To my mind, the economic greatness we have achieved as a nation has rested on these twin pillars of free enterprise and competition. Indeed it is true that oil has been singled out. It was singled out in 1959 when it was exempted from the normal rules of competition because of its supposed value to our national security. I might remind you, Cliff, that oil is the only product which has received such treatment, and it appears in our zeal to protect this industry back in 1959, we overcompensated. Milton Friedman, hardly an advocate of socialistic government controls, sums up import controls this way: "oil import quotas should be eliminated. We should buy the oil where we can get it, at the lowest price, not subsidize high-cost domestic producers."

Now as a Republican and a member of the Armed Services Committee I have been extremely impressed by the dedication of Task Force not only to National Security but also to a genuine desire to avoid Government control and replace such control with market place economics. I concur with the findings of both the minority and majority members of the Task Force that we can have a liberalization and still adequately protect our national security.

I, of course, have had a specific interest quite apart from these national issues because of the disproportionate and inequitable impact the present program has on my state, Massachusetts, and on my region, New England. It is unconscionable to me that certain states and regions have to bear such a high share of the cost of the oil import program-a national security program. It's like saying that the people of New England must pay a higher per capita share of the Department of Defense appropriations; surely something you would not support. I know that you, too must be dismayed that the average per capita cost of the Oil Import Program falls so heavily on the citizens of Wyoming. Both the Office of Emergency Preparedness and the Task Force Report itself show the per capita cost of the Program in Wyoming as the highest of any state in the Union. The Task Force Report, for example, places the Wyoming per capita cost at $57. This means a family of 6 in Wyoming is spending some $342 more for its oil purchases than would be the case without the Oil Import Program. That is a heavy burden indeed and the burden we bear in New England is also a heavy one.

In conclusion, I want you to know, too, that I think the dialogue initiated by your letter has been a useful one and I hope that my comments have proved helpful to you. I do apologize for the length of my reply, but I agree with you that the issue is so important that it must receive full exposure.

Sincerely yours,

EDWARD W. BROOKE.

(Senator Brooke also supplied three tables for the record. The same tables were received from Senator Prouty in earlier testimony and are printed on page 6.)

Senator BROOKE. Mr. Chairman, again I thank you for the opportunity to make this very brief statement. I wish you well in the conduct of these hearings, and I am very hopeful that some time in the not too distant future that we are finally going to obtain the relief which we have been mutually seeking for such a long period of time, the relief for the consumer of No. 2 fuel oil in New England.

Senator MCINTYRE. I am sure that you realize that Senator Hansen and one of his colleagues who like the present oil policy have agreed and admitted that the Northeast and New England in particular should receive some form of help in this particular No. 2 fuel oil situation. So they have joined us at least in our cry for what we consider to be equitable.

I wondered, there is a little confusion in my mind that I might straighten out for the record, last year a group of Republican Senators went and discussed this matter with the President and it was reported that the President had said that he was going to give this a very good look, and there would be some form of decision by the time snow fell. This was last year.

But some statements have been made that the President promised this group of Senators relief for the Northeast.

Was it your memory that he promised relief, or that he would make certain a good hard look was taken at the situation?

Senator BROOKE. Well, I was one of the Republican Senators that attended that meeting. I think it was attended by the distinguished Senator from Maine, Mrs. Margaret Chase Smith, and the President did not say by the first snowfall, he said "by the heating season."

As you know, we had some heating days in the early part of September of 1969. But my recollection is that the President did not promise relief. In all fairness to him, he did say he felt this was a matter that should be studied very thoroughly, that he would see that this was done, that he hoped he would have a decision for us prior to the heating season.

As you will recall, Mr. Chairman, I think after the first heating day I know my thermostat was set at 70-I sent a telegram to the President reminding him of his promise to have some word for us by that time and we did not get it. In fact, we did not get it until after many, many heating days had passed, and finally the task force did make its report and its recommendations which we had hoped would be accepted. But I don't believe he actually promised us relief.

Senator MCINTYRE. That was my memory of it as reported to me by the senior Senator from Maine and the senior Senator from Vermont.

I want to thank you very much for coming here this morning. I know you share with me the great interest we have in this problem and the fact that for some reason or other, whether it is a Democratic or Republican administration, we just can't seem to make headway. Senator BROOKE. It is certainly not a partisan matter.

Long before I came to the Senate, New England members of the congressional delegation, both of the Republican and Democratic Party, have joined together in trying to get relief for New England. And certainly since I have been here, certainly under your leadership, Mrs. Smith's and others' we have been unanimous in asking for this relief.

To date we still have not gotten it. I don't know what else we can do. But I am still very hopeful we are going to get that relief.

I see my distinguished Republican colleague from the Congress, Congressman Silvio O. Conte from Pittsfield, who is here with us today. And he has been very active, as you know, on the House side in fighting for relief. I am very pleased to see that he is going to testify before your committee, Mr. Chairman.

Again I thank you.

Senator MCINTYRE. Thank you very much, Senator Brooke.

The Commonwealth of Massachusetts is well represented in the room at this time.

Congressman Conte, I have Senator Kennedy scheduled to lead off and with your permission, we will call him at this time.

Our next witness will be the senior Senator from Massachusetts, the Honorable Edward M. Kennedy. But before we continue I would like to insert in the record at this point a statement received from Senator Cotton.

(The statement follows:)

STATEMENT OF NORRIS COTTON, U.S. SENATOR FROM THE STATE OF NEW HAMPSHIRE

Mr. Chairman: First, I would like to take this opportunity to commend you and your colleagues on this subcommittee for the attention you have given this

matter. You and I have constantly fouht for cheaper oil and I know the people of the section of the country which we represent will appreciate all that you are doing in their behalf.

Like yourself, I have supported the project of a free trade zone and an oil refinery at Machiasport. I shall say I am keenly disappointed that after the President's Cabinet committee recommended a reduction in import restrictions the President postponed action awaiting the report of a newly-created oil policy committee. We've had too much fact-finding, too many commissions and committees, too many studies. These will never keep us warm in the winter.

The position of New England is unique and requires special treatment. New England with nine percent of the country's population uses twenty-one percent of the home heating oil consumed in the country. Some 70% of the homes in our sector are heated with oil. New Englanders pay top dollar to their oil man, and yet can never be certain there will be enough oil to last the winter.

Threats of fuel shortages are not uncommon. On February 3rd an emergency allocation bailed New Englanders out of a heap of trouble. It was the second instance within the past three years when our delegation has had to plead hardship to insure our people against a fuel shortage. At best such emergency measures offer only a glimmer of relief. It falls short of meeting the central issue, an adequate supply of fuel oil and at a reasonable cost.

Since the oil import program was established in 1959 following Suez, we have been on the short end of the stick. Not only is there the constant threat of shortages, but in 1968 New Englanders paid nine percent more to heat their homes than the national average.

I am fully aware of the broad question of our national oil policy and the national security implications, and prefer to leave that to the oil policy committee and to zero in on what I consider to be the major concern of we New Englanders. Namely, it is fairer consideration for our region from the Federal government's oil policy.

Only a few weeks ago, a top Defense Department official, Barry Shillito, testified before a House Committee that this country could have more imported oil and still not jeopardize security. If this is so why not give New England the fair shake we have been seeking all these years.

Recently, my colleague from Vermont, Senator Prouty introduced the New England Fuel Oil Act. I believe this bill meets the issue head-on and I was pleased to sponsor the measure with him. Our bill simply removes import controls in New England. I hope that your committee will consider similar legislation that will attack the problem squarely and remove this heavy economic burden on our residents.

Again let me thank you for this opportunity. I look forward to working with you in the interest of the eight and one-half million fuel oil consumers in the New England sector.

Senator MCINTYRE. The committee is delighted to welcome you here, along with your colleague, Congressman Conte. Many of the Massachusetts Congressmen have responded to this hearing and we know the great importance you attach to this matter.

STATEMENT OF EDWARD M. KENNEDY, U.S. SENATOR FROM THE STATE OF MASSACHUSETTS

(Senator Kennedy's full prepared statement is printed at p. 52.) Senator KENNEDY. Thank you very much, Mr. Chairman.

First of all, I want to commend you and your committee for holding these important hearings. You have done much over the past 18 months to highlight the heating oil problem of the Northeastern States, particularly New England. And in doing so, you have helped to bring to the attention of all Americans the weakness and inequity of the present oil import program.

This phase of your consideration of the heating oil issue comes at a particularly critical time-critical because these months are a time. of testing for this administration, a testing of its commitment to change and progress in our Government policies.

For those of us over 30, who ask why many of the youth of our Nation have become disillusioned about our system, we need look no further for one answer than the subject of this committee's consideration-oil import policy. For the handling of oil issues over the past year provides a classic example of the failure of our institutions and our leadership to respond to the clearly demonstrated needs of our people and our Nation.

After almost a year of intensive study, the Cabinet Task Force on Oil Import Control developed facts, information and data which demonstrated, beyond a doubt, that the present system has not worked and is not serving our national interest or our national security. But what has been the response of the oil industry?

They have attacked the findings of the task force and claimed that it was run by people who didn't "understand" the industry. By that they mean, of course that the staff was not a captive of the industry and was willing to take a fresh clear unbiased look at the import

system.

And what has been the response of the President?

Despite the massive evidence, despite the strong recommendations of the majority of the task force, composed of the leading members of his Cabinet, the President has done nothing. He has, of course, ordered more study and review. But now that the task force has finished its work, there is no reason for more study, and every reason for action. On the issue of oil imports, we have a real test of the leadership and commitment of this administration.

It is a test of the administration's commitment in a number of areas. First, it is a test of commitment to the people, called by some of the "middle Americans." It is that group-the middle Americans— who bear the burden of high oil prices-3 cents per gallon more for heating oil and 5 cents more per gallon for gasoline.

I would ask every American who thinks this President is speaking for him to check the cost figures developed by the task force. He would then realize that the oil industry, supported by a program under the direct control of the President of the United States, is taking a minimum of $100 per year from his family in higher prices. And in New England this figure runs as high as $200 per year.

That's what I mean about a test of commitment to the people.

Second, the oil issue represents a test of the commitment of this administration to fight against inflation. We've heard a lot of talk about how critical it is to stem the tide of rising prices and how committed the President is on this issue.

The President is now faced-today-with a clear test and challenge. Over the past 2 weeks the major oil companies have challenged the President's fight against inflation by raising the retail price of gasoline 1 cent per gallon. One cent per gallon means $1 billion a year in added consumer costs $1 billion of new inflationary pressure on our economy.

The President could easily prevent this from happening, for he, and he alone, has been authorized by Congress to control oil imports and through that control he maintains the prices of gasoline and heating oil at artificially high levels. It would be a simple matter-it would take the stroke of a pen-for the President to allow sufficient imports to come in to roll back that price increase.

Perhaps most important of all, third, oil policy is a test of the President's commitment to orderly and legal procedures in our Government. My Subcommittee on Administrative Practice and Procedure is beginning to take a hard look at past and future procedures under the oil import proclamation and regulations. We have a great deal more to learn, but based on a review of the recent decision regarding Canadian oil imports, and examination of the program over the past 11 years, I have serious doubts that the procedural safeguards established by the Congress, particularly in the Administrative Procedure Act of 1946, have been adhered to.

Fourth, and perhaps most important of all, oil import policy is a test of the President's commitment to the national security standards established by the Congress in the Trade Expansion Act of 1962. I realize that what I am about to say involves issues of importance and gravity to our Nation.

But the issue is too important for silence.

Under the national security clause enacted by Congress in 1955 and reenacted in 1958 and 1962, we gave explicit instructions to the President. He was to control imports only in cases where those imports threatened to impair the national security.

And in determining whether a threat to our security existed, he is to rely on the advice of the Director of the Office of Emergency Preparedness and, of course, other officials concerned with security matters, such as the Secretary of Defense.

The three leading officials of this administration concerned with national security matters-the Secretary of Defense, the Director of the Office of Emergency Preparedness, and the Secretary of Stateall joined in supporting the majority report of the Cabinet Task Force. All recommended an increased level of oil imports.

These hearings are also focusing attention and gathering the facts involving another test of the administration's commitment-the commitment to the welfare of the people who live in the Northeastern States of our Nation.

Witnesses are presenting eloquent testimony to the need for more oil imports and about the heavy and inequitable burden which is borne by the consumers of the Northeast, who have been forced to pay, year after year, the high cost of the discredited oil import program.

But these witnesses are not the only ones who have spoken about the heavy burdens and the need for more imports of heating oil. The majority report of the task force says we have a problem which needs a solution; and even the minority report of the task force, recognized the need for more heating oil imports.

So we can rightfully ask the President: Why is there no action? Why is there continuing delay? Why is there more study?

We can also ask him: Why did you act so quickly on the Canadian imports, which is going to mean higher prices and more inflation? And why won't you act on the Northeast heating oil issue which can mean lower prices and less inflation?

There is something that can be done and on which there is full agreement; amendment of the Presidential proclamation to assure substantial increases of home heating oil imports into the east coast. The President can accomplish this objective by three methods.