February 28, 1973
Page 5782
OIL IMPORT QUOTAS
Mr. MUSKIE. Mr. President, it has now been 6 weeks since President Nixon temporarily suspended controls on imports of No. 2 heating oil in an attempt to ease the critical shortage of fuel throughout many parts of the Nation. It seems appropriate, therefore, to evaluate the results of the President's action, at least as they are evidenced in my own State of Maine, and to attempt to draw some conclusions from this experience:
First. Heating oil continues to be in short supply: The intention of the President's proclamation was, according to a statement released on January 17, to "insure an adequate supply of heating fuel for homes and businesses this winter." Yet, neither consumers nor oil dealers in Maine have received assurances that supplies of No. 2 oil will be increased for the balance of the heating season. Arbitrary monthly quotas imposed by the major oil companies on local dealers are still in effect and could easily result in major oil shortages in the coming weeks should temperatures remain below 1972 levels.
Second. There has been no concrete evidence offered by the major oil companies that they have increased supplies as a result of the President's relaxation of controls: At a meeting in Augusta, Maine, with officials of more than a dozen major oil companies on January 30, Gov. Kenneth M. Curtis asked for specific information as to who would be receiving renewed oil supplies under the new import authorization, when, and in what quantities. The response was neither complete nor adequate and can be summed up in the statement of one company representative that the situation "does not look insurmountable." This information is hardly helpful to those who must plan allocations for the rest of the winter.
Third. The independent terminal operators have not been able to purchase quantities of No. 2 oil overseas. The independents, on whom New Englanders depend not only for supply but also for price competition with the major companies, have found the temporary, 3-month relaxation of import controls to be of little use. Denied the opportunity to make year-long contracts with foreign suppliers, the independents either cannot purchase No. 2 oil at all or can do so only at uncompetitive prices.
Fourth. Price increases of more than 8 percent for home heating oil have been announced by the major oil companies: It is quite likely that these price increases are not directly related to January's revisions in the import program. Nonetheless, if import controls had been relaxed last fall and throughout the heating season, sufficient quantities of oil at lower prices would have been available to provide competitive pressures on the major oil companies.
Fifth. There are continued supply problems with other petroleum products, such as kerosene, which are not covered by the President's proclamation: Maine, as is the case with several other States, relies heavily upon kerosene – generally classified as No. 1 oil under the import program – for home heating purposes. Although the assumption at the time of the President's decision was that the relaxation of controls on No. 2 oil would relieve shortages of kerosene, there is no evidence in Maine that this has taken place. The Maine congressional delegation was able, however, to arrange emergency authority for overland kerosene imports from Canada to deal with spot shortages. This has been helpful, but clearly illustrates the aggravating problems associated with trying to work within the bureaucratic tangle of the import program. The arrangement also put Maine consumers in the position of having to accept kerosene at prices up to 30 percent higher than normal due to restrictions placed on the authorization.
Mr. President, the lessons of the last 6 weeks, in my judgment, lead to only one conclusion.
Manipulation and frantic last-minute adjustments in a patchwork program of Government- administered oil imports is simply an inadequate solution, now and in the future, to the problem of assuring an adequate supply of heating oil for our homes and businesses.
Worse, the success of this system is dependent upon the cooperation of the domestic oil companies to produce heating oil and other products in sufficient quantities to meet demand.
Frankly, Mr. President, I do not have confidence in the oil industry's willingness to carry out its side of the bargain – particularly after I read a report last Thursday that the Office of Emergency Preparedness was given assurances by the oil industry last fall that it would produce sufficient supplies to avoid shortages this winter.
The success of the import program is also dependent upon the willingness of a President and his administration – any administration – to make appropriate adjustments in the import program to meet changes in demand. Here, too, the record of 14 years and four administrations is one of a failure to respond to the needs of the consumer. Instead, we have had an annual import program, based largely on guesswork, designed to permit only enough supply to meet estimated demand without regard to price competition.
The solution is to abandon the oil import program.
That is why I was pleased to join yesterday with my distinguished colleague from New Hampshire, Senator THOMAS MCINTYRE, in sponsoring legislation to terminate the mandatory oil import quota system on June 30, 1973. I urge prompt action on this measure and hope that the House of Representatives will also take swift action on a companion bill introduced in that body.
The end of the oil import program will not be a sudden panacea for oil problems of the country or of my region. We must continue to explore means of increasing domestic production, improving and maintaining healthy price competition, developing alternative energy sources, and adopting a comprehensive national energy policy for the years ahead. But the starting point for all of these efforts must be to eliminate an ill-advised and poorly administered program of import controls which has only served to make our problems worse.