annual cost of the quota restrictions on Number Two fuel oil is about $85 for a family of four in Maine. We can ill afford this kind of inflation.

The majority of the President's Task Force has advocated removal of the quota restrictions. Even the dissenting minority views advocate special provisions to reduce the cost of Number Two heating fuel.

New England's consumers deserve relief from the insidious, governmentsponsored inflation in the price of heating fuel. We demand this relief, and we demand it now.

STATEMENT OF HON. WILLIAM D. HATHAWAY, REPRESENTATIVE IN CONGRESS FROM THE STATE OF MAINE

Mr. Chairman, the people of Maine's Second District whom I represent are almost entirely dependent upon #2 heating oil to furnish heat during the long winter months. This dependence on home heating oil characterizes the whole northeast area of the Nation, and particularly the New England region. Over 80% of New England's eleven million people depend on fuel oil for residential heating. Although New Englanders comprise 6% of the population of the United States, we consume some 21% of all the home heating oil. Yet retail prices for this heating oil are higher in New England than in any other region of the country. In 1968 we paid 9% more than the national average for #2 heating oil. Moreover, in recent winters we have experienced critical shortages of heating oil and have had to depend on emergency allocations by the Oil Import Appeals Board.

The swollen cost and inadequate supply of #2 heating oil are, in my view, a direct result of the oil import control program instituted by the Eisenhower Administration eleven years ago. The oil import quotas established under this program impose artificially high prices on oil products across the Nation, costing the American people an estimated $5 billion annually. But the cost is not borne equally by all regions of the country. Whereas the national per capita cost of import restrictions is $24, the per capita cost for my state of Maine is $41. This increased cost results from Maine's dependence on heating oil which must be transported thousands of miles from major sources of supply in the southwestern area of the Nation. Because of the import control program, Mainers are forced to use domestically produced oil priced at approximately double the world market price. Without the quota system, greater volumes of imported oil would be free to enter the United States at east coast ports such as the one contemplated for Machiasport in Maine. It is estimated that a refinery operating in Machiasport would result in a reduction of at least 10% in the bloated cost of home heating oil in New England.

The cost of heating oil is a major item for every Maine family. It is not a luxury item, but a vital necessity. Yet while the present Administration attempts to fight inflation in the press, it continues to ask Maine people and all Americans to pay fuel prices that are unnecessarily high and artificially maintained. The effect of the oil import control quota system is to protect an inefficient domestic oil industry while pushing up the cost of fuel for the American consumer. The effect is particularly devastating for those who live on fixed incomes.

The oil import quota system was instituted eleven years ago as a "national security" measure designed to reduce American reliance on foreign sources for our oil supply. But sources within the Administration which implemented the program admit that "national security" was merely the rationalization for a very costly economic decision. In his memoir, "Firsthand Report," Presidential Assistant Sherman Adams candidly admits that national security was not at stake, but was used as a legal excuse: "The imposing of import controls on oil was primarily an economic decision brought about by an economic emergency, but the action was based upon security considerations in accordance with the law."

Recently the Antitrust Division of the Department of Justice has also challenged the national security rationale behind the import quota system: "These costs would not appear to be necessary to any reasonable security goal. . . The benefits achieved . . . do not seem to warrant the costs involved. The import quotas themselves do nothing to preserve this nation's domestic oil reserves. Reserve capacity is maintained, if at all, by state regulatory action aimed primarily at other objectives, such as conservation. The resulting hodgepodge of Federal and state regulation seems ill adapted for achievement of a coherent program designed to provide this country with sufficient emergency oil reserves."

This finding was reiterated by the President's Cabinet Task Force on Oil Import Control. After months of study and consideration the task force concluded that "the present import control program is not adequately responsive to present and future security considerations . . . [it] has spawned a host of special arrangements and exceptions for purposes essentially unrelated to national security, has imposed high costs and inefficiencies on consumers and the economy, and has led to undue government intervention in the market and to consequent competitive distortions."

The arbitrary and costly controls on the importation of oil were designed to insulate the domestic-based oil industry from the competitive impact of foreign oil. By restricting the entry of cheap foreign crude oil to 12.2% of domestic production in states east of the Rockies, the quota system assures the domestic oil companies of a demand for all production, despite inflated prices. The ultraprotectionist psychology demonstrated by the domestic oil industry calls to mind the following quotation from the writings of the noted 19th century French philosopher and economist, F. Bastiat:

"To the Chamber of Deputies: We are subjected to the intolerable competition of a foreign rival, who enjoys such superior facilities for the production of light that he can inundate our national market at reduced price. This rival is no other than the sun. Our petition is to pass a law shutting up all windows, openings and fissures through which the light of the sun is used to penetrate our dwellings, to the prejudice of the profitable manufacture we have been enabled to bestow on the country. Signed: Candle Makers."

In the dead of winter, fuel is as necessary as the sun to Maine citizens. Yet the powerful oil interests in this country have succeeded in erecting a wall between the source of fuel supply and the customer. That wall protects "the profitable manufacture [they] have been enabled to bestow on the country."

In an effort to tear down that wall, I have co-sponsored a bill to eliminate all oil import restrictions over a ten year period. In addition, since I view the task force recommendation to replace the current quota system with a tariff as a useful first step in easing the present restrictive situation, I have joined 47 of my colleagues in urging the President to implement that recommendation of his own Presidential Task Force. This would reduce prices by about 30¢ a barrel, and would have a significant counterinflationary effect.

My colleagues and I have also urged the President to direct his new Oil Policy Committee to consider the total elimination of oil import controls-a step that would save the average American family nearly $100 a year in fuel costs.

Mr. Chairman, the present oil import policies are economically unsound and provide no valid contribution to our national security. They have fostered inefficiency and waste in domestic development practices, and have discouraged healthy competition. Particularly with respect to #2 heating oil, the quota system perpetuates unnecessary and unfair regional price discrimination.

The time for reform is now. The consuming public which is forced to pay unnecessarily high prices deserves a more equitable system. The inflationary forces eroding our purchasing power require a less costly system.

Thank you.

Senator MCINTYRE. The subcommittee is delighted to recognize the distinguished Senator from Rhode Island, to introduce the next wit

ness.

STATEMENT OF JOHN O. PASTORE, U.S. SENATOR FROM THE STATE OF RHODE ISLAND

Senator PASTORE. I would like to thank the members of the committee and the chairman for allowing us to come before this committee today and testify.

I have a dual function to perform this morning. I wish to present to this committee a young man who comes from a family that has been engaged as an independent oil dealer as far back as I can remember. His name is Robert De Blois. I have known his father for many, many years, and I know the reputation of this firm and Mr. De Blois' grasp

of the situation and the effect that this program has on consumer prices, especially of home heating oil in the State of Rhode Island.

I daresay that there is no individual in any State who knows more about the effect of this program upon the consumer of his individual State than Bob De Blois knows about its effect on the consumers of Rhode Island.

I would like to make a personal observation of my own. I have no written statement. But I was here when this program was inaugurated and I daresay it has been a dismal failure. It has been a tragic failure. I think all that it has allowed is for the fat cats to become fatter and the consumer to be gouged, because in my humble opinion, there is no industry where prices are more artificially instituted than in the oil industry.

I will give you an example or two to prove it:

They say this may be a coincidence, but you drive along any street, along the highways of New Hampshire or Maine or Rhode Island, or any place else in this country, and whether you buy Sunoco, Esso, Mobil, Shell, or any gasoline at all, you are going to pay the same price in one place as you paid in another.

Now, you cannot tell me that where an industry is competitive that every dealer has to price his gasoline at the same price, no matter what kind of gasoline you buy, whether it is, Mobil, Esso, you name it, and the situation is the same.

Now, we have lived with this for a long, long time and we have endured it for a long, long time. I do not know how many letters we have written to the various Presidents of this country. I have served here under five Presidents. And this has been an old chestnut, Mr. Chairman; this is an old chestnut. And we have not seen the light of day yet.

We were promised some time ago that something was going to be done and as a result of that promise, they appointed this task force. Now, the task force is having a tremendous job in trying to prove its own credibility, whether or not it did do a good job. So we are going to have another study. We have study after study.

And here we are. We have this very, very sad situation that oil that is deposited in Portland is sent up to Canada to be sold 3 cents cheaper than you can buy it in Portland.

If that makes sense to the American people, then I think I have wasted my time in public life.

Senator MCINTYRE. There are a lot of peculiar ones in this oil industry.

Senator PASTORE. Let me say a word or two further. After all, this committee knows how I feel about imports that destroy American jobs, and I do not apologize to anyone. We are not protecting American jobs in this area; we certainly are not doing that. As I said before, the rich are getting richer.

This whole business of control by five or six big, big, big establishments, they control the price pretty much. That is what the consumer has to pay. And the peculiar thing about this is the price sometimes goes up even for heating oil in the summertime. In the summertime we have had the experience in Rhode Island where the price of heating oil went up in the summer.

Now, I agree with the gentlemen who say there ought to be an exemption here insofar as heating oil is concerned, and residual oil, because that does effect the economy of New England.

Now, this argument that is being made about the national security, there is nothing more rediculous, nothing more fallacious than that argument. After all, we all believe that there should be a continuation of exploration for oil. But let us face it, we in America constitute about 7 percent of the landmass of the world, and there is only so much oil under the ground in this continent that we are privileged and blessed to occupy. And the more you pump it out, and the quicker you pump it out, the sooner you are going to exhaust it.

And don't you think it would be a good thing for national security if we could conserve these reserves to keep them here for posterity? Here we are, we are a nation that is not yet 200 years old. We use about 50 to 60 percent of the goods and the natural resources of the entire planet in the United States of America. And we are told, and I am going to document this for the committee, we are told that within 75 to 100 years we are going to exhaust our oil reserves.

Now, gentlemen, you cannot eat your cake and have it too. And if we keep pumping this oil out of our own earth without some supplement coming in from abroad, we are going to wake up some day, not maybe us, because we may not be here, but at least our children or our children's children are going to wake up one day and find out there is no more oil.

I made an observation to Jim McKenna in my office the other day. I live about 12 miles outside of Washington. I am not one of those affluent fellows who can live in Spring Valley, so I live out in Kensington. It takes me about 35 minutes to get into town. There is a string of automobiles every morning, and I wonder what is going to happen to this country one day when we do not have any more gasoline. I wonder.

Now, after all, as I said before, we are less than 200 years old. I hope we are going to be here for all eternity. I hope that somebody in this day and age is worrying about what the people are going to do in the year 2050 or 3000. And I think we have some of the responsibility to make sure that these supplies of oil that we have under the ground are there for national security in some future time.

So this argument about national security, that is the red flag that is being raised in order to fortify their case, but it is fallacious, and as Congressman Conte pointed out, as phony as a $3 bill.

On March 17, 1962, our beloved President, John F. Kennedy, realizing the fact that we needed a second source of energy in this country, if we are to persist as the leading industrial nation of the world, and we are talking about atomic energy, and there we have certain problems; we have certain problems in pollution that the Senator from Maine knows much about, and the Senator from New Hampshire knows about, but the President requested a study be made, and they came back with a report to the President and this is what they said. This is what they said, speaking about the supply of fossil fuel:

As can be seen, different combinations of the estimates of fuel reserves and of cumulative uses would predict that if no supplementary forms of energy were utilized, we would exhaust our readily available low-cost supplies of fossil fuel in from 75 to 100 years.

Now, what is 100 years in the life of this Nation? Are we thinking about it today? We have to begin to think about it today.

So what I say to you gentlemen, I do not know how much good these speeches are doing us, we have suffered for so long.

First of all, they were not to include residual oil in the directive of 1958. But the pressures came in from the oil lobby and they put residual oil in. And we were not even producing the residual oil in this country to meet the demands of this country.

And they tried to justify that on national defense, national security. Here we are in New England, we pay more into the Treasury of the United States than any other area of this country. We are the most industrialized section of the country. And here we are, we have the highest oil prices. What is happening to us?

There has been an exodus over the years of some of our factories, some of our mills, running to places where they can buy electric power cheaper. Why? Because of the transportation costs.

Now, they are telling us about Alaska. But before we get that oil from Alaska, do you know how much it will cost us in Providence? The price is going to be prohibitive.

All I am saying, gentlemen, this problem has to be brought into proper context. I do not think we ought to put the oil businness in the United States out of business. I do not think we ought to stop our exploration.

But at the same time we ought to look at the facts the way they are, and we ought to face the facts the way they are.

And I am telling you that the housewives in Rhode Island are becoming a little tired of paying these tremendous prices. Imagine, 17.9 cents per gallon today to heat up your home. And the price is becoming prohibitive. Why? Only because of this policy to protect whom? Just a half dozen big, fat cats. It is all it amounts to. And it is about time that somebody got off their haunches and stood up and made a decision in this case.

I was hopeful the President of the United States would have done it. At least he took it away from Secretary Hickel at the time and said, I will handle it myself. Well, it has not been handled yet.

I tell you I have been friendly with the President of the United States, and I do not want to say anything unkind, but the time has come, the time has come for action.

Let us do away with the rhetoric and get some action now. That is what I have come here to say this morning to the committee. Anytime you are ready to go down to the White House, if they will have me, I will come.

Senator MCINTYRE. I know you will.

Senator PASTORE. Now I want to present to you this fine young man who can give you all of the details that you need.

Senator MUSKIE. Now you will know what it is like to try to follow Senator Pastore's speech.

STATEMENT OF ROBERT E. DE BLOIS ON BEHALF OF THE NEW ENGLAND FUEL INSTITUTE

Mr. DEBLOIS. I was going to say it is a dubious distinction to be introduced by Senator Pastore. It is certainly a privilege to be intro