CONGRESSIONAL RECORD -- SENATE
April 15, 1969
Page 9161
THE PROPOSED FOREIGN TRADE ZONE AT MACHIASPORT, MAINE
Mr. MUSKIE. Mr. President, with the distinguished Senator from Massachusetts (Mr. KENNEDY) and the distinguished Senator from New Hampshire (Mr. MCINTYRE), I should like this afternoon to spend a few moments of the Senate's time to discuss a project which is of particular interest to my State and to New England, and which has already been the subject of some discussion on the floor of the Senate -- the so-called Machiasport project.
I expect that the discussion this afternoon will be only one of many such discussions in the weeks and months ahead, so I do not expect to cover the subject exhaustively this afternoon. It is our desire to begin a discussion from the point of view of New England, from the point of view of those who support this project in New England's interests.
The people of New England know their needs for low cost fuel have been ignored for too long.
The Governor of Maine has taken steps to reverse this situation by making application for a foreign trade zone in Machiasport, Maine. The trade zone would contain an oil refinery which will use foreign crude oil to produce cheap fuel for New England. The plan has had powerful opposition. There has been a great deal said and written about the impact of this proposed refinery on the U.S. economy and national security. Many of these statements have been misleading, or based on incomplete information. The New England delegation has a responsibility to set the record straight, to present the facts so that a proper judgment may be made with reference to the foreign trade zone proposal, the application for an oil import allocation, and the proposed change in the mandatory oil import regulations.
On March 12, 1969, our colleague, the junior Senator from Louisiana (Mr. LONG) made a speech on the floor in which he spoke of the risks he saw in constructing an oil refinery in New England. We, the New England delegation, would like to submit for the RECORD a paper which briefly disputes the major points made in that speech. As the weeks go by, we will continue to speak to these points in detail. We will provide the facts to enlighten the Senate on the advantages of the Machiasport proposal. So I ask unanimous consent that this brief statement be printed in the RECORD at the conclusion of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. MUSKIE. With respect to the many points which might be raised in refutation of the speech made by the distinguished Senator from Louisiana, I should like to touch upon one this afternoon, and I expect that the distinguished Senator from Massachusetts and the distinguished Senator from New Hampshire will touch upon others.
For example, the distinguished Senator from Louisiana challenged the request for an oil import quota of 100,000 barrels per day to serve the proposed refinery in New England. He described it in such terms as "fantastic oil concession," "crippling body blow to the oil import program," and "discrimination against other companies." He went into detail to explain how the allocation of 100,000 barrels a day of foreign oil would in his judgment threaten our national security.
In the same speech, however, he expressed approval of the allocation of import quotas of 240,000 barrels to three companies for the development of desulfurization plants. On January 23, 1969, Guardian Oil Co. was granted a 95,000 barrel-per-day quota; Supermarine was given 46,500, and Fuel Desulfurization Inc. was given 100,000 barrels per day.
The rationale was that these quotas of foreign oil would be used to produce low sulfur oil to meet clean air regulations, thus eliminating air pollution problems in New England. I should explain that the three companies awarded these oil import quotas were newly organized. They have no prior marketing experience, no oil production, no transportation and distribution facilities, no markets, and no specific plant location. By the same token, a site has been selected in New England for the Machiasport refinery, a company has been selected that will refine low-sulfur oil, and New England independent marketers are ready to supply the market outlets.
We cannot understand how anyone can attack a refinery at Machiasport which would use a 100,000 barrel-a-day quota, and at the same time endorse allocations to import 241,000 barrels a day.
I support any legitimate move to produce and supply low sulfur, non-polluting residual fuel oil, oil not presently being produced in this country. That is one reason that I support the refinery at Machiasport which will produce such an oil because it will be refining low sulfur crude oil from the Middle East instead of the high-sulfur Western Hemisphere crude oil.
On March 12 our colleague from Louisiana assured us that this 241,000-barrels-a-day import allocation for desulfurization refining will, "preserve the integrity of the mandatory import program." I think there is evidence to the contrary. In the April 7, 1969, issue of the Oil and Gas Journal there is an interesting article titled "Resid Sweetners Pluck Import Plum." This article states in part:
A sleeper in oil -- import regulations will allow operators of U.S. desulfurization plants to generate quotas for high-quality crude worth about $1/bbl in exchange for domestic residual actually processed in the plants.
This was disclosed by Interior Department sources last week as a fourth desulfurization plant was announced. Steuart Refining Company, Washington, D.C., applied for a 100,000 barrel per day residual quota for a refinery desulfurization plant to be built at Piney Point, Maryland. Steuart has been stymied in efforts to obtain a foreign-trade zone for that location. . . .
The rules allow desulfurization plants to generate import quotas for residual fuel, or topped crude, equal to the low-sulfur residual produced for sale to meet clean-air regulations. The residual actually processed to make low-sulfur product must be high sulfur material.
But the plant operator does not have to import high-sulfur product. He can import high-quality, low sulfur topped crude which is good refinery feedstock, Interior sources confirmed last week, and exchange this for domestic high-sulfur residual to be run in the desulfurization plant. The difference in value, Interior officials say could be as much as $1/bbl.
The typical desulfurization plant can generate quota equal to about 80% of its inputs. This means that a company can import high-quality topped crude and exchange it for the domestic residual it will actually process. This exchange will earn the company as much as $1 a barrel, the difference in price between foreign and domestic crude. Equally important, a typical desulfurization plant can generate 80 percent of its input. Therefore, a plant using 300,000 of crude a day could import 240,000 barrels of foreign topped crude free of the mandatory import program. I cannot agree with our colleague from Louisiana that the desulfurization program will, "preserve the integrity of the mandatory oil import program."
The distinguished Senator from Louisiana also spoke of the massive research programs being carried out by the oil industry and the Government to solve air pollution problems at reasonable costs. He indicated that if special treatment is given to the proposed refinery in Machiasport, a refinery that will produce low sulfur fuel, it would be difficult to justify alternative programs benefitting the entire Nation. He stated, with reference to pollution and the desulfurization plants, "Surely, cheaper ways are available and are now being intensely investigated." What we were not told was that it requires four refineries to process desulfurized oil using Venezuelan crude under the program and procedure he endorsed. And who will pay for the fuel products that require four refineries? If past experience is a guide, the consumer will pay.
Mr. President, I have discussed just one small segment of the controversy over the Machiasport proposal. Today, and in the ensuing weeks my colleagues from New England and I will continue to clarify and correct the many illusions that misinformed discussion has created.
Mr. KENNEDY. Mr. President, will the Senator yield?
The PRESIDING OFFICER (Mr. BELLMON in the chair). Does the Senator yield?
Mr. MUSKIE. I am happy to yield to the Senator from Massachusetts.
Mr. KENNEDY. Mr. President, I wish to commend the Senator from Maine for the statements he has made this afternoon. His comments are balanced, reasonable, responsible, and pertinent to the issue at hand. They answer some of the arguments which our good friend and colleague, the Senator from Louisiana, made on the floor of the Senate a few weeks ago in attacking Machiasport. In reviewing these arguments we find several misleading distortions which are unfair to the people of New England.
The Senator from Maine, in providing leadership on the question of Machiasport, has addressed himself to some of these very important issues.
I wish to ask the Senator from Maine if he would give me his thinking and reasoning on one of the other areas which we have been very much interested in. The only justification advanced for the Mandatory Import Control Program is that for national security.
It is claimed that only by keeping inexpensive foreign oil out, and domestic prices high, would exploration in this country be sufficiently encouraged and sufficient oil reserves available in case of war or other international crises.
Now it seems to me that there is a flaw in the argument that our reserves will be conserved if we consume them first; for by keeping out foreign oil, we must, of course, use our own to satisfy our peacetime demands. Thus, while Senator LONG maintains that reserves have fallen despite the program, it seems to me that if they have fallen, it is -- at least in part -- because of the program.
For under this program, U.S. production in 1967 was slightly greater than Middle East production, yet while our proven reserves remained about constant, Middle East proven reserves have grown to the point that they are now about 250 billion barrels, or about eight times our proven reserves. If we continue to force domestic consumers to use U.S. oil in peacetime, this trend will continue.
Does the Senator from Maine, then, not find some difficulty in following the reasoning of those who support an oil import program on the basis of national security? It would certainly appear to me we would be much better off conserving our own domestic resources, perhaps by finding a program that will maintain our productive capacity at less cost to the oil-consuming public throughout the country, and in particular to the consumers of New England.
Does the Senator find trouble in justifying an oil import program, as I do, in justifying it under the rationale of national security,
Mr. MUSKIE. The Senator from Massachusetts, I think, has touched upon an important point. In response to it, there are two or three observations which are relevant.
First -- and I suppose this is the least substantive of the answers that would be relevant -- we do not propose to use any kind of project to eliminate the oil import program. As a matter of fact, we are not asking for any increase in the total import quotas. What we are asking for is the earmarking of some of the quotas for New England, which is a special deficit area in all kinds of fuel.
When the national security argument is raised by the distinguished Senator from Louisiana and other Senators or other opponents of the project, they are not responsive to the nature of the project and its application. That is the first point I should like to make.
Second, there is a national security argument in reverse. There has been in the nature of an oil import program which is concentrated -- well over one-third of our total refinery capacity -- in the Texas-Louisiana gulf area. These gulf refineries, concentrated as they are, are likely to become a prime target of enemy attack. Thus, national security involves not only sources of oil but also the refining of oil.
At this point, with so much of the refinery capacity concentrated in the gulf area, there is a national security argument for building Machiasport in New England.
The third point I should like to make, with respect to the arguments made by the opponents of the project, is the inconsistency of the case they make to protect the oil industry. They are the first to fight for the oil depletion allowance. For example, the oil depletion allowance, they argue, is necessary in order to discover new sources of crude -- new sources of oil, and that the oil depletion allowance is available for prospecting overseas as well as at home. So that, to the extent the American oil industry has foreign sources of crude which has been subsidized by the taxpayers of the United States by way of the oil depletion allowance, the same oil companies come to us and say that these sources of crude, which have been supported by taxpayers dollars are not reliable sources in times of national security. It seems to me that that makes the case against the continuation of the oil depletion allowance to support foreign prospecting by American oil companies.
Mr. KENNEDY. As the Senator from Maine has well pointed out, not only do the oil companies get an oil depletion allowance for the exploration and research abroad as well as at home, but we also know, as has been revealed at the antitrust subcommittee hearings chaired by the Senator from Michigan (Mr. HART), that they are, in effect, able to credit foreign taxes against U.S. taxes otherwise owed on a dollar-for-dollar basis. Under any realistic kind of labeling, these payments to foreign governments are quite clearly royalties. Yet the companies are able to obtain a tax credit for these payments. If those same payments were made to landowners in this country, they would be royalties and could be deducted, not credited. So not only do they get the oil depletion allowance, but also the written-in kind of special privilege which, as the Senator from Maine has pointed out, provides for an additional incentive for exploration outside the country.
This is contrary to the rationale of the oil depletion allowance itself and to that of the oil import program which is meant to encourage domestic -- not foreign -- exploration.
Mr. MUSKIE. Let me say to the Senator from Massachusetts that there are a combination of ironies which confront the citizens of New England. One, they are asked to pay taxes and, by payment of those taxes, subsidize the oil depletion allowance of the American oil companies for exploration of foreign sources of oil. Then, when they seek to import that oil for use in a fuel deficit region, which pays the highest oil prices in the country, the taxpayers are told, in the interests of national security, that they must not import that oil but should rely upon local sources. They argue it both ways. We have an earthy way to describe that kind of situation in America but I guess I should not use it on the Senate floor. But, this is getting it both ways, and I think it is therefore perfectly appropriate for us to say to the distinguished Senator from Louisiana and others who oppose this project, "Choose one of the two, but you cannot have both."
Mr. KENNEDY. In the meantime, as all of us know in New England, where we are suffering because of the possibility of the limitation of oil, we see the free flow of cheap textiles and cheap shoes which come pouring into the country, which works to the disadvantage, in many instances, of New England, and adds to its problems.
On the first point on which the Senator talked in this area, does the Senator from Maine have the same kind of trouble I have with respect to importation of oil from Canada. This oil is more secure than our offshore or Alaskan production, yet Canadian imports are deducted from the 12.2 limitations. This means that even less than 12.2 percent of crude oil -- excluding residual -- can be imported into Districts I to IV from abroad.
We find, for instance, in the State of Alaska -- which I have just had the good chance to visit recently–
Mr. MUSKIE. It seems to me I read something about the Senator's visit there. [Laughter.]
Mr. KENNEDY. It was a lonely trip up there.
We find Alaskan and offshore production not included in the 12.2 percent program, but Canada, whose production is more secure included.
If we are talking about the question of national security, it would certainly appear to me to be self-evident that so far as having that oil come in here by sea from Alaska, it would certainly be a lot more difficult than having it come across the border at any one of a number of places from Canada.
Thus, once more, if we are going to talk about the question of national security, it seems to me that consideration should be given to the total concept of security. Certainly, we should be willing to look at the resources in Canada as being resources which would be readily available, since our security is so intimately involved with hers.
Mr. MUSKIE. As a matter of fact, the oil supplies from domestic sources are brought to us by water. The water lines from the Gulf -- where so much of the refinery capacity is located -- to Portland, Maine, are as long as the water lines to Europe. I think, almost as long as the water lines to the Middle East. Water is the method of carriage of oil domestically produced, as well as overseas production.
Mr. KENNEDY. It seems to me that if our enemy -- whoever it may be -- sinks a coastal ship, it can sink it whether it comes from the gulf ports of this country, from Venezuela, or from the Middle East.
Mr. MUSKIE. If we could get some kind of exemption for coastwise traffic, I suppose that might be helpful.
Mr. KENNEDY. I am wondering whether the Senator believes, as I do, that we could devise a system that would not be nearly so costly to the consumers of New England, and to the taxpayers generally, to preserve the possibility of immediate production -- if there were some kind of national crisis; for disinterested, expert witnesses before the antitrust subcommittee have estimated that our existing programs cost some $4 billion a year to the American consumers.
Does the Senator not agree with me that it certainly would seem possible to continue the kinds of production facilities necessary for our national security without having to burden the American consumer with up to $4 billion a year.
Mr. MUSKIE. As a matter of fact, as I recall the testimony before the Hart Subcommittee, the import program in effect subsidizes, at the expense of the American taxpayer and consumer, the least efficient units, wells producing 10 to 20 barrels a day, a producing capacity that we would really be better off without, in terms of the impact on consumer prices. If the import controls were eliminated and the price were allowed to seek its natural level, domestic production could compete with foreign producers of oil. At least, that appears to be the finding of the Hart committee.
Mr. PASTORE. Mr. President, will the Senator yield to me?
Mr. MUSKIE. I yield.
Mr. PASTORE. First of all, I congratulate the Senators from Maine, New Hampshire, and Massachusetts for the magnificent fight they are carrying on for the establishment of a free trade zone in Maine.
Speaking of the security of the Nation and the preservation of our natural resources, I think one thing we should keep in mind is the fact that it is to the advantage of America's posterity to hold in reserve as much as we can hold in reserve the supply of oil that is underground in this continent. After all, there is only so much oil there, and in a matter of time, the supply will become exhausted.
I think if we can at this time promote and stimulate the importation of oil from abroad, to the advantage of the consumer, the ultimate result will be that we will stretch out our own reserves, so that, if the day should ever come when we needed domestic oil in greater supply, we would have it here if the foreign supply were shut off.
Mr. KENNEDY. Mr. President, if the Senator will yield, one of the very impressive pieces of testimony that came before the Antitrust and Monopoly Subcommittee some 2 weeks ago -- and this testimony has not been refuted -- shows that even if imports were permitted without restriction most of our domestic production, if it were not encumbered by wasteful and inefficient prorationing regulations, would be competitive with foreign. This testimony reveals that we are paying a great deal of money to bring forth a rather small increment to domestic production.
Mr. MUSKIE. The Senator refers to production controls?
Mr. KENNEDY. Production controls. That is exactly right.
Mr. PASTORE. Mr. President, will the Senator from Massachusetts yield, with the permission of the Senator from Maine?
Mr. KENNEDY. I yield.
Mr. MUSKIE. Yes.
Mr. PASTORE. Of course, I believe the whole matter of quotas of oil importation has developed into a national scandal. It is a scandal. There is no earthly reason for it. Our hospitals and our manufacturing plants use residual oil. We do not manufacture sufficient residual oil because it is more profitable to produce higher octanes. However, for some reason, when the directive was issued during the Eisenhower administration, someone gave it the interpretation that it even included residual oil. So residual oil comes under the restriction. As a result, there are small oil dealers in Rhode Island who have to beg for tickets. The problem now is that once a small distributor becomes a customer of the large oil companies he becomes a captive customer because he has no choice. Thus, if a customer wanted to go somewhere else to get oil or have some competition for his business, he would not get the ticket he needs. So the whole distribution system has been tied up in a knot. The result is that the price keeps going up, and up, and up. The people of Rhode Island who have to use oil for heating homes or heating their plants or for manufacturing purposes are paying exorbitant prices unnecessarily.
This oil question has become a scandalous and sickening matter in New England, because, in the final analysis, the consumer is the one who has to pay the price, and he is paying it very dearly. I hope something will be done about it.
I again congratulate my colleagues for at least making this a public issue on the floor of the Senate of the United States.
EXHIBIT 1
NEW ENGLAND SENATORS' STATEMENT ON OIL IMPORT POLICY AND THE PROPOSED FOREIGN TRADE ZONE AT MACHIASPORT, MAINE
The debate over the proposed foreign trade zone at Machiasport has dragged on for many months. It has been embroiled in the politics of oil and conflicting pressures on two administrations.
Because the debate has raged so long, the discussion has become disjointed and confusing. Issues have been raised, ranging from the alleged disaster one oil refinery would create for the domestic oil industry to accusations of favored treatment for one oil company.
The New England Senators believe the Senate deserves more than a series of verbal broadsides.
We believe the Machiasport project and other steps which could alleviate New England's petroleum supply problems should be considered on their merits.
The following statement is a brief expression of our concerns. We present it as evidence of our unity of purpose, as a brief refutation of arguments raised by opponents, and as a document to re-orient public discussion to the genuine issues involved. In the coming weeks we shall add to our case with more detailed discussions and factual presentations.
The case for Machiasport can be adequately presented under the following headings
NEW ENGLAND'S NEED
New England's per capita consumption of heating oil is 3½ times the national average. The region has no indigenous sources of raw petroleum, no operating oil refineries, and no pipelines. It does not have indigenous supplies of coal. Because of its geographic position at the end of long oil supply lines, New England's oil supplies are restricted and unreliable. Fuel shortages in parts of the region have deprived people of heat during the coldest months of the year.
It is difficult for non-New Englanders to appreciate the seriousness of the problem. Few realize, for example, that winter temperature ranges and averages in Burlington, Vermont, are virtually identical with those of Anchorage, Alaska. Fuel supply in New England is not a matter of mere comfort. It is a matter of survival.
PRICING
New England pays higher prices for heating oil than the rest of the country. In 1968, New Englanders paid over 7 percent more for heating oil than people in the rest of the United States.
The following table documents the price disadvantage suffered by New England.
[Table omitted]
New England's need is clear -- and so is one of the remedies.
The Maine Port Authority has proposed the establishment of a free trade zone which would include the construction of a large oil refinery at Machiasport. That refinery would have the capacity to refine 300,000 barrels of oil per day, shipped directly from sources in North Africa.
One of the benefits from the refinery would be a reliable and economical supply of low sulfur heating oil for New England.
ECONOMIC EFFECTS OF THE PROPOSAL
The plan for a free trade zone and oil refinery at Machiasport would help guarantee a reliable supply of heating oil for New England homes. It would also bring industry and employment to an economically depressed area. Although Machiasport has a magnificent natural harbor, its economic potential has not been developed. The projected oil refinery would provide the impetus for economic growth.
The most striking effect of the new refinery would be its impact on prices. New England prices are higher than national levels because of extremely high costs of distribution. The only way to reduce costs to consumers is to obtain crude oil at low cost. The Machiasport project would have access to low cost foreign crude. Economists have estimated that New England could realize a cost reduction of 10 percent -- enough to bring its fuel prices into line with the rest of the country.
THE FOREIGN TRADE ZONES
Under the Foreign Trade Zones Act each port of entry in the United States is entitled to a foreign trade zone. Under the act, approval of the application is an administrative, rather than a policy-making process. If the proposed foreign trade zone meets the requirements of the act, approval should be given.
The Foreign Trade Zone Board of Alternates reviewed the proposal and recommended approval.
Under normal circumstances, that recommendation would have been adopted by the board itself.
But opponents of the refinery have succeeded in clouding the issue for this administration, as they did for the last, by injecting oil import policy questions into a proceeding before a board which does not control oil import allocations. There is no connection between oil import allocations and the eligibility of a port for a foreign trade zone.
The purpose of a foreign trade zone is to serve the convenience of commerce. The creation of a zone does not in any way relax the protections which are given to goods or domestic industries by reason of our trade policy -- whether tariffs or quotas.
The responsibility for the board to approve a zone is clear. The board must decide that:
(1) The applicant conducted an economic survey that reflects, "that the anticipated commerce, benefits and returns, both direct and indirect, will justify its construction to expedite and encourage foreign commerce."
(2) There is adequate proof of the ability of the applicant to finance a zone.
(3) There are adequate physical facilities in the form of warehouses, transportation connections, sanitation, light and power, fire protection, adequate enclosures to segregate the zone from the customs territory, and such other facilities that may be recommended by the Board.
Officials of two administrations, including Secretary of Commerce Stans, have openly stated that these are the only considerations pertinent to the foreign trade zone board's jurisdiction.
USE OF THE FOREIGN TRADE ZONE
The State of Maine's port authority would be the operator of the foreign trade zone. Occidental Petroleum Company has applied to the authority for a license to operate a refinery. If that application were approved, Occidental would operate its refinery according to standards set by the State of Maine.
Under the law, foreign trade zones are operated as public utilities. Use of Maine's foreign trade zone could not and would not be limited to one company or to one kind of manufacturing. Applicants for use of zone facilities must be treated equitably.
Companies other than Occidental have indicated interest in applying for use of the zone. Their proposals, when submitted, would be given equitable consideration. Approval would depend entirely on their ability to live within the foreign trade zone regulations.
Contrary to opposition assertions that Occidental Petroleum is guaranteed exclusive rights to the foreign trade zone, Occidental is only one out of several potential users of the zone.
OIL IMPORT REGULATIONS
Oil import restrictions, under the presidential proclamation of 1959, have a direct bearing on the refinery proposal. Under current regulations there is no provision for the withdrawal of finished products from foreign trade zones for consumption in the United States customs area.
In 1968, the Secretary of the Interior recognized this circumstance and requested staff proposals to amend the oil import regulations to permit him to judge applications for such withdrawals on their merits. Two proposals were published, each of which would have given the secretary authority to approve allocations of oil imports from foreign trade zones when such allocations would be in the best national interest. The major difference in the proposals concerned the source of crude oil to be refined in foreign trade zones. Under proposal "A" there were no restrictions on the source of crude oil. Under proposal "B" there was a requirement that 50% of the finished products withdrawn from a foreign trade zone would have to be refined from crude oil produced domestically.
If proposal "B" had been adopted it would not have been economically feasible to construct a refinery in any foreign trade zone that was not located next to a source of supply of domestic oil. The Johnson administration did not act in favor of either proposal.
President Nixon has transferred the responsibility for review of the oil import regulations from the Secretary of the Interior to himself. He has appointed a task force headed by the Secretary of Labor to study oil import policies. We anxiously await the result of this task force study.
NATIONAL SECURITY
The stated rationale of the import control program is to guarantee adequate oil reserves and refinery capacity for national defense. Proponents of our current oil policies maintain that the import control program, coupled with the oil depletion allowance, encourages domestic oil exploration, which in turn contributes significantly to our national security.
What the proponents fail to mention is that the current oil import regulations have forced the concentration of well over a third of our total refinery capacity in the Texas-Louisiana Gulf area. These gulf refineries are likely to become the vulnerable first targets of an attacking enemy.
As concerns the impact of the oil depletion allowance program on national security, it should be noted that the depletion allowance applies to international oil operations, as well as domestic, giving equal encouragement to exploration in foreign fields.
CONSERVATION
Those of us who have supported the proposal have been concerned about its effect on the natural beauty of the Maine coast. The State of Maine has obtained technical advice in developing a set of anti-pollution standards for the off-loading facilities and refinery. The proposed standards require chemical and thermal wastes from the oil refinery to be disposed of without making the surrounding air and water offensive to humans. Biologists from the U.S. Department of the Interior have agreed that the standards are high enough to protect surrounding fish and wildlife.
Designing oil handling facilities and an oil refinery to meet such standards is expensive, but it is possible. We are aware of the need to enforce the anti-pollution standards, and intend to do all we can to ensure that the enforcement mechanisms are adequate. In addition, we believe the location and design of the facility will reduce the environmental impact to an absolute minimum.
CONCLUSION
These are the chief areas of relevant discussion. We think this short statement contains the basic arguments in favor of the proposal. We shall present, over the next few weeks, a series of speeches to provide the Senate with a detailed and straightforward set of evidence on behalf of a more rational and equitable oil import policy.
Mr. PASTORE. Mr. President, Secretary of Commerce Stans shocked me by an announcement he made recently to newspaper reporters. He said no decisions will be made on a foreign trade sub-zone at Machiasport, Maine, until the White House study of the oil import program is finished.
Mr. Stans knows that this is specious reasoning and double-talk.
The question of a foreign trade zone for Maine and the study of the oil import programs are entirely unrelated; unrelated, that is, except for the part the powerful oil lobby is playing in these events. The oil industry favors, and urged the President to conduct the study, but they have used all their vast influence -- with apparent success -- to thwart the efforts of all New England to establish a foreign trade zone in Maine.
Oil imports are supposed to be the responsibility of the Department of the Interior.
The application for a foreign trade zone is supposed to be considered by three other Department heads, the Secretary of the Army, the Secretary of the Treasury, and Mr. Stans, the chairman.
Secretary Stans is giving the Rhode Island consumer and all citizens of New England the run around. He knows it and I can guess why.
Six weeks ago, when Mr. Stans was before the Commence Committee on the question of his nomination to head the Department of Commerce, I asked him if he was ready to consider the Machiasport matter as soon as he took office and give to the people of New England the benefit of his decision as expeditiously as possible.
Mr. Stans assured me and the committee that he was convinced that the Maine application had to have priority of attention as soon as he took office.
I am going to quote what the nominee said:
I will do my best to expedite it, having in mind, of course, that there are other departments of the government that also have a voice in the subject, but I will expedite it just as quickly as I can.
"I will expedite it just as quickly as I can." What caused the Secretary to switch his signals in 6 short weeks? How can he justify this dilatory tactic in light of the unanimous decision of the subordinate board of alternates in favor of the Maine application?
There is no logic to Secretary Stans' position. It is another monument to the awesome power of the oil lobby. You could not convince a single Rhode Island consumer otherwise. This is a power play that is costing the housewife in my State a couple of cents a gallon for the fuel oil burned to keep her family warm. That amounts to $2 million more each year that Rhode Island families are paying for oil than they should.
We, in New England, perhaps naively, never really knew the depth and breadth of control that the oil industry had fastened on the Government. That is why the facts compiled by Senator McINTYRE's Banking and Currency Subcommittee appalled and shocked us so. If anyone in New England ever had any doubt about the raw political power of the oil companies, we certainly have no illusions left now.
That is one lesson we have learned from the Machiasport project. Time and again, over the past several months, the big oil companies have worked their will to delay, postpone, and destroy the good and valid application of the State of Maine to establish a foreign trade zone at Portland, with a subzone at Machiasport. Time and again, when a decision based on the merits was about to be made on one phase on another of Maine's application, an oil industry policeman signaled "stop" and the Government apparatus conveniently found a new way to grind to a halt.
To characterize what happened to Maine's application during the last administration as an administrative irregularity would be a kindness. We, in New England, soon learned that we were getting the runaround from Secretary Smith. We hoped for better things under Secretary Stans.
Decisions now, we are told, would be made on a businesslike basis -- without prejudice. Judged by these recent developments, however, it appears as though "businesslike" really means business as usual, at the same old stand, with the big oil companies calling the tune.
New England, indeed the whole Northeast, has had its nose bloodied in this matter by the oil industry; but, as the going gets tough, we are going to get tougher. We in New England are not about to be frightened away from this fight, and, I think, the oil lobby will regret the day they decided to try and stop New England from getting its fair share of the benefits of the oil import program.
Now, I understand that Harold McClure, president of a domestic producers group, told a press conference recently that we New Englanders, in our "exuberance" over Machiasport, were misleading our constituents by telling them that the oil industry was mulcting them with the highest prices in the Nation. I understand, too, that he specifically noted that Senators MUSKIE, KENNEDY, and McINTYRE were among the leaders of the group making such "wrong" claims.
These three esteemed associates do not need me to defend them, but I strongly resent such criticism, particularly in light of the whole misleading record of oil company propaganda which we have been forced to stomach in New England, once we decided to seek a more equitable arrangement for our consumers under the oil import program.
Mr. McClure had some more industry sleight-of-hand statistics to prove that on the average, over the last 11 years, our home heating oil prices were not out of line with those in the rest of the country. I suppose if one goes back far enough and mixes together a sufficient number of figures, one can prove almost anything, but not to the Rhode Island housewife and her husband who are footing the bill. You cannot fool them. They know they are being gouged.
The oil companies should know that we in New England do understand, at long last, the facts of oil industry pricing. We know from our own independent analyses that if one examines the figures for the last 5 years, on a year-to-year basis, that prices for our home heating oil on both wholesale and retail levels have risen far more sharply than in any other section of the country.
We know, too, that at this very moment our consumers are paying higher retail prices and our independent jobbers are paying higher wholesale prices than in any other representative section of the country. These are facts and they cannot be waved away with a magic wand by lumping them together in an 11-year exercise of "averaging".
It seemed that under the new administration, some progress was going to be made on Maine's application for a foreign trade zone. The three-man sub-Cabinet level committee of alternates unanimously endorsed the application. Moreover, Secretary Stans, Chairman of the full Foreign Trade Zone Board, scheduled a meeting of his Board for February 24 and, I understand, he confirmed his intention of disposing of this application promptly to several of my distinguished colleagues from New England on the other side of the aisle. But, the industry called a different tune and Secretary Stans found it convenient to ignore all these pledges. Well, I do not accept that. I believe he should honor his commitments and I am going to do everything I can to insure that he does.
During his confirmation hearings, Secretary of the Interior Hickel promised that the oil import quota application needed to make Machiasport a reality would receive priority treatment. Thus the stage was set for decisive action -- action that was long overdue. But, we in New England may have sold the industry short again.