Hodges, Quincy R., secretary-supervisor, State Oil and Gas Board, State of 1607 Langdon, Jim C., chairman, Texas Railroad Commission_. 1597 Miller, John, president, Independent Petroleum Association of America ; 1554 Moskowitz, Jack, assistant to the chairman of Common Cause; accom- panied by Woodrow Ginsburg, consultant----- Nesbitt, Charles, chairman, Oklahoma Corporation Commission-- Peach, W. N., professor of economics, University of Oklahoma_. Robson, Ernest; accompanied by Thomas J. Devine; and Bruce Kiely, counsel, on behalf of the Petrochemical Energy Group-. Sawhill, Hon. John C., Administrator, Federal Energy Office; accom- 1520, 1524 Bartlett, Hon. Dewey F., U.S. Senator from Oklahoma. Biemiller, Andrew J., director, department of legislation, AFL-CIO; ac- companied by George Taylor, research department; and Kenneth T. Woodcock, Leonard, president, United Auto Workers; accompanied by 1611 ADDITIONAL STATEMENT CONSUMER ENERGY ACT OF 1974 MONDAY, APRIL 22, 1974 U.S. SENATE, COMMITTEE ON COMMERCE, The committee met at 9:40 a.m. in room 5110 of the Dirksen Senate Office Building, Hon. Adlai E. Stevenson III presiding. OPENING STATEMENT BY SENATOR STEVENSON Senator STEVENSON. The meeting of the Commerce Committee will come to order. This morning we continue what has already been a lengthy series of hearings on various aspects of the energy crisis. In fact, this is the 13th day in this series of hearings. They will be continued tomorrow. I hope to conclude them soon. We have already heard over 100 witnesses, and it is certainly my feeling, and I think the feeling of all of the members of this committee, that the time for action has come. It has been said by, among others, the President of the United States, that the energy crisis is behind us, or the back of the energy crisis is broken. The fact of the matter is, as these hearings plainly indicate, the energy crisis is in front of us, and it is not simply a crisis of supply, but very largely a crisis of price. In March, consumer prices were rising at an annual rate of about 15 percent. For the year ending with March, fuels rose by about 83 percent. The public perceives the cost of energy at the fuel pump. It does not as yet perceive the cost of energy in the grocery store, and that is where it hits. It is only beginning now to be felt, and it is beginning now to be perceived by the public. The cost of energy is the principal cause of inflation in the country. Those prices that are felt at the gasoline pump are felt in the grocery store; roughly 30 percent of the cost of food is the cost of energy. Almost 20 percent of the cost of steel is the cost of energy. The high cost of every commodity and the high cost of service reflects the high cost of energy. The effects of that cost are artificially determined all the way from the well in Saudi Arabia to the gasoline pump and are reverberating now throughout the economy and threatening our society with the most serious economic distress since, I suppose, the early 1930's. Staff members assigned to these hearings: Henry E. Lippek and John W. Jimison. (1355) I hope in these closing days of our hearings we can address some attention to the rectification, if any, of this threat, not only to our economy, but to our political and social stability. It has been said in the past that this industry, the major oil companies, has not been as practicable as other industries, but when we make adjustments for the different accounting procedures and compare profitability on the same basis as other industries, we find that even before the recent price increases it was among the Nation's most profitable industries. It is said that justification for this is the need for increased revenues with which to finance increased exploration and development. The revenues which increased in 1973 by about $24 billion, and are continuing to increase at that rate, or higher-it would be higher with deregulation of natural gas-are far in excess of anything that the industry could conceivably reinvest in increased oil and gas exploration and development. I don't know what justification there is. Perhaps the representatives of the industry will give us some day. Without some justification for the prices which threaten our entire way of life, and are now being reflected in very high profits, the government will have to take some action to control the prices. That is the immediate purpose of these hearings. Among other things, the Consumer Energy Act does contain provisions for controlling the price of this one most essential commodity, oil, and also natural gas. I don't think it is really a question anymore of whether, excluding now a question of how, to control those prices. I sit also on the Banking Committee, and other representatives of the administration, Mr. Schultz and Secretary of the Treasury, Dr. Dunlop, and the Cost of Living Council, all support expiration of price controls with one exception-the petroleum sector. The Senate came within two votes to deregulate the price of natural gas. Two months later, they voted overwhelmingly to regulate the price of oil. The real question in my mind now is how to do it in a way that poses as little interference with the industry as possible, in a way that does not impede the accumulation of resources with which to expand energy production in the country and not stifle incentives especially for the independents who conduct most of the exploratory drilling. We try in this act to set up, centralize and reform the regulatory process, to confine regulations to only the most noncompetitive sector of the industry, the major oil companies. Perhaps there is a better way of doing it. We will have a chance today to hear from representatives of the industry, the Federal Energy Office, from persons in the academic world, and also from regulators at the State level. After today's and tomorrow's hearings, I would hope that we could at last move in this committee to a markup and quickly to some action on what may be the most important domestic subject facing the country, namely, the control of inflation and production of the one most vital commodity-energy-at a reasonable cost. [The working papers follow:] |