tary upon our Government today that we could assume, with the dedicated people that we have in government, that there is much chance of such a situation recurring.

I feel this way, that if we had taken the approach that you have taken here this morning, we wouldn't be drilling offshore in the coastal areas of this country because there, too, is great wealth. Yet I think our Government, specifically the Department of the Interior and others, moved forward wisely with respect to our offshore oil. They have developed a very important resource just as I believe this can be developed, and I can't think that the implication that you made, that we have got to be very careful what we do here because of what happened in Tea Pot Dome, really is a constructive or a responsible approach.

Professor GALBRAITH. I would like to urge one point there. I was warning against the ever-present possibility of being associated with the alienation of public property and I hope the Republican Senators realize that, before recalling the specter of Elk Hills and Tea Pot Dome and those misfortunes for the Harding administration, I did strongly praise three Republican Presidents for setting up a policy which has conserved this resource for us.

I think one should state that President Harding's withdrawal orders that came during the 1920's were one of his monuments to conservation. Since he was somewhat a maligned man, then, we should do anything possible to keep history straight on this.

Getting back to more practical matters, I would hope that under no circumstances would any comparisons be drawn between this resource which is known and the existence of which-the value of which can be easily established by rather simple core drilling, and the much more speculative operations that are associated with ordinary oil exploration or offshore oil exploration. I think there was considerable merit in the technique we followed there of giving a concession and saying there is a very good profit if you can find the oil. There is no parallel with this problem. This is a problem in technical research and development, and calls for a very different kind of treatment.

Senator HANSEN. Let me say that I didn't interpret your mentioning Elk Hills and Tea Pot Dome to have any political connotation. I thought it was just pure demagogery on your part, sir.

Professor GALBRAITH. Well, I appreciate the Senator's clarification. Senator HANSEN. I would like to make one further observation. That is that the small independent companies, I think in this instance, have played a far more important role than many people may understand. I am sure you know, Dr. Galbraith, that much of the constructive exploration and research that has been done has been undertaken by rather small companies. It was a small company effort that brought dawsonite to the attention of the world.

I don't know how important it is going to be. Here is a mineral that may, indeed, be a very important source of aluminum as time goes along, and yet it was a small company that discovered its significance there.

I am not going to rule out the contribution these small companies can make at all. I think they may make a major contribution. As a matter of fact, some of the testimony that has already been heard

by my committee, Interior, has been presented by representatives of small companies who are vitally interested in having the Secretary promulgate some rules and procedures under which people can move forward into this area with some assurance that there will be an opportunity to develop this potential resource.

I would like, if I may, Mr. Chairman, to ask that an article written by my legislative assistant, David Dominick, be included in the record. It is entitled "Oil Shale-the Need for a National Policy." This paper won the Rocky Mountain Mineral Law Foundation prize for research and scholarship in 1966 and it was published in volume II, No. 1 (1967) of the "Land and Water Law Review."

Senator HART. It will be.

(The document referred may be found at p. 496.)

Senator HANSEN. I would also like to ask for the inclusion in the record of a speech I made February 2, 1967, on the Senate floor, and if I may, I would just like to read one paragraph from that speech because it touches upon a point that you raised, Doctor, with regard to our national security that I think is of some importance.

"First let me discuss our national energy resources and the part that oil must play in our total energy consumption. According to the U.S. Bureau of Mines the United States was consuming about 55 quadrillion btu's per year in 1965.

"If this were to be translated to an equivalent amount of oil consumed, it would equal about 25 million barrels of oil per day in 1965. The Department of the Interior estimates that this oil equivalent will rise in 1980 to about 42.3 million barrels per day.

"While energy consumption estimates, even up to as short a time as 1980, are tenuous at best, some experts are already claiming that the United States is now, or soon will become, an energy-deficient nation. What this means is that the United States must rely upon the importation of energy in order to run its industry. This increasingly heavy reliance on important energy is a major threat to our national security. Leaders in the petroleum industry have estimated that at least 10 years' lead time will be required in order fully to mobilize an oil shale industry. This leads me to state that the trend toward growing energy deficiencies must be reversed just as soon as possible. This means that it is incumbent upon us to encourage oil shale development immediately." Senator HART. It will be made a part of the record in full. (The document referred to may be found at p. 437.)

Senator HANSEN. I have no further questions. Thank you, Mr. Chairman. Thank you, Doctor.

Senator HART. Doctor, is this the point you make? Whether we like to use the word or not, there is every indication that a subsidy is going to be involved in this area. You are arguing that rather than paying the subsidy in the form of a grant of the land which is, as you suggest, imprecise in value and potentials, better that we appropriate the money and hire the brains to enable us thereafter to announce the means whereby the development can be managed. In doing so, we would make available the information much more widely to competitors in pursuit of the resource and its exploitation. Isn't that just what you are saying?

Professor GALBRAITH. That is precisely what I am saying; yes. But the two further advantages-the costs of the process will be known. Therefore, that certainly will enable more people to participate in itself. It also will enable the Federal Government to establish the royalties and the leases which allow the developers a fair profit and the Federal Government an equitable return.

80-344-67-pt. 1- -3

There is also one great conservation advantage in this. This I think perhaps would be common ground between the Senator from Wyoming and myself. This is an extraordinarily beautiful country and it is very important that the development be done in such fashion as to conserve the beauty of what is one of the great natural landscapes of the United States. If we know the process, it will be known how that natural charm and beauty of that countryside can be best conserved. If we don't know the process, there will be no possibility of proposing regulations that allow this conservation. Or it would be a good deal less easy to do so. Again I must apologize for getting out of the territory of this committee but it is a matter of general interest.

Senator HART. It may be out of the territory of this committee to ask you any more about Rifle. However, it occurred to me that you regard the beefing up of Rifle as not the prudent method of advancing our knowledge in order that we shall avoid further concentration in the industry. Why do you

Professor GALBRAITH. I may be unfair to Rifle. I can only give an opinion and it is not an engineer's opinion. But I have some feeling that that operation there is designed partly by the Department of Interior and very specifically by the oil companies to show action rather than to produce action.

Senator HART. Well, I haven't heard anybody around here this morning who has opposed action.

Mr. Chumbris?

Mr. CHUMBRIS. Dr. Galbraith, one thing I seek is to see that we can keep within the jurisdiction of our Antitrust and Monopoly Subcommittee hearings for the next 6 days and at the same time get a full picture of how we proceed from here as far as action is concerned.

Now, as I understand from the record, we have about eight or nine processes that are either in operation, have been in operation, or are planned in the very near future which will give us more hard-nosed statistics as to how this program is going to work.

For example, the Tasco process; the gas combustion report at Rifle, Colo., in which stage one has been completed and I understand they are entering stage two; Petrosik process by Cameron and Jones for study in Brazil; the Union Oil process that you referred to briefly: lab experiments by Texaco and by Petroleum; in situ by Sinclair research; and I understand Mobil has made a study in 1961 and Equity Oil in 1966; the Bureau of Mines study in Laramie; the projected Gasbuggy in New Mexico which deals with natural gas; the Dragon Trail by Continental-CER which will be taken up as I understand it, depending upon how Gasbuggy works; and then on top of that Project Rulison also in Colorado.

Now, all of these processes and projects are for the purpose of obtaining information that you say that we do not have at this time, isn't that so?

Now, supposing this project moves along nicely. As I understand from the record, the earliest estimate of when we can begin operations when I say "we," the Government-is about 5 years hence, providing they get certain things lined up, such as the clouds on title, the question of whether we have sufficient water, the question of where we are going to dump the excess materials or the unused materials in

this matter, what we are going to do about conservation, and then the barebones' statistics of where they can put in $100 million or $125 million capital and $25 million annual expenditure and be able to get a sufficient return on the money to make the gamble, that some people think they will be making, in going into this oil shale operation.

So, with all of this quick summary that I gave, why can't some of the comments that you have made here today, as there being those questions-those questions you raised as there being resolved, why can't the Secretary of the Interior who has the authority under law and supported by maybe additional authority from Congress, proceed, because this is something that is not going to happen tomorrow or the very next day.

Professor GALBRAITH. Let me say one thing about that list that the distinguished counsel for the minority read. A certain number of those items do not involve research. They involve a much more economical process of just putting out a press release saying that something has been done or is contemplated.

It would be a great mistake, in other words, to take this list as a serious statement of research now underway.

Mr. CHUMBRIS. Well, two witnesses from the Interior Department are going to testify right after you-and Professor Garnsey from Colorado-as to what has been done or what will be done under these projects that I just mentioned. So, I hope that they are more than just press releases.

Professor GALBRAITH. I hope you press them very hard on the actual accomplishment under each heading and I shall be very much surprised if this is-this content is rich. But I won't get further into their field. I see no reason for not going ahead and I would hope that one of the consequences of these hearings would be to persuade Secretary Udall to postpone what I think is not a useful procedure under item III and come back to the Congress for a request for an appropriation to initiate activity and activate what I would deem to be the right way of getting this industry underway.

Mr. CHUMBRIS. You made your views known in the minority report that you filed beginning on page 20 and running through five pages there, when you presented it to the Secretary of the Interior in February 1965.

Professor GALBRAITH. No; this was not a minority report.

Mr. CHUMBRIS. Well, they referred to it, then, as a conglomeration of—I wish I had the exact word that someone referred to-six or seven different views that were submitted.

Professor GALBRAITH. This was, I must say, as near as there was to a majority report. There were six members of the Board and two of them agreed on this particular proposal and I was one of the two. So this would perhaps have to be called, Mr. Counsel, the plurality report.

Mr. CHUMBRIS. It reminds me of the funeral report this subcommittee just issued. There were five different reports with no one receiving a majority or a plurality.

Senator HART. Senator Hansen?

Senator HANSEN. I do have one further observation to make. That is. I wonder if you might agree with me that in some areas delay and

failure to come forward with a meaningful policy now by the Department and by the Government tends to permit greater and greater speculation from which would follow, I think, greater concentration of power in oil companies.

If there are those who take discouragement from the inaction on the part of the Government, is it not likely that a fewer number of oil companies will move in and try to acquire what rights others may have. Isn't it also likely to produce a greater concentration of technology, that is, fewer people will be concerned with the perfection of processes by which oil may be recovered ultimately. Is there not also likely to be a further concentration of ownership of water rights? Now, we have hardly touched on that but you did, I think, refer indirectly to it when you spoke about the uniqueness and the pristine beauty and character of that country out there. Certainly that would contemplate water as well.

I think I have read that some competent authorities feel that it may take 1.2 barrels of water for the production of each barrel of oil from oil shale. Would you agree, Professor Galbraith, that delay may tend to bring about these concentrations, concentration of power, of technology, and of water?

Professor GALBRAITH. Well, I would like to be agreeable, Senator. I would say that the greatest danger of concentration would be to proceed with the wrong kind of development and the wrong kind of development would be one which, in Senator Hart's terms, used the land as a subsidy for the development. This is something which only the big companies can take advantage of. And the other people coming in-and there would be lots of others coming in-would be for the purpose of getting a stranglehold on some land which would be purely for the most speculative purposes.

Senator HANSEN. Thank you.

Senator HART. Again, thank you very much, professor.

Our next witness is Prof. Morris Garnsey, of the Department of Economics, University of Colorado. Professor Garnsey's presence has been noted several times already this morning and his background is impressive and full. Without objection, I shall ask that a full summary of that impressive background be placed at this point in the record. (The curriculum vitae of Professor Garnsey follows:)

CURRICULUM VITAE, MORRIS E. GARNSEY, 1505 BLUEBELL, BOULDER, COLO., BORN OCTOBER 12, 1906

Education

Drury College, Springfield, Mo., 1924-28 A.B.

Clark University, Worcester, Mass., 1928-29 M.A.

University of Paris, 1929-30.

Harvard University, 1930-31.

University of Louvain, 1933-34 (summer 1937).

Harvard University, 1935-37 Ph. D.

Teaching experience

Brown University, instructor in economics, 1931-33.

Brown University, instructor in economics, 1934–35.

Harvard University, instructor in economics and tutor, 1935-37.

University of Colorado, assistant professor, economics, 1937-43; Associate professor, economics, 1943-45; Professor, economics, 1945; Chairman, department of economics, 1944-57, 1960–63.