CONGRESSIONAL RECORD -- SENATE

November 18, 1969

Page 34519

OIL IMPORT CONTROLS

Mr. MUSKIE. Mr. President, the time is approaching when we will soon receive from the President's Cabinet Task Force the long-awaited report on oil import controls. Senators who have been deeply involved in this matter have submitted their ideas and suggestions to the task force, individually and in concert. Although many good recommendations have been made, one recent submission deserves our special attention. On November 12, 1969, five members of the Senate Armed Services Committee wrote to Secretary of Defense Melvin Laird suggesting significant changes in the oil import program.

Using the Department of Defense report to the task force as a base, our colleagues on the Armed Services Committee made nine recommendations. These recommended changes, if adopted, will provide the needed consumer benefits in the form of lower cost petroleum products, and at the same time, meet the needs of our national security goals -- goals that have been clearly defined by the Department of Defense.

The major points made in this proposal are:

That an active role be given to refineries located in foreign trade zones;

That oil imported overland from Canada and Mexico be eliminated from the import control program; and

That the import quota be raised from 12.2 percent of domestic demand to 20 percent of domestic demand.

The arguments for these changes are sound, and the members of the Armed Services Committee who have prepared these recommendations are to be commended. Senator SMITH, Senator STEPHEN YOUNG, Senator MCINTYRE, Senator INOUYE, and Senator BROOKE have made an outstanding contribution to the deliberations on the issue.

Mr. President, I ask unanimous consent that the text of the letter and the memorandum to the Secretary of Defense be printed in the RECORD.

There being no objection, the items were ordered to be printed in the RECORD, as follows:

NOVEMBER 11, 1969.

Hon. MELVIN R. LAIRD,

Secretary of Defense,

Washington, D.C.

DEAR MR. SECRETARY: We would like to congratulate you and your Department for your forthright statement of views on oil import control to the President's Task Force. We were deeply impressed by the statement's constructive presentation of the national security aspects of an import control policy. As you know, the legal justification for controlling imports is our national security needs. We therefore consider the views of your Department to be vital to the structuring of a wise, realistic and equitable control policy.

As members of the Armed Services Committee, as well as Senators deeply concerned by the impact of the oil import program on the people we represent, we would like to share with you our thoughts about possible changes in the present structure of the program which would respond directly to the security needs discussed in your Department's presentation to the Task Force.

From an economic standpoint, as the Department of Justice pointed out in its submission to the Task Force, the ideal answer would be a return to free trade in oil. Some members of the Senate, including some signatories of this letter, have supported this position. But, it is also possible, to suggest more limited changes in the program which would achieve a measure of consumer relief and at the same time be fully consistent with defense needs as defined by your Department. The proposed changes set forth in the attached memorandum seem to us a logical outgrowth of your definition of these national security needs. We feel, in fact, that the logic of the Department's own presentation compels a restructuring of the present program along the lines at least similar to those we propose.

A key aspect of our proposed restructuring would be the use of foreign trade zones. This aspect of our proposals should be of special interest to you since your Department is represented on the Foreign Trade Zones Board and would share direct responsibility for executing an oil import policy tied to the use of such zones.

Since you are presently in the process of discharging your responsibilities as a member of the President's Task Force and are reviewing the alternative solutions to the problem, we hope you will keep in mind the points raised in the attached memorandum. We believe our proposals to be compatible with the interests of your Department, as well as with a healthy economy, and hope they will prove helpful to you in your contribution to the efforts of the Task Force.

If you have any comments or questions regarding these matters we shall, as always, be pleased to hear from you.

Sincerely,

MARGARET CHASE SMITH, U.S. Senate.

EDWARD W. BROOKE, U.S. Senate.

STEPHEN M. YOUNG, U.S. Senate.

DANIEL K. INOUYE, U.S. Senate.

THOMAS J. MCINTYRE, U.S. Senate.

MORATORIUM

SUBJECT: NATIONAL SECURITY AND OIL IMPORTS

A. Defense submission to task force

Before explaining our recommendations we believe it will be useful to outline briefly the salient points made by the Department of Defense to the Task Force.

1. Oil is a strategic material and from a military standpoint is absolutely essential. Success or failure in any conventional conflict may hinge on oil.

2. Military petroleum capacity cannot be judged simply by measuring productivity and deliverability of crude oil but is measured in terms of refining capacities, pipeline through put, and capacity of storage terminals as well.

3. There must be maintained a capability in the U.S. to supply our own war needs in case existing foreign sources and alternative foreign sources are denied.

4. Mobilization studies show that any type of extended emergency involving the U.S. and its allies cannot be adequately fueled by the U.S. alone.

5. Our national security dictates that we have in existence dependable, capable and willing overseas sources to satisfy our petroleum needs on a global basis.

6. The most secure oil supply source is clearly continental U.S. The most secure foreign sources are Canada and Mexico, and particularly insofar as overland movements are concerned. They are probably as secure as supplies from the U.S. itself. Within the U.S. the least secure supply is that which moves from the Gulf to the East Coast by tanker, thus becoming vulnerable to hostile submarine action.

Shipments from the Caribbean area to the East Coast by tanker are no greater risk than shipments from U.S. Gulf. The Caribbean is more desirable than the U.S. Gulf for West coast needs.

Among all major foreign producing areas, the Middle East is least secure, with Iran less susceptible to supply interruption than other Middle East countries. North Africa and West Africa are more secure than the Middle East countries. Supplies from Alaska are not as secure as those from the continental U.S., Canada, Mexico, or the Caribbean. There are obviously no political risks in Alaska but the North Slope is highly vulnerable to enemy action. Moreover, the potential Northwest passage sea route to the East Coast is vulnerable to enemy submarines sheltered by Arctic ice fields. Deliveries to the West Coast are similarly vulnerable, but probably to a lesser degree.

7. There are only two types of threat against which we must protect ourselves from the standpoint of oil availability:

a. A protracted conventional war to which we are a party.

b. A cut-off of supplies resulting from a limited conflict involving some of the producing nations.

Continuity of oil supply in the aftermath of a nuclear exchange would not be a factor of major significance since consumption of oil would be sharply reduced, as would the capacity to refine oil.

8. All experience to date with limited wars indicates that disruptions associated with them are limited in scope. The denial of sources is not apt to be universal, nor do such denials affect all consuming countries equally. Of the two major sources for U.S. military requirements, it is unlikely that the Caribbean area will be affected by this type of hostility, but possible that all or part of the Middle East area could be denied at any time.

9. The more serious threat is the possibility of a protracted general war.

Such a war requires large and continuing military oil requirements and is likely to involve some of the world's major oil supplying nations. It is only the possibility of this kind of a conflict which justifies the maintenance of sufficient U.S. and Western hemisphere spare capacity to make up for the loss of other foreign supplies. Thus, it is only the possibility of this kind of a conflict which justifies the continuation of some oil import controls.

10. In the forseseeable future, partial or complete denial of foreign oil to the U.S. would not limit our capabilities for military action. A conventional war of extended duration would probably result in severe oil shortages but the least effect would be felt in the U.S. Europe and Japan are far more dependent on oil as an energy source (55% and 70%) than is the U.S. (44%) and less able to reduce demand by restricting nonessential uses or substituting other energy sources.

11. In the event of a sudden curtailment of foreign oil supplies, particularly if heavy fuel supplies were cut off, government control over U.S. refining and transportation operations and an allocation of producing, transportation and refining resources would have to be initiated.

12. Denial of foreign supplies of residual fuel would be of great significance to the Navy. Except on the West Coast, Navy special fuel oil is entirely of foreign origin. A military supply gap of 45-50 million barrels per year would be created if this oil were cut off. Allocation of available U.S. residual fuel would be required immediately in order to avoid the early immobilization of the fleet. Imposition of government controls would be absolutely necessary.

By far the greater portion of military requirements are below the motor gasoline range of refinery output, and they will be even more so should the Air Force shift to a distillate based jet fuel as is now being considered.

U.S. refinery outputs, now heavily oriented towards gasoline (47% in 1968), would need restructuring to meet military requirements if foreign sources were denied.

13. Adequate U.S. flag or U.S. controlled shipping must be available to move U.S. crude oil to refineries dependent on waterborne supplies. Most water-borne supplies consist now of foreign crude oil shipped to the U.S. in foreign flag vessels which might not be available under emergency conditions.

RECOMMENDATIONS

1. Canadian and Mexican oil shipped overland should be allowed to enter the U.S. freely outside of the quota system. There is simply no reason to restrict this oil. As indicated by the Department of Defense in its submission to the Task Force, overland shipments from Canada and Mexico are as secure as our own continental oil supplies, more secure than Gulf Coast supplies which have to be moved to the East Coast by tanker and far more secure than militarily vulnerable Alaskan oil.

With complete freedom of access to the U.S. market, Canadian imports would probably increase from current levels of 600,000 b/d to 1.5 million b/d within two years and to 2.5 to 3 million b/d within 5 to 10 years.

Canadian oil is lower cost oil than our own continental supplies on an average by about 50¢ per barrel. Thus free access of Canadian oil to U.S. markets would cause a price decline in the U.S. which would be likely to force our highest-cost, least-efficient wells to close down. Within a relatively few years, most of our inefficient stripper well production would be phased out as Canadian imports grow. State pro-rationing tied to market demand and designed to protect high-cost wells would become a thing of the past, eliminating an economic misallocation which the C.R.A. study estimates costs the nation 2.3 billion dollars annually.

In the process stripper well reserves of approximately 6 billion barrels would probably be lost until such time as technological advances made their production economical once again. On the other hand, some 12-15 billion barrels of new reserves would be added from Canada, new exploration incentives there would add still further reserves, and our industrial and home consumers, particularly in the middle west, would benefit from lower cost energy.

Moreover, the largest single market for U.S. exports of a wide range of goods, the Canadian market, would expand as Canadians earned more dollars from oil exports to America and could thus increase purchases of other goods here.

The only serious objections raised about increasing our dependence on Canadian oil has been the fact that Canada itself depends on foreign imports to cover oil requirements in the eastern part of the country (from Ottawa Valley east to the Maritime Provinces). Part of that demand is met by crude oil piped to Montreal from Portland, Maine, and part by crude oil and product imports shipped by tanker from foreign sources. We can't depend on Canada, so the argument runs, because in an emergency supplies normally sold to the Western U.S. will be directed to Eastern Canada.

That argument is simply not defensible. In the first place, as Canada's own submission to the Task Force clearly indicates, Canada doesn't have the transportation facilities for shipping oil from its Western provinces to Montreal and points east. Moreover, as part of any overall oil agreement between the two countries, we could logically undertake to supply our crude and finished products from the Gulf Coast to the Montreal market in an emergency while Canada in return could step up shipments to us in the Mid-west.

In view of both the military security of supply and the economic benefits involved, we urge that the Task Force recommend complete freedom of overland Canadian oil shipments on a normal commercial basis. In addition, if Mexico production grows sharply and overland pipeline shipments from that country can be initiated, we urge that they be treated similarly to Canadian oil.

2. We urge that the Federal government develop new methods of insuring emergency spare capacity. The government could, for example, construct extensive storage facilities, establish a national pro-rationing system for efficient large fields, or promote the research necessary to make practicable the exploitation of shale oil and oil from coal in the United States and tar sands in Canada.

3. In determining the level of permissible imports from non-North American sources, a detailed determination should be made by the Department of the Interior with the direct assistance of the Department of Defense of the volume of crude oil needed to cover our essential requirements.

Current data suggests that the country could meet any emergency operating on about 80% of current consumption levels. This figure is based on the fact that about 55% of our total oil use is centered in the transportation field. And of total transportation use, about 70% is used by private automobiles, motorcycles, and pleasure boats. In an emergency situation, use of these private vehicles could easily be cut by 50%, without endangering essential industrial and military operations. This would in turn reduce overall consumption of oil by a minimum of 20%.

4. After making a determination of essential requirements the Federal Government will be in a position to establish a rational oil import program. The allowable import rate would be fixed so as to assume continued domestic capacity equal to the essential requirement. We believe that the rate chosen should be reviewed frequently and, at the least, every two years.

If we assume that essential needs equal 80% of our total consumption, then the Federal government could set non-North American imports at, say, 14% of consumption, leaving a 6% pool to be used selectively by the government to promote military, economic and social objectives which could not be achieved by simply allowing the entire 20% to come in under the Oil Import Program as presently administered.

A 14 % quota may not seem like a significant expansion from the current 12.2% permissible level. In reality, however, it would provide for sharp growth of non-North American supplies, because at present almost 30% of our total crude imports Districts I-IV come from Canada, which, under the program suggested above would no longer be included in the oil import system.

We expect much of the increase in non-North American imports to come from the Eastern Hemisphere rather than Venezuela because Eastern Hemisphere supplies are lower cost than Venezuelan. The expansion of Eastern Hemisphere imports would, of course, help our relations with producing countries in that area, but since such imports would be non-essential, we would not become vulnerable to sudden denial of such supplies in an emergency.

5. We believe that foreign trade zones would be a most useful vehicle in allocating the remaining 6% pool of import allocations. By their nature, refineries located in foreign trade zones require federal approval. Thus the Federal government is in a position to impose the terms under which such zones can operate. The Government could spell out conditions which would enable such zone refineries to achieve national foreign policy, defense, and economic objectives.

6. In foreign trade zone refineries, for example, the following military objectives could be achieved.

a. Zone refineries located on the East and Gulf coasts could be induced to operate largely on Venezuelan oil, providing a dramatic growth in the U.S. market for supplies from that country which would otherwise not take place. The government could, for example, grant one barrel of product import quota (allowing a company to sell products from the foreign trade zone into the U.S.), for each 3 barrels of Venezuelan oil used at the foreign trade zone refinery. Such an arrangement would assure a very high proportion of non-North American imports from Venezuela -- the area deemed most secure among foreign sources by the Department of Defense in its submission to the Task Force.

In fact, as noted, Defense states that Caribbean supplies are equally secure from a military standpoint as our own tanker-shipped supplies from the U.S. Gulf Coast. The encouragement of Venezuelan shipments would also be consistent with longstanding State Department priorities and foreign policy goals in South America.

b. The government could require that only a certain type of refinery be built in a zone, thus ending the Navy's 100% dependence on foreign fuel for its Atlantic and Mediterranean fleets. At present our Navy faces immediate immobilization if foreign sources of Navy special fuel oil are shut off. The DOD in its submission notes that there would have to be a restructuring of the entire U.S. refinery set-up in order to avoid such immobilization in the event foreign supplies were denied.

This situation has developed because U.S. refineries run their plants to maximize gasoline output and minimize the heavy residual fuel oil which is used by the Navy to power its ships. No heavy fuel type refineries are built in the U.S. Meanwhile companies without import quotas desiring to participate in the U.S. heavy fuel market have been forced, under the present oil import program, to build their plants off-shore of the U.S. In the last decade, since import controls were established, there has been a rapid expansion of heavy fuel type refining capacity in the Maritimes, Panama, Trinidad, and elsewhere. New plants are now under construction in the Bahamas and Newfoundland.

In short, we have been exporting our refinery capacity. This is bad news from a balance of payments standpoint, and it is even worse from a military standpoint because in an emergency when such refining capacity would be needed most by the Defense Department, these refineries could not be placed under control of the U.S, government.

According to the Defense Department submission, the great preponderance of its military requirements are products below the gasoline range. Thus, in approving foreign trade zone refineries, the Government could require that such plants produce a high proportion -- perhaps 80% -- of products below the motor gasoline range.

It is interesting to note that Occidental Petroleum Corporation at Machiasport, Maine, Tenneco at Savannah, Georgia, Steuart Petroleum in Maryland, the Hawaii Independent Refining Company in Honolulu, already plan to build heavy fuel oriented plants of the type recommended. In fact, the revised Occidental refinery plan provides for production 153,000 b/d of low sulphur residual fuel -- more than 55 million barrels annually. Thus, this one plant could in an emergency cover the entire shortfall of Navy special fuel oil outlined by the DOD in its submission. A string of such heavy fuel oriented refineries would give the DOD flexibility of supply in an emergency and make it far less vulnerable to denial of foreign supplies than at present. Naturally, such refineries would be under complete U.S. control in any emergency mobilization since they would be located on U.S. soil.

c. A separate but related military issue is the question of dispersal of refinery capacity. During the 10 years of the Oil Import Program, 85% of refinery capacity in Districts I-IV has been built in just two states -- Texas and Louisiana. This has increased the concentration of refining capacity in that area, making our refining capability more vulnerable to enemy attack. With absolute control over foreign trade zone approvals, the Federal government can easily, through its approval of zone locations, contribute to a meaningful dispersal of our refining capacity.

d. Another vulnerable military area outlined by the DOD is the lack of U.S. flag tankers. All of the heavy fuel now imported into this country from the off-shore plants described above is shipped in foreign-flag vessels. Under an emergency mobilization we have no control over these vessels, and should they be denied us, it would be difficult if not impossible to increase the flow of U.S. Gulf Coast oil to the East Coast.

Foreign trade zone refineries under existing law would be required to ship products from the zone to the U.S. in U.S. flag tankers. Occidental Petroleum, for example, has estimated that its zone refinery alone would require the addition of 8-12 new T-2 type U.S. tankers to the U.S. flag fleet.

7. Foreign trade zone refineries can also be used to bring a measure of economic relief to those regions of the country which have been burdened unfairly and disproportionately with high prices under the present program. We attach two tables summarizing the trends in retail and wholesale home heating oil prices over the last five years. These show that New England, the Southeastern Atlantic area, and the middle Atlantic area, all are at a considerable price disadvantage compared to the midwest, where refining capacity is sufficient to cover local demand. With free access for Canadian crude as proposed above, the disparity between midwest consumer prices and those along the Eastern seaboard, in the Pacific Northwest and Hawaii, will become even greater unless foreign trade zones are promoted specifically to reduce prices.

District I, which comprises the East Coast, uses 45 % of the Nation's oil yet has only 15 % of this Nation's refining capacity. No new refineries have been built along the entire East Coast since the Import Program was instituted. Nor are any likely to be constructed there given the economic realities of the situation unless the present program is changed.

8. Use of foreign trade zones should not be restricted solely to the East Coast, although they will be particularly useful in that area. Prices for home heating oil in the Pacific Northwest are also far above the national average and foreign trade zones in that area would be useful.

Similarly prices for all refined products in Hawaii are far above those on the mainland. On the basis of the evidence submitted to the Task Force so far, there seems to be a good case for removing Hawaii from District V and eliminating all import restrictions now applicable to Hawaii. If, however, the Task Force decides to continue import restrictions in Hawaii or to phase them out gradually over an extended period of time, foreign trade zones would be a useful vehicle during such a transitional period.

9. In addition to all of the above military and economic objectives which can be achieved through the use of zones, we believe there are a number of other requirements that the Federal government could consider in connection with granting foreign trade zones. These include possible requirements that:

a. zone refineries maintain at least 10% spare storage and refinery capacity for use in times of emergency;

b. the tightest possible air and water pollution controls be built into any zone refinery and terminal operation;

c. a positive contribution to the U.S. balance of payments be demonstrated by each foreign trade zone refinery applicant;

d. zone refiners meet any other objectives deemed appropriate by the competent local, state and federal officials involved.

STATEMENT ON OIL LETTER TO DEFENSE SECRETARY LAIRD

Several members of the Senate Armed Services Committee have today sent to the Secretary of Defense Melvin Laird a position paper urging increased use of Foreign Trade Zones as a part of the Oil Import Control Program. They expressed the hope that the Secretary would consider their proposal in determining the Defense Department's contribution to the soon-to-be-concluded Presidential Task Force review of the Program. Joining in the letter were Senators Margaret Chase Smith (R-Maine), Stephen M. Young (D-Ohio), Daniel K. Inouye (D-Hawaii), Thomas J. McIntyre (D-N.H.), and Edward W. Brooke (R-Mass.). (A text of the position paper is attached).

The five Senators pointed out that their letter is fully consistent with the definition of national security needs as regards oil made by the Department of Defense in its own earlier staff level presentation to the Task Force. They said that their proposal has been offered as a viable accommodation between those who would eliminate the Oil Import Control Program entirely and those who would retain it essentially in its present form. The lawmakers pointed out that if adopted as government policy their recommendations would improve our ability to meet national security needs and, at the same time, greatly increase the annual volume of oil imports to the considerable advantage of American consumers.

The Senators called for the following changes in the present program:

(1) The immediate decontrol of all Canadian and Mexican oil shipped overland into the United States.

(2) An increase in the present quota of 12.2% of domestic demand to 20% of existing demand, 14% of this amount to be wholly decontrolled and the remaining 6% allocated to Foreign Trade Zones.

Additional background information follows

The Senators have recommended, first, that Canadian and Mexican oil shipped overland into the United States be allowed to enter without any import controls. They have done this because they agree with the Defense Department's recognition, in its earlier submission to the Task Force, that these sources are fully as secure militarily as continental oil supplies, more secure than U.S. Gulf Coast supplies moved to the East Coast by tanker, and far more secure than militarily quite vulnerable Alaskan oil.

They have recommended, second, that the present oil import quota of 12.2% of domestic demand be raised to 20% of domestic demand. This recommendation is based on their considered judgment that in a prolonged emergency the United States could continue to operate successfully on the 80% of domestic demand which would continue to be supplied from militarily secure sources.

It is their belief that the bulk of the oil coming into the United States under this increased quota --- an amount equal to 14% of domestic demand -- should come in free of any controls whatsoever.

They feel that the remaining 6%, however, should be allocated to Foreign Trade Zones. Because these zones and their manner of operation must be approved by the Federal government, their activities can be regulated to achieve a number of foreign policy, military, and economic objectives not being achieved under the present program.

For example, the present program is so constituted that no new refineries have been built on the East Coast since the program was instituted in 1959. The East Coast, with 45% of the Nation's oil demand, has at present only 15% of the Nation's refining capacity, which is presently heavily concentrated along the Gulf Coast. The construction of new refineries at Foreign Trade Zones throughout the Nation would not only benefit consumers but would disperse our refining capacity and thereby make it less vulnerable to enemy attack.

Moreover, most existing refineries have an economic incentive to maximize gasoline production and to minimize the production of heavy fuel oil such as is required by the United States Navy.

As a result, the Navy is almost wholly dependent on oil refined in the Caribbean and in the Maritime Provinces of Canada. Since none of these refineries could be controlled by the Defense Department through emergency mobilization, the Navy might well be immobilized if certain types of hostilities broke out. Foreign Trade Zones, however, could be granted incentives to engage in the type of refining which would meet our Navy's needs.

Additional national policy goals might be achieved if East and Gulf Coast refineries operating in Foreign Trade Zones were required to operate on Venezuelan oil. Given the political uncertainties in the Middle East, it would not be prudent for the United States to become overwhelmingly dependent on Eastern Hemisphere supplies. At the same time, however, we have always been able to count on Venezuelan oil throughout long history, even during World War II, the Korean war, the Vietnamese conflict, and two Arab-Israeli wars. Such a requirement would serve foreign policy as well as just military objectives. It would be consistent with President Nixon's and Governor Rockefeller's new Latin American policy which is designed to help all developing countries and particularly those of Latin America.

Other policy objectives which the Senator's recommendations could help achieve are developed in the position paper itself. They feel that the possible realization of these objectives, and the considerable consumer relief entailed by their recommendations, entitle them to serious consideration both by the Department of Defense and by other agencies represented on the President's Task Force.

Mr. BROOKE. Mr. President, I want to thank the junior Senator from Maine for bringing this matter to the attention of the Senate.

In making our proposal to the Secretary of Defense we have tried to offer an alternative that is fully consistent with national security needs as set forth by the Department of Defense in its own earlier staff level presentation to the task force. This recommendation offers both improvement of our ability to meet our national security needs and, at the same time, greatly increases the annual volume of oil imports to the considerable advantage of American consumers.

I am hopeful that all who are concerned with this program will realize that as presently structured it does not and cannot serve the best interest of the country. We must look to the task force for relief from the intolerable burden that this system has placed upon us. The embattled consumers of this Nation agree: major reforms of our oil import system are needed now.

Mr. MCINTYRE. Mr. President, I want to thank my distinguished colleague from Maine (Mr. MUsKIE) who has long been an ardent advocate of consumer interests, for his remarks.

As members of the Armed Services Committee our primary focus in analyzing and developing recommendations to modify the existing oil import control program has been keyed to national security goals. At the same time, as Senators concerned with the problems of our constituents, we have been anxious to reduce the unfair burden imposed on oil consumers from the unnecessarily high prices resulting from the present program.

The proposal we have outlined is a moderate one which lies part way between the status quo, advocated by oil industry representatives and the complete elimination of the program, advocated by many of us representing consuming States.

It is designed to appeal as a middle road approach to President Nixon who must soon decide this Nation's future oil import policy. We know the President is beset by mounting pressures on both sides of the import issue. Our proposal is designed to seek an accommodation so that no one wins or loses the oil import battle except this Nation's taxpayers, who will get more security for a smaller expenditure, and this Nation's consumers, who will get more supplies at lower costs.

The oil industry will be benefited by these proposals as well. If adopted, they will signal the end of what has been described by many as a bitter struggle between the oil industry's privileged position and the public interest. I believe that struggle should be terminated for it does industry no good here at home or in its operations abroad. I think it is time the oil industry realized some accommodation must be made -- some recognition must be given to the legitimate complaints of the public. For if moderate proposals such as those we have outlined are attacked by the industry, the battle will go on. And the final resolution of this problem is apt to be far more severe on its impact on the industry than these proposals advanced to Secretary Laird.