First is the adverse effect on our efforts to control air pollution of the present oil import policy. Imported #2 heating oil is substantially lower in sulphur content than its domestic counterparts.

The current program severely restricts the amount of inexpensive foreign oil which can be imported into the United States. Yet it is precisely this fuel, particularly #2 heating oil, which is used in home oil burners. New England is more dependent on this fuel for heat than any other region. With approximately 5 percent of the nation's population, we consume over 20 percent of all the #2 fuel oil consumed in the United States. Over 80 percent of the households in New England use home heating oil.

The result of the present system is that we pay more than we should for oil, and that we risk not having enough of it. To illustrate how we are being overcharged let me point to my own State of Massachusetts.

Imported No. 2 fuel oil can be delivered to the Port of Boston for three cents a gallon less than domestic oil. The citizens of Massachusetts consume over 2 billion gallons of fuel oil a year. Thus, they are paying over 60 million dollars more a year than they need to.

As for the shortage, it appears to stem largely from the fact that domestic refiners prefer products such as jet fuel which yield higher profits than home heating oil. However, the recently announced 3 percent price increase shows that they also recognize the profit to be made from heating oil. The Massachusetts Consumers Council has stated that at one point last winter New England only had enough oil on hand to last for five days. This year, according to the Council, the East Coast supply of #2 fuel oil is currently 10 percent below what it was a year ago.

Obviously the effects of the Oil Import Quota Program go beyond the price and availability of heating oil. I was interested to learn that the staff of the Office of Emergency Planning has estimated that if the program had never been put into effect, American consumers of all petroleum products would pay annually some 5 billion dollars less than they now pay, and that the yearly savings to Massachusetts consumers would be over 200 million dollars. Obviously there is a good deal of speculation inherent in any such large-scale estimates. But what I have told you about the quota system's effect on the New England fuel oil consumerthat he is overcharged and potentially undersupplied-is fact.

Sincerely,

FRANCIS W. SARGENT.

Senator MCINTYRE. We will call as our next witness the Honorable Benjamin S. Rosenthal, Congressman from New York. Congressman, we are delighted to welcome you here this morning.

STATEMENT OF BENJAMIN S. ROSENTHAL, U.S. REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

Mr. ROSENTHAL. Thank you, Mr. Chairman. I am very pleased for this opportunity to express my concern about a policy which, as a consumer has abused my sense of justice and which, as a citizen, has shaken my confidence in the orderly procedures of government.

The committee's laudable aim in these hearings is to review and, perhaps, correct the mistreatment of the Northeast region under the oil import program. But, frankly, Mr. Chairman, we will be deceiving ourselves and our constituents if we think that our efforts or similar efforts can importantly affect our system of representing these grievances.

The distressing and deeply pessimistic conclusion I make-after 5 years as chairman of the House subcommittee on consumer representation-is that until the Federal Government itself changes its methods of representation, nothing close to consumer justice can result from our efforts, no matter how diligent, no matter how sincere..

A look at the task force report on oil imports will tell why-58 American oil producers and refiners submitted statements to the task force. Dozens of other spokesmen from oil-related industries testified on the importance of the oil import program. More importantly, the composition of the task force itself testified to the economic strength of the producer segment, while, in fact, ignoring the American

consumer.

It is an interesting question to ask, who spoke for the consumer on this task force? If Mrs. Virginia Knaur ever represented consumers' views before that task force, the record on such representation is silent. The Federal Trade Commission did submit, on request, a factual statement on the impact of the present import quotas on competition, concentration of economic forces and, indeed, on con

sumers.

But the sad fact is that no representative of the consumer's interest— no matter how strained an interpretation one gives that admittedly vague interest-served on the task force.

The Secretary of State was a member, presumably, to represent relations within the international community; the Secretary of Defense spoke for the needs of national security; the Secretaries of Commerce and Interior represented the true heart of economic power in this case that unique combination of geography and industry which has made the oil industry such a dominant feature of American life; the Secretary of the Treasury spoke also for the producer's economic interest, particularly as that interest affects the revenues of the Federal Government; finally, and appropriately, the Secretary of Labor, the task force chairman, spoke for the thousands of oil industry workers whose livelihood, the task force was so often told, depends upon keeping cheaper foreign oil out of America.

The economic importance of oil in America is only suggested, however, by the membership of the task force. A more trenchant indicator of the strength of the oil industry is the fact that five of the top 10 American corporations and 14 of the top 50 corporations in net profits in 1968 were, indeed, oil companies. These 14 companies earned over $5.25 billion in 1968, a sum greater than the gross national products of all but a few countries in the entire world.

What was ignored was the savings to all of us who use petroleum products. Those savings are well known to you, Mr. Chairman, and to the committee and will undoubtedly be cited by those more expert than I am in economics. But, briefly, abolishing the quota system would save about 5 cents a gallon on gasoline and 3 cents a gallon on fuel oil. Every penny reduced from gasoline prices saves the American consumer about $1 billion annually. If the significant savings for fuel oil are added, the present oil import system costs consumers between $6 and $7 billion a year. New York State, my own State, would save $120 million annually from reduced fuel oil costs alone. Yet, the cynical comment of the Secretaries of Commerce and Interior in their separate views opposing any true liberalization of the quotas-was to us rather shocking. In their opinion, this $6 to $7 billion was not really wasted. Rather, they said, it went into the pockets of other Americans, a fact which they thought justified the violence to good sense and marketplace justice.

What they were, indeed, suggesting, Mr. Chairman, was a kind of Robin Hood in reverse: take from the poor and give to the rich. And it was, in my humble judgment, a serious display of cynicism toward the American consumer.

The effect of this economic strength is further seen by the fact that import quotas based on national security have never been applied on behalf of any other industry except oil.

Seen against these imposing evidences of economic stakes, it is no matter for surprise that consumers did not get proper consideration from any source, including the President, who modified the modest liberalization proposed by the task force.

It is especially important that Members of Congress represent that consumer's interest lest it be ignored by the weight of domestic geoeconomics which has so far prevailed with the oil import system.

After reading the task force report, Mr. Chairman, and following its deliberations and the Presidential action it precipitated, I come to the following conclusions:

First, the only spokesman before the task force who truly represented the consumers' interests were individual Members of Congress and Governors of the States. Most of the individual pleas came from the Northeast since our area pays most dearly for petroleum products which are now artificially restricted in source to the Southern and Southwestern States, far from our constituents.

Second, that modest representation was powerless to impress vividly either the task force, or ultimately, the President, with the extent of the consumer interest in lower priced oil.

Third, that unless we reorganize the representation of the consumer within the Federal Government, we will never have a chance for justice in the Nation's marketplace for only within the Federal Government can we ever hope to maintain that vital balance between the public interest and private economic advantage.

Fourth, and perhaps most importantly, we have lost, at least temporarily, a superb opportunity for better international stability by failing to end the oil import quota system. On this point, with your permission, Mr. Chairman, I would like to dwell for a moment.

Our international goals, during the dreary quarter century since World War II, have been largely negative in nature. We have sought, under a variety of rhetoric, to contain, stifle, encircle or otherwise nullify a strong competing world force stemming first from the Soviet Union and its satellites, and more recently from Red China. It is fashionable now to demean that policy, but it is perhaps more appropriate to say that it is outmoded today. We are, as the 1970's begin, slowly groping for modifications of the cold war theories.

We should recall that the oil import controls are based on national security alone. There is no presidential or congressional mandate to protect the oil industry from competition abroad and there should be none. We should, therefore, in the context of the cold war thaw, consider whether the national security mandate given to oil import quotas still stands scrutiny.

This is obviously a complex and extremely serious undertaking, deserving the most careful consideration of both the Congress and the President. As a member of the Foreign Affairs Committee, I would

purpose only that a quite different interpretation might be given today to the routes which lead to national, and international security, and that these routes might not take us through the familiar territory charted under a fortress mentality.

For example, might not mutual dependence instead of mutual antagonism be an equal, or even, superior method of deterring war and those other disruptions in the international community to which the oil industry and its spokesmen so often refer? Might it not be better if the United States and the Soviet Union-and even Red Chinawere bound together by such a network of trade agreements and import requirements that military threats at sometime in the foreseeable future became unthinkable?

These are considerations beyond our immediate concerns in this hearing. But the interests of the northeast consumer and the interests of citizens who want peace and who know it might be better approached by some different efforts in world trade, may possibly coincide on this unique and interesting question of oil import quotas.

And out of this exercise, which we in Congress are obliged to pursue, may come a more explicit challenge to the broader, and more vital question: How well and by what means does our Federal Government represent its citizens' views?

Today's answer is-and this is my statement after many investigations and many weeks of hearings that view is not represented at all, and when it is represented, it is represented very poorly.

Neither economic justice nor international amity was served by the President's decisions on oil import quotas. But I might suggest that the last word has not yet been heard, as these hearings, Mr. Chairman, so clearly and effectively indicate.

I would like to say, Mr. Chairman, additionally, if I might, that the deep question of consumer representation in Washington is one that I have been concerned with for some 6 or 7 years now. As I suggested before, it is my conclusion that the American consumer is very, very inadequately represented in Washington, that special interests, whether they be, as in the case of oil, a special combination of geographic and economic interests or just simply special partisan interests, have controlled governmental decisions.

The oil industry appears to utilize a special magic. Their history of accomplishments in Washington are well known, and I frankly think on occasion we ought to tip our hat to them for their skillful and sophisticated exercise in influencing the decisions of government.

But there does come a time when the American consumer is entitled to equal representation and equal weight in the far-reaching governmental decisions that affect his life. We talk about the serious problem of inflation and you, Mr. Chairman, have spoken out on this and know it so well. The average citizen in this country is being squeezed so tightly and vigorously that he has become thoroughly disenchanted with all of us here in Washington and, sometimes, disenchanted with the entire system under which we operate.

Yet we are prepared to tell him, the man who operates a car and has to pay for gasoline to get to work, the fellow who owns a small home in my district and your State, that he is going to have to pay considerably more for fuel oil and for heating oil and for gasoline because the

oil companies have learned to use the system under which we operate far more efficiently than he has.

My own view, put very succinctly, is that the national security argument is completely a subterfuge. These quotas began under President Eisenhower, and they have grown like every other thing grows here in Washington, once instituted and given the vitamins of Government lethargy. The cause of national security is not advanced by maintaining these quotas.

If the quotas were eliminated, in the long run, a majority of foreign oil would come from Canada or elsewhere in this hemisphere, and there are many people who are prepared to suggest-and I have no special knowledge that Canadian oil which would come overland might, indeed, be safer in times of crisis than oil moved by ship from the Gulf Coast to New York or to other places.

I don't think there is anyone who is prepared to question the fact that our civilian economy and hence, our national security requires a great deal of oil. However, I do think that at some point those who profess dedication to our national security and to our foreign policy are obliged to look into the question of whether our national interest isn't better advanced by not resisting the importation of the products that other countries are able to deliver to us. I think the enlightened day of increased communication and intercourse between countries has to come.

In my judgment our oil import policy is not in the interest of national security and is, in fact adverse to the interest of national security. It is certainly adverse to the interest of the average American consumer, particularly those in the Northeast. In reality this policy is clearly in the interests of 15 to 20 large corporations who, for one reason or another, have been able to exercise their power far out of proportion to the needs of the American people.

The separate views of the Secretary of Commerce and Secretary of Interior were cynical. They were absolutely incredible. They said, in effect, "What difference does the cost make as long as the money stays in the United States?" Take it from the pockets of the people in New England and New York and give it to the barons of Texas. It is unbelievable that high Government officials would be willing to affix their signature to those kinds of views.

Some of us on occasion are enchanted by the prospect of playing the role of Robin Hood, thinking we can take from the rich and give to the poor. There is still a certain amount of glamor and romance in that kind of a concept. But I find very few Americans who are willing to affix their signatures to a view that is the reverse of that of Robin Hood: "What difference does it make if a policy takes from the poor guy who is driving to work every day to whom 2 cents or 3 cents a gallon means something, as long as it stays in America." The view neglects the importance of considering who and what section of the country benefits from the fact that the money stays in the United States. Given my choice, I would rather take that money out of the coffers of these giant corporations centered essentially in the Southwest and put it where it fairly belongs in the pockets of the average American consumer.