus.

Russia's first sputnik in 1957 was said to be so far ahead of the West's conceivable technology that it would leave America for the rest of our lives at the back end of a "missile gap"; within six years the Americans were preparing to fire surplus rockets at the moon.

Then there was going to be a worldwide shortage of university graduates especially from the science departments; within a decade they were one of the bigger groups of the unemployed.

As the 1960s started, there were said to be limitless prospects for offshore funds and other equity investment media for the small man, for go-go business conglomerates, for high technology companies like Rolls-Royce; these were therefore the ventures that went bust (as property developers and then North Sea oil may in the 1970s).

In the mid-1960s we were told it was impossible to bridge the lasting technological gap between America and the rest of the world; this meant that the dollar would soon be devalued.

As a result of yesterday's trendinesses, we now have created in the developed world an unfortunate excess of both birth control devices and anti-pollution controls, although the rearguard of yesterday's preachers about ever-rising birth rates and ever-increasing pollution is still infuriated when the figures are pointed out.

Energy has played its part in the game of cheat-the-prophet, too.

During the coal crisis of 1947, it was said that no coal miner in Europe or Japan need fear for his job during the rest of this century; within a decade a majority of European and Japanese coal mines had closed down.