December 18, 1973
Page 42192
PETROLEUM PRICE CONTROLS
Mr. MUSKIE. Mr. President, I am pleased to cosponsor the Mondale amendment to the Federal Energy Administration Act. Basically, this amendment is designed to continue until June 30, 1975, price controls on petroleum and petroleum products by permitting the FEEA Administrator to issue standards and regulations governing future price increases of petroleum fuels in short supply. The Comptroller General will be required to monitor all price increases granted under this system and to report at least quarterly to Congress with his comments on the decisions.
Mr. President, this amendment makes eminently good sense from the standpoint of the American consumer, who feels increasingly victimized by the effects of rapidly escalating costs of heating oil and gasoline on his family and his way of life. At the same time, the amendment will not create undue hardship for oil companies, which will be permitted to pass through increased costs actually incurred in production to the consumer. Instead, it will eliminate the inequitable and unjustified possibility of huge windfall profits to big oil companies at a time when consumers are beginning to feel the real pinch – both economically and materially – of the energy crisis.
We hear much talk about letting the free play of market forces determine the price of heating oil, gasoline, and other energy sources in short supply. But the sad fact is that by allowing companies to raise prices, unchecked, in this time of scarce supply, we would be creating untold hardships for too many Americans who simply could not afford the burden of higher prices. At the same time we would be allowing the oil companies to reap windfall profits.
Consider the following facts:
According to Dr. Herbert Stein, Chairman of the President's Council on Economic Advisers, fuel prices may rise as much as 50 percent in the coming months. Such an increase alone would trigger a staggering 3-percent rise in the Nation's inflation rate next year.
Mr. President, such a price increase would do unaccountable harm to ordinary American families, already beset by galloping inflation and shrinking paychecks.
According to an independent estimate, the price increase predicted by Dr. Stein would take $30 billion more out of consumer pocketbooks. At least $25 billion of that amount would find its way directly to the major oil companies.
Given the potentially huge windfall profits of the big oil companies, without price controls, the Nation could be faced with a situation where oil company profits run as high as 300 percent next year. This on top of actual third quarter profits this year for Exxon and Gulf of 81 percent and 91 percent, respectively, is clearly an intolerable windfall, which the amendment before us would prevent.
There is another key provision of the Mondale amendment of particular importance to Maine and other New England States, which rely to a large extent on independent fuel dealers. This provision would allow greater price increases than a mere passthrough of costs when declining sales volumes justify such increases. In my opinion, this is a reasonable and flexible provision, which hopefully will help to ease some of the pressures that many independent dealers in my State have faced in recent weeks.
Mr. President, we have heard much talk from the President and his energy czar on what sacrifices the American people will have to make to meet the energy crisis. But we have yet to hear what sacrifices the oil companies intend to make and, in fact, we have yet to hear the President ask the oil companies this question. I cannot see how the President can expect the average American family to sacrifice and then stand by while others draw windfall profits from their suffering.
We know how to pull together in this country – and we will. But, it is only fair to ask that everyone bear his fair share of this burden, and it is up to those in charge of the energy program to guarantee its equity for all Americans.
I urge adoption of the Mondale amendment.