One decision has already been made one that, unfortunately, reduces the level of imports from Canada and may increase prices of petroleum products, including heating oil, in the Middle West. I might add that I believe that the decision on Canadian imports has provided new allies for the cause of the American consumer, allies who realize how much the oil import program contributes to inflation in our Nation.

General Lincoln, chairman of the Oil Policy Committee, told a House committee last month that the question of heating oil imports was on his agenda for early consideration.

I hope that General Lincoln's committee will be able to act with as much speed as it demonstrated in the case of the Canadian decision, and that a new program will be instituted beginning July 1, 1970, to provide some solution of the Northeast heating oil problem.

There is no need for more study and no more excuse for more delay. The time for action, as I believe these hearings will show, has arrived. We have been very patient in New England, perhaps far too patient. Despite the record made more than a year ago, despite a record of emergencies documented before the Oil Import Appeals Board, we have stood by and waited until the task force finished its work.

That work is complete and there is no longer any disagreement that something must be done and done quickly for the Northeast. The majority and minority of the task force agree that more fuel oil imports are needed and can be provided consistent with national security. Even the staunchest defenders of the quota program here in the Senate our distinguished colleagues, Senator Hansen and Senator Stevens, have recognized the validity of the New England case and have gone on record in favor of increased imports of our area. In fact I know of no one who has studied this program over the past year who has not concluded that relief must be granted and that the "equity" of which President Nixon spoke is long overdue.

We can only repeat the question: Why the delay? These hearings are designed to develop the most current information and provide a focus of attention on the No. 2 fuel oil problem. And as a result, I hope that at long last, on July 1, 1970, we will see some relief. In the hearings I plan to focus on five major areas:

First, the findings of the task force;

Second, the inequitable, high costs borne by the consumers of the Northeast;

Third, refinery production and projected supplies of home heating oil:

Fourth, the plight of the independent home heating oil marketer; Fifth, the state of competition in the heating oil markets of the Northeast.

Our witnesses will include Senators and Congressmen from the area; Governor Curtis of Maine, representing all the New England Governors; Mrs. Bess Myerson Grant, the Commissioner for Consumer Affairs of New York City; Mr. A. Thomas Easley, appearing on behalf of the New England Council; and fuel oil dealers and marketers from New York and New England.

I am very proud and happy to welcome here the distinguished Senator from Vermont, a neighboring State of my own New Hampshire. Senator PROUTY. I am very happy to be here.

Senator MCINTYRE. Senator, I am aware of your strong interest in this program and would invite you to testify in any manner you see fit.

STATEMENT OF WINSTON L. PROUTY, U.S. SENATOR FROM THE STATE OF VERMONT

Senator PROUTY. Thank you, Mr. Chairman.

First I want to thank the subcommittee for the service which it is performing by holding public hearings to explore the heating oil crisis in New England. I am most grateful to you, Mr. Chairman, for this opportunity to express my views.

I might point out that at the present time the Labor and Public Welfare Committee is in executive session trying to find ways and means of preventing a nationwide railroad strike on April 11. So, with your permission, Mr. Chairman, I will only read extracts of my statement, but I hope the entire statement will be inserted in the record.

Senator MCINTYRE. The whole statement, Senator, will be included and made part of the record, and you can, as you say, hit the highlights that you wish to emphasize (see p. 4).

Senator PROUTY. As you know, Mr. Chairman, Vermonters are the most disadvantaged victims of the unfair economic structure that creates high prices for home heating oil and which endangers adequate supplies of this vital product. Because Vermont is inland and far from oil distribution centers, its citizens must pay a substantially higher price for home heating fuel than consumers in any other State in the country except Wyoming. Although Vermont is hardest hit, all of our New England States pay higher prices for home heating oil.

In 1968 New Englanders paid 9 percent more for No. 2 oil than the national average. Between 1964 and 1968, the retail prices in New England increased by 2.19 cents per gallon, from 15.37 cents to 17.56 cents, whereas in a comparable 14-State area east of the Rockies, prices increased 1.19 cents per gallon, from 15.02 cents to 16.21 cents. Mr. Chairman, I have submitted with the text of my statement several tabulator summaries of retail and wholesale prices of home heating oil based on published data, and I ask that these tables be included in the record with my statement (see p. 6).

Senator MCINTYRE. Without objection.

Senator PROUTY. Without import quotas, New England could use foreign-produced home heating oil at a saving of 3 cents per gallon. Therefore, I submit that the solution for New England is the lifting of all quota restrictions on home heating oil consumed in that region. I do not go so far at this time as to propose a total lifting of all import restrictions; such a decision calls for a serious weighing of the national security implications, a responsibility which the President must assume. (I note, however, that the Task Force Majority made out a good case that the replacement of quotas with tariffs would not endanger the national security.)

My suggestion is simple and direct. It can be accomplished either by legislation or Presidential Proclamation. I suggest that New England be allowed to import whatever quantity of foreign No. 2 oil that is necessary to assure our region an adequate supply at a reasonable cost. To this end, I propose action on two fronts for relief in time to alleviate the plight this winter.

First, I propose quick and favorable action on my bill, S. 3579, which I introduced on March 11. This measure, which is entitled the New England States Fuel Oil Act of 1970, directs the Secretary of the Interior to license the importation of all needed home heating oil without regard to existing quotas. In effect, the bill would be a legislative exemption of New England from present quotas on heating oil. Mr. Chairman, as you know, we in the New England delegation have sought relief from the last three administrations. Our efforts are not partisan in any sense; they are the efforts of all New England representatives. At last, I believe the light can be seen at the end of the tunnel, for now our President has caused an exhaustive and fresh look to be taken at oil policy. President Nixon has been receptive to new approaches, and in this I find great hope.

Thank you again for the opportunity to express my views. I stand ready to assist in any way this subcommittee's efforts to relieve the New England consumer of his unfair burden.

(Senator Prouty's statement in its entirety is as follows:)

STATEMENT OF WINSTON L. PROUTY U.S. SENATOR FROM THE STATE OF VERMONT

THE PLIGHT OF NEW ENGLAND OIL CONSUMERS

Mr. Chairman, first I want to thank the subcommittee. for the service which it is performing by holding public hearings to explore the heating oil crisis in New England. I am most grateful to you Mr. Chairman for this opportunity to express my views.

As you know, Mr. Chairman, Vermonters are the most disadvantaged victims of the unfair economic structure that creates high prices for home heating oil and which endangers adequate supplies of this vital product. Because Vermont is inland and far from oil distribution centers, its citizens must pay a substantially higher price for home heating fuel than consumers in any other State in the country except Wyoming. Although Vermont is hardest hit, all of our New England States pay higher prices for home heating oil.

This discriminatory condition is not merely the inevitable result of natural economic factors such as transportation costs. In that case, we might understand and live with the hardship. On the contrary, the high cost of home heating oil in New England is the unnecessary and avoidable result of the artificially protected price structure created by the Mandatory Oil Import Control Program.

There is no doubt in my mind, Mr. Chairman, that the present quota system. which restricts the importation of foreign crude oil and finished products, is the principal culprit. New England depends for delivery of home heating fuel on a large number of independent-dealer-distributors. These dealers sell over 70% of all of the home heating fuel in New England. Yet they are severely disadvantaged by the operation of the import restrictions. Although they have an abundance of deep water terminals which could receive foreign products, they cannot import cheaper foreign oil and must depend on the domestic supply made available by the major Gulf States producers. The quota system disfavors the independents, because it freezes imports at the 1957 level and allocates them according to import history. Thus only the major integrated companies can import any substantial amount of heating oil, and the independents must look to the majors for their supply. The independents are thus forced to rely on their competitors for an adequate supply-hardly a situation conducive to competition.

Moreover, the major marketers, who unlike most independents deal in numerous oil products, do not find home heating fuel as profitable as gasoline and other refined products. They therefore have no special incentive to increase their sales of No. 2 oil to New England, which is located at the far end of the geographic supply lines.

Since the imposition of mandatory controls in 1959, importation of all finished petroleum products other than residual fuels has been rigidly limited to about 76,000 barrels per day nation-wide, more than one third of which goes to the Defense Department. This leaves relatively little oil for private use, all of which goes to a few major marketers.

New England residents are the captive victims of an unfair system which in recent years has resulted in critical shortages of No. 2 oil during the peak consumption winter months, and each year the shortages grow more acute. Between 1968 and 1969, the deficit of demand over supply doubled—from 22 million barrels to 65 million barrels. The present outlook for 1970 is no brighter.

During the recent winter of 1969-70, Vermont suffered severe cold weather and heavy snowstorms. The per capita heating oil requirements rose, but the available supply declined.

The prices which New England homeowners must pay for home heating oil are nothing short of outrageous. Retail prices are higher in New England than in any other region of the country. In 1968 New Englanders paid 9% more for number 2 oil than the national average. Between 1964 and 1968, the retail prices in New England increased by 2.19 cents per gallon, from 15.37 cents to 17.56 cents, whereas in a comparable 14-state area east of the Rockies, prices increased 1.19 cents per gallon, from 15.02 cents to 16.21 cents. Mr. Chairman, I have submitted with the text of my statement several tabular summaries of retail and wholesale prices of home heating oil based on published data, and I ask that these tables be included in the record with my statement. These tables refute the notion advanced by advocates of the status quo that New England retail prices have risen because of higher distributors' margins. They establish, to the contrary, that retail prices have risen since 1964 solely as a result of higher wholesale prices, and not because of increased margins of profit for distributors.

Mr. Chairman, President Nixon's Cabinet Task Force on Oil Imports fully bears out the contention of New Englanders. The Task Force determined that the nationwide cost we bear for restricting oil imports is $5.2 billion. The Eastern Seaboard States bear the biggest share of this cost, paying $2.1 billion more than they would if controls were lifted. Even more startling is the high cost to New England; the Task Force stated that whereas the national per capita cost of import restrictions is $24, Vermonters must pay an extra $45. In Maine the figure is $41; in your home State of New Hampshire, Senator McIntyre, the figure is $39.

The reason why New England is singled out for such harsh treatment is obvious: Our region depends entirely on home heating oil produced in distant areas of the country, such as the Gulf Coast, and transported thousands of miles. Because of import restrictions, we must use domestically produced oil, which at $3.30 a barrel wellhead price exceeds the world market price of $2.00 by over 50%. New England has no indigenous sources of crude oil, no refineries and no oil pipeline, so we depend entirely on other regions to supply us with finished products.

Without import quotas, New England could use foreign produced home heating oil at a saving of 3¢ per gallon. Therefore, I submit that the solution for New England is the lifting of all quota restrictions on home heating oil consumed in that region. I do not go so far at this time as to propose a total lifting of all import restrictions; such a decision calls for a serious weighing of the national security implications, a responsibility which the President must assume. (I note, however, that the Task Force Majority made out a good case that the replacement of quotas with tariffs would not endanger the national security).

My suggestion is simple and direct. It can be accomplished either by legislation or Presidential Proclamation. I suggest that New England be allowed to import whatever quantity of foreign number 2 oil that is necessary to assure our region an adequate supply at a reasonable cost. To this end, I propose action on two fronts for relief in time to alleviate the plight this winter.

First, I propose quick and favorable action on my bill, S. 3579, which I introduced on March 11. This measure, which is entitled the New England States Fuel Oil Act of 1970, directs the Secretary of the Interior to license the importation of all needed home heating oil without regard to existing quotas. In effect, the bill would be a legislative exemption of New England from present quotas on heating oil. My bill has been referred to the Senate Finance Committee and I am informed that Senator Long will soon hold hearings on bills relating to oil imports. I urge Senators to support favorable action on S. 3579. My bill has now been supported by 6 cosponsors: Senators Aiken, Smith (Maine), Brooke, Pell, Pastore, and Cotton.

An identical bill has been introduced in the House of Representatives by Congressman Stafford of Vermont.

Second, action should be taken in the Executive Branch. The newly constituted Oil Policy Committee under the Chairmanship of the Director of the Office of Emergency Preparedness is now considering revisions in the present quota regulations to give relief to New England. I am hopeful that prompt action will be forthcoming.

New England's problem is universally recognized as a real and immediate one. I have yet to hear anyone seriously refute the hard facts that our region is short-changed on home heating oil. We are not seeking some special break or advantage for New England, but only rectification of an inequitable situation. New England depends almost entirely on oil to heat the homes of its citizens. Our region consumes 21% of all home heating oil in the nation, although we comprise but 6% of the population. High prices thus create an extreme economie hardship on our citizens, most of whom simply cannot afford the outlay. Home heating oil is hardly a luxury item to our people; it is a basic necessity. I believe it is grossly unfair to ask these people to foot the bill for our oil import program.

Mr. Chairman, as you know, we in the New England delegation have sought relief from the last three Administrations. Our efforts are not partisan in any sense they are the efforts of all New England Representatives. At last I be lieve the light can be seen at the end of the tunnel for now our President has caused an exhaustive and fresh look to be taken at oil policy. President Nixon has been receptive to new approaches, and in this I find great hope. Thank you again for the opportunity to express my views. I stand ready to assist in any way this Subcommittee's efforts to relieve the New England consumer of his unfair burden.

1 Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. Prices are average of those quoted monthly for Portland, Boston, Providence, Hartford, New Haven.

2 New York, New Jersey, Pennsylvania. Prices for New York are weighted 50 percent for New York City and 25 percent each for Albany and Syracuse. Prices for New Jersey and Pennsylvania are average of those quoted for Montclair and Philadelphia.