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Senator LONG. The first time we looked at this thing about controls relative to big companies, someone came in here with a price control law which said if any one of 220,000 filling stations sold a gallon of gas, even though he was selling it for the price at or below the price fixed by the Cost of Living Council, he could be dragged before the Renegotiation Board and made to renegotiate on the price. Talk about getting at Exxon, the next thing you know, they are going to go after the independent filling station fellow who is selling at a price such that it is all he can do to make it.

I would hope that when recommendations are made in the excess profits area that they will be backed up by showing where the profits are. That is where I think regulation ought to occur. So far, I do say, Mr. Sawhill, you have done a lot better job than people give you credit for. There is complaint down my way that you took away from the State of Louisiana the price the were getting on Stateowned land. I didn't come here to congratulate you on that, by the

way.

Mr. SAWHILL. No.

Senator LONG. There have been a lot of complaints on that.

Senator TUNNEY. Mr. Chairman, I have one last question, too. I am deeply concerned, Mr. Sawhill, about the allocation formula developed by your agency as they relate to feedstock available to the fertilizer and pesticide industry, and I just can't help but believe that one of the reasons that we are going to have increases in good prices this year is because we have inadequate fertilizer and pesticide production. This is going to mean that on the same amount of acreage planted we are going to have a shorter crop.

I am using this forum to state to you that I think your allocation formula has not been satisfactory as it relates to the fertilizer and pesticides industry, because food production is a closed cycle. You need fuel to plant and to harvest, but you also need feedstock to manufacture fertilizers and pesticides.

Mr. SAWHILL. As far as fertilizer is concerned, the principal feedstock is natural gas, and if we would deregulate it, I think we would resolve that problem.

As far as pesticides, I really am not familiar with what the feedstock is.

Senator TUNNEY. I think it is a very serious problem, and I can tell you in my state, and I finished a 10-day tour of my State over the Easter recess, and had an opportunity to speak to many farmers, and they all are saying that they are going to have less production and unit acreage because of the fact that they don't have adequate fertilizer or pesticide supplies.

Thank you, Mr. Chairman.

Mr. SAWHILL. I think that points out again why we need one agency that has regulatory powers over one fuel, because the FPC places a different priority on it than Agriculture.

Senator STEVENSON. You are all making great speeches for the "Consumer Energy Act of 1974." It separates out the independents, allocates the fuel to the fertilizer industry and centralizes regulation. On the fertilizer issue, the FEO has taken the position that it does not have authority to allocate fuel for the production of fertilizer. My impression is that the FEO has interpreted the statute as

not giving it the authority to allocate fuel to the production of fertilizer.

Mr. SAWHILL. Well, not natural gas. But food products, yes, we will make these available, the maximum available.

Senator STEVENSON. I am glad to hear that. I was under a different impression, and consequently I introduced legislation to make it clear you do have that authority. I think you do.

Mr. SAWHILL. I think we do, also. I could say this, Senator Stevenson, perhaps in closing, that we have a lot of work here, a bill here, and you are asking for our proposal. Maybe what we ought to do is get our staffs together and see if we can work out a program on natural gas prices that would move this industry away from dead center, where I think it is right now, and we certainly would be glad to work with your staff as soon possible, becuase I think it is so important that we get on with the job.

Senator STEVENSON. I welcome that suggestion, and I am sure Senator Magnuson would too, and I would only add that we feel a great sense of urgency on this. It has been pending for too long already.

The staff should get together. and get together quickly so we can get it one way or the other and get it to the floor.

Mr. SAWHILL. We will take the initiative on that.

Senator STEVENSON. Thank you very much, Mr. Sawhill.

The next witness is Dr. W. N. Peach, professor of economics, University of Oklahoma.

Senator LONG. Mr. Chairman, may I ask that they turn off the TV lights for awhile? I am getting very tired.

Senator STEVENSON. Could we turn off the lights. I think everybody would appreciate it.

STATEMENT OF W. N. PEACH, PROFESSOR OF ECONOMICS,

UNIVERSITY OF OKLAHOMA

Dr. PEACH. Mr. Chairman, and members of the committee: My name is W. N. Peach. For the past 25 years I have been a professor of economics at the University of Oklahoma. Prior to that I taught at Syracuse University and the University of Texas at Austin.

I am pleased to appear here in support of the proposal to establish a Federal Oil and Gas Corporation. It seems to me to be a modest and reasonable proposal and long overdue.

The recent lifting of the Middle East embargo has not solved our energy crisis although many irresponsible statements either state that it has or imply as much. At best, the Middle East will continue to be an unreliable and expensive source of supply for the United States.

We must continue our conservation efforts and greatly expand them. A reasonable and well thought out conservation program can do much to alleviate our present energy shortage.

But after making due allowance for conservation efforts, most people agree that we must substantially increase our supply of energy. Some estimate that we must approximately double our supply by 1985. There are many other estimates. Accepting this as a reasonable estimate, the cost has been put at $300 billion to $1 trillion.

In recent years, governments throughout the world have been playing a more important role than formerly in the energy field. This has been true of producing countries and consuming countries, left wing and right wing, or if you prefer, capitalist and socialist countries.

Only in the United States is increased Government activity opposed as religious heresy. Elsewhere in the world, an increasing role for government in this basic industry seems to be accepted as desirable and necessary. To many groups in the United States-some of them powerful-the prospect of having their Government participate directly on a modest scale in the production and other aspects of the energy industry seems to provide an excuse for another round of the crusades.

As I understand it, the Federal Oil and Gas Corporation is not scheduled to take over a single oil well now owned by a private company, nor a single gas well, nor a single geothermal well, nor any oil shale deposit owned by a private company. But the proposed Federal Corporation is designed to develop a fraction of the new wells. Most of these new wells are located on land owned by the Federal Government.

The arguments advanced in opposition to the proposed Federal Oil and Gas Corporation are almost identical with those advanced four decades ago against the TVA. It would ruin the private electrical industry, lower the profits of private electric companies, would lead to socialism, would be subsidized with tax dollars, would be inefficient, would have overwhelming advantages over private firms, would be exempt from taxes, would be a loser for the tax-paying public, would lose money for the Treasury, would fail in its objectives, would undermine systematically every private electric utility, would discourage investment in the private electric industry, and would have serious negative implications.

What were the effects of TVA? Despite all the dire predictions, the TVA had the effect of lowering electric rates throughout the Nation and vastly increased the profits of private companies. It has not led to socialism of the electric power industry. It has not discouraged investment. Nor has it had any of the other dire effects that were predicted.

Every responsible person agrees that the United States is abundantly endowed with energy resources. What we need is to develop and use them. One of the most important things the proposed Federal Oil and Gas Corporation could do is to assure that we never again find ourselves in the position of an "energy crisis." That is intolerable in the face of our abundant supplies.

We have abundant supplies in the offshore areas of the gulf coast, the east coast and the west coast, in the oil shale deposits in the Green River area of Colorado, Utah and Wyoming where there are trillions of barrels of high quality oil, compared with the 100 or so billion barrels produced in the past century in the United States. Although production of oil from shale is not specifically included in the operations of the proposed Federal Oil and Gas Corporation, it seems to me this would be an appropriate activity. The Federal Government owns most of this land and has been operating prototype plants there for many years.

We have enough coal to last for hundreds-even thousands--of years, which can be gasified and liquefied. It is not necessary to wait for another century while additional experiments are conducted. Other countries, including Germany, England, the U.S.S.R., Japan, and other countries have the technology now. They are willing to share it with us.

We have untold amounts of geothermal energy in the West. There are recent developments which suggest that geothermal heat may be made available in other parts of the Nation.

There is an unlimited amount of solar energy available. The technology for heating and cooling is already available, although further development is needed to make electricity for large cities available.

Helium is available wherever there is water, and can be used for many purposes now.

Then there are the so-called exotic sources of energy which will require decades of further experimental work. But there is no need to wait until the year 2,000 to develop all the energy America needs, as a flood of self-serving propaganda would have us believe. We have the energy resources now. All we need do is develop them. And the proposed Federal Oil and Gas Corporation is a promising way of doing just what is needed.

As has been pointed out elsewhere in these hearings, the Federal Government now owns most of the land from which our future energy resources will come offshore, oil shale, geothermal, et cetera. The Federal Government, plus State and local governments. are large consumers of energy both in times of peace and war. The Federal Government spends most of the money on research and development of energy resources.

The proposed Federal Oil and Gas Corporation can perform a useful service in such areas as oil shale, geothermal and other energy resources. Over the next decade it can increase the supply of energy.

Second, it can introduce an element of competition in an industry that is not known around the world as one characterized by vigorous competition. It can give preference to cities, States and the Federal Government, and the independent.

Third, in some areas, such as oil shale, it can do some experimenting and set environmental standards and determine their costs. Once the standards and their costs are settled, private industry can take over with the knowledge of these important costs.

Thank you.

Senator STEVENSON. Thank you. Professor Peach. I think you are the first proponent from the State of Oklahoma. I hope you get back safely.

Dr. PEACH. I hope so.

Senator STEVENSON. I was glad to hear you place emphasis on conservation. I am afraid the statements of some who say the energy crisis is behind us are doing the public a real disservice and certainly are undermining the efforts to conserve oil and gas in the country.

You mentioned, also, that other countries have such corporations. Dr. PEACH. Yes.

Senator STEVENSON. There is nothing really remarkable about this proposal. What is really remarkable, I think, is that unlike all the other developed countries of the world and many of the underdeveloped countries of the world, this is the only country that hasn't already created a Government Oil and Gas Corporation.

Are you familiar with the experience of the foreign corporations? Can you tell us anything about how effective they are?

Dr. PEACH. Some of them, for example, Canada has set up an oil and gas corporation within the last 3 or 4 months. It has been in process for a long time. England certainly has been operating. They own most of British Petroleum, and I didn't hear anybody say anything about British Petroleum being inefficient, and Royal Dutch Shell.

Senator STEVENSON. It is going to be too efficient and therefore unfair competition. or inefficient. That is argued both ways.

Dr. PEACH. My feeling is. Senator, that we have plenty of energy in this country, and that what we ought to do is get on and develop it, and then continue with experiments and continue research and development.

But it doesn't make any difference what anybody says about the degree of competition. The fact is that we have an energy crisis now and it can be resolved, and you don't have to wait until the year 2.000 to do it.

I have seen a lot of propaganda to the effect that nothing significant can be done till the year 2,000 or 2.020, and that just isn't true. I think we ought to save a lot of that testimony, because it will make good reading as a substitute for the comics.

Senator STEVENSON. You would go further than we have gone to authorize this corporation to develop alternative sources of energy. It is our attention, and judging from what you have said, it is not clear in the bill to authorize the corporation to produce oil from shale.

Dr. PEACH. Yes.

Senator STEVENSON. But we have not gone beyond that to authorize the corporation to produce coal or oil from coal.

Dr. PEACH. Occidental Petroleum announced a few months ago that they have an in situ process where they can do that and bring it up to the level of ground for, say, $1.25 a barrel. If you add $1.50 for transplanting that, that is still pretty cheap compared to today's prices.

I would remind you that that is the biggest source of fossil fuel available--trillions of barrels. We have only produced in this country 100 million barrels since 1859, about that.

Senator STEVENSON. That is from shale.

Dr. PEACH. And coal will last us for thousands of years, and also the oil shale. They are producing-let me remind you that Germany ran her war machine in World War II on gas produced from coal. This technology is not new, except in this country. Well, it is not new in this country, either.

But the British have announced that they have a simple process where the capital investment is fairly low, and that we can have that to produce gas and liquefy coal any time we want it.

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