February 7, 1974
Page 2725
Mr. MUSKIE. Mr. President, I yield to the distinguished Senator from West Virginia.
The PRESIDING OFFICER. The Senator from West Virginia.
SENATOR RANDOLPH URGES PROMPT ACTION ON ENERGY EMERGENCY CONFERENCE REPORT
Mr. RANDOLPH. Mr. President, I would like, before speaking very briefly, to know which Senators signed the conference report.
The PRESIDING OFFICER. The clerk will please state the names of the Senators who signed the conference report.
The legislative clerk read the following names of Senators who signed the conference report:
Senators JACKSON, BIBLE, METCALF, RANDOLPH, MUSKIE, BAKER, HOLLINGS, STEVENSON, and STEVENS.
Mr. HANSEN. Mr. President–
Mr. MUSKIE. Mr. President, I have the floor.
The PRESIDING OFFICER. The Senator from Maine has the floor.
Mr. MUSKIE. I have yielded to the distinguished Senator from West Virginia.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. RANDOLPH. I had hoped, Mr. President, that the Senate of the United States could be, as I see it, responsible to the people of this country. They have every right to expect that a conference report of this kind, in which there has been an earnest attempt to cope with the energy emergency, would be acted on before any recess of this body takes place, whether we are to leave at the close of business tomorrow, or some other date to be determined by the Senate.
I would feel that throughout America men and women by the millions who are being adversely affected by the continuing crisis in energy – which I believe will be abated by the Energy Emergency Act – and I repeat this for the third time – have a right to expect that we act and that we act now.
I am not critical of the viewpoint of any Member of this body. But what excuse, what plausible reason can be given to the citizens of this Republic when the Senate and/or the House, both bodies, fail to come to grips with this matter and suggest that some 10 days or 2 weeks later we will come back to it, we will talk about it, and then we may do something?
Mr. ROBERT C. BYRD. Mr. President, may we have order in the Senate while the Senator is addressing the Senate? May we clear the well? Will the Chair require attaches and the aides to take seats and Senators who are not addressing the Senate, to take their seats?
The PRESIDING OFFICER. Senators and aides will take their seats.
Mr. RANDOLPH. Mr. President, I thank the able majority whip.
There were 3 days of consideration of this report by the conferees. Hour after hour the conferees addressed themselves to the problems that we as a Congress should be attending to now, not later. I say, in good humor and good purpose, it is not only difficult for me to understand, but frankly, I do not understand why we cannot proceed to the business at hand. I have every confidence in the Senator from Washington. I have every confidence in the Senator from Arizona, the chairman, and the ranking minority member of the Interior and Insular Affairs Committee. I have every confidence in my colleagues who were conferees, those who signed the conference report, that we can adequately explain the actions that have been taken. Then, Mr. President, we would either vote the conference up or vote the conference report down.
It seems to me that we fail, in considerable degree, to serve the people of this country if we delay the action which can be taken in this body. It is not for us to speak for the other body, but in the Senate, this matter can be considered with adequate debate, lasting, if necessary, late into the evening tonight, beginning early tomorrow and running perhaps late into tomorrow, in order to dispose of the conference report.
Mr. President, I close by saying that I do not attribute to any Member of this body a desire to fail, in his opinion, to give the consideration to this matter which he believes it should have.
However, those who would delay consideration of this matter were conferees on the part of the Senate. They were there hour after hour. They heard the discussions and participated, often helpfully, in the consolidation of our thoughts. Changes were even made. Those matters were thoroughly discussed and evaluated. However, after all of that work has been done, they say, "We are leaving Washington. We are going back to our States or wherever we have made arrangements to travel. For this period of time we will continue to have uncertainty compounded." That is not proper. However, that is what will happen.
Mr. President, I must emphasize that in what I have just said, I am in no way assuming the role of a carping critic. I am only saying that at this time I wanted to speak these words slowly and
earnestly, believing that in so doing I expressed not only my conviction, but also, I think, the opinion of those who, if they could speak to us in voices that could be heard, would say that we should be going about our business and continuing to discuss the conference report today and tomorrow, and for as many hours as necessary.
Why could we not meet until 9 o'clock tonight? Why could we not come in early tomorrow and meet until late tomorrow evening if necessary?
I hope that the calm words which I have spoken will help to resolve this matter. They are not spoken in any way to lecture someone, because certainly that is not my purpose. However, I do believe, I repeat, that we have an obligation and we will fail in that obligation to ourselves as a body and to the country as a whole if we do not act, either affirmatively or negatively, on the conference report by a roll call vote of the Members of this body after adequate debate.
I thank the Senator from Maine for giving me this opportunity to speak. I might say that in the 15 years that I have been a Member of the Senate, I doubt that I have ever even approached the position of offering criticism of the membership of this body or of any Member of this body. And that has not been my intention as I have talked this morning.
Mr. MUSKIE. Mr. President, I thank my good friend, the chairman of the Public Works Committee, the Senator from West Virginia (Mr. RANDOLPH), for his highly appropriate remarks and for his mention of my own concept of what we need to do.
What I have said this morning is said more in sadness than in anger. However, I want to call to the attention of the Senator from Arizona a few additional points with respect to these problems.
I have a great deal of respect for the Senator from Wyoming and for the Senator from Arizona. I have a great deal of respect for Mr. Simon. As a matter of fact, I have taken what has been said to me in the course of the last few minutes in all good faith. I think that Mr. Simon is doing a very difficult job. He is doing his best to get the facts, and he is doing his best to convey the facts to the American people.
Mr. President, separately today, I am going to have printed in the RECORD a speech Mr. Simon made last Tuesday to the National Press Club. The thrust of his remarks was an expression of his determination to get the facts to the press and to the public, because, as he sees it, one of his greatest challenges is the lack of credibility in all our institutions. I read this language which suggests his sense of urgency:
Within 24 hours of our receiving your requests for information, we will issue an acknowledgment or grant the requests. Within 10 working days, I personally guarantee that you will get the information you seek or have the opportunity of appealing, and appeals will be ruled upon in no more than 10 days.
That is the kind of action that Mr. Simon is proposing to get the information to the American people and to mobilize our Nation's energies to deal with this problem.
So, I am for Mr. Simon. I have been for him, and I think that this matter requires a sense of urgency.
May I say to my good friend that there are items in this conference report dealing with energy with respect to automobile emissions that do not need to be dealt with on an emergency basis. In our Senate Committee on Public Works, we have already planned and scheduled hearings to deal with some of these issues this year, either in the late spring, early summer, or fall. Testimony will be scheduled. Then we will act.
To the unhappiness of many people, we dealt with some of these issues in the conference, notwithstanding the fact that they were not dealt with on the Senate floor.
When a Senator says to me that there are matters in this report that deserve deliberate consideration and discussion, I tell him that I agree. However, with respect to my particular responsibility, we resolved those issues quickly and expeditiously because Mr. Simon told us – and I believed him – that there was a crisis and a sense of urgency.
There is great doubt around the country that there is a crisis. There is a widespread feeling that the shortage is contrived. Mr. Simon does not believe that. He tells us with all earnestness and all the urgency that he can command that there is a real crisis and that we must deal with it quickly.
It was for that reason that we acted quickly in the conference on the matters under my jurisdiction. It is for that reason that we must act expeditiously now.
May I say to the Senator from Arizona and to the Senator from Wyoming that I intended to present the environmental portions of the conference report today.
I will not do so today because it seems to me that the whole report is in doubt. At this point, it is left hanging.
I will be available to answer questions about the matter. I will not absent myself. If there are Senators on the floor who want to discuss those portions of the conference report, I will be available. However, I will not present them with a recommendation for adoption today, because if the distinguished Senator from Arizona feels he is entitled to more time to consider these issues, if he feels that other Senators are entitled to more time in which to discuss these issues, then I say to the Senator with all due respect that I am entitled to more time in which to discuss these matters. It cannot be a one-way street.
We have had ample time in the conference to discuss these issues. The Senator's case has been made appropriately and well. He raised questions, questions that I think create doubt on all sides. But the question today is whether this is such an urgent matter for action and whether we should collapse our time frames to get to a disposition of the matter.
If the Senator urges, and is in a position to implement his feeling, that we need more time, I say to the Senator I am going to take more time.
Mr. FANNIN. Mr. President, I would like to clarify a situation in which I may have been misunderstood.
I supported the Mansfield unanimous consent request, and it may have been misconstrued, when I was objecting as to what the Senator from Rhode Island (Mr. PASTORE) was discussing, that I was objecting to senator MANSFIELD's unanimous-consent request. I want the record to be clear that I support the unanimous-consent proposal of the distinguished majority leader, and appreciate very much that he made that unanimous-consent request, which was not accepted.
Mr. President, we have before us very important legislation regarding what can be done to assist in solving the energy problem, but unfortunately I do not feel that we have taken the action that is necessary to accomplish that objective that is, to obtain additional supplies of petroleum products domestically, and to provide the incentives that will accomplish that particular need.
We have a real sense of urgency, as has been expressed. I agree, but urgency must never replace thorough deliberation on legislation that will touch each and every one of us in this country.
Let us use the necessary time to explain this report, and make sure this is legislation that will cure our problems and not aggravate them.
We feel that more than 90 Senators have not had a sufficient opportunity to digest the legislation – or approximately 90; there were 11 members of the conference committee, though not all the members of the conference committee were in attendance. We did spend considerable time on the discussions, but we also tried to give thorough consideration to the witnesses who came before us on this particular measure.
On February 2, a Saturday, hearings were held on this energy bill, at a time when we had witnesses from various schools, witnesses from industry, and economists of great renown. We had Dr. John H. Lichtblau, executive director of the Petroleum Industry Research Foundation of New York; we had Dr. Thomas Stauffer, research associate, Center for Middle Eastern Studies of Harvard University; we had Mr. Warren Davis, chief economist, Gulf Oil Corp., here in Washington; and we had Mr. John Emerson, energy economist of the Chase Manhattan Bank of New York.
I would like to refer to the testimony of Dr. Thomas Stauffer, research associate of the Center for Middle Eastern Studies at Harvard University. He gave us, I think, some very beneficial information, and I would like to read what he had to say, because I think that everyone should know his position in this regard as a student of the subject.
He said:
I would oppose a price roll back at the present time, in the absence of much more careful consideration and better information, because a price roll back could have a number of important and serious repercussions on our national economy, and possibly on national security.
(1) It would perpetuate our dependence upon foreign sources of unreliable oil imports.
(2) It could mortgage our future supplies of energy in order to offer a very short-run dividend in the form of slightly lower prices. This might be good politics, but it is bad economics.
I want to bring out that many of the things done under this legislation, perhaps, are good politics but bad economics. Perhaps they will prove to be very detrimental.
Dr. Stauffer continued:
(3) The hidden costs of energy shortages can be a much greater burden than the visible costs of higher oil prices. It is better to pay more but to have energy, than to pay less and thus to get less energy – and cause still more jobs to be lost.
(4) There is a disastrous precedent for unwise price regulation of energy resources. We must remember what FPC price regulation did to the natural gas industry. Those price controls were implemented in the name of consumerism. And those policies of Commissioners Swidler and White promoted the waste of energy and created today's shortages.
(5) Finally, last October we embarked on a policy in the Middle East which created today's energy crunch and cost American jobs. In the face of today's shortages, it seems unwise if not folly itself, to make another political decision which would reduce the incentives for the production of domestic energy. Having cut ourselves off from oil from Middle Eastern producing countries, if not careful we might find that price rollbacks and revisions of the oil tax laws might dry up our otherwise promising domestic sources.
Price rollbacks and oil tax revisions as called for by Chairman Jackson are definitely not the direct route to achieving energy self-sufficiency. On the contrary such actions can impede the attainment of self-sufficiency.
Such measures do not contribute to any solution of our country's energy problem. Indeed, the proposed price rollbacks and possible revisions in the tax laws seem better designed to perpetuate and worsen the energy crisis. Specifically, these measures would reduce our production of domestic oil and increase the already dangerous import gap. Senator Jackson's proposals could ultimately render us still more dependent upon foreign oil imported from the Middle East. Far from fostering energy self-sufficiency for the U.S., these measures would render us still more vulnerable to more serious oil embargoes in the future.
The United States has already lost some 20 % of its oil supply as a consequence of our political policy in the Middle East, and now millions of Americans must bear increasing inconvenience, while hundreds of thousands have already sacrificed their jobs. Any act which could impair the remaining domestic supply is at best perverse, if not an act of absolute folly. At this point we need all the oil which we can produce. Higher prices are certainly unpleasant – no one wants to pay more – but higher prices alone are the most direct route towards emancipating ourselves from the political dangers of greater oil imports. Given our commitment to Israel, the best alternative to imported oil is a strengthened domestic oil industry, not one weakened by price cuts.
Such measures appear to be expressly designed to perpetuate and exacerbate the present energy crises. If price rollbacks are implemented, the consumer in the short run obviously pays less for gasoline or heating oil, but over the longer period the consumer would also get less. We must ask which poses the greater burden for the consumer – some market-related price for a commodity or the ramified costs of shortages such as we begin to see now? Which is more serious – paying market-related prices for an indispensable resource or the still greater costs resulting from not having enough?
Given that we are confronted with acute shortages in key areas, it seems imprudent, if not irresponsible, to reduce the incentives for energy production until the ramifications and implications of these steps are fully understood. Otherwise, we shall resemble the farmer who decides to get more in the short-run by eating all of his seed corn. His belly was certainly more full for a few months, but the price for such a short-lived bounty can be long years of unpleasant
deprivation.
A central issue here is the relationship between the prices of oil and gas and the additional production which can be obtained from increased prices. It is clear that our potential reserves of oil and gas are very large. In particular, these are large enough that exploitation of such conventional reserves can greatly facilitate our switch to coal or nuclear sources over the longer-run.
It is exceedingly difficult to estimate the supply elasticity for oil or gas, i.e. how much more one can discover and produce at higher prices, or, conversely, how much less one might have if real prices were to decline. Conventional econometric calculations are so unreliable that I for one do not believe them even when I might agree with the result.
However, a simple-minded set of engineering-type calculations leads to the suggestion that there should be about a fifty-percent increase in potential production for every doubling of the price. Thus, very approximately, a twenty-five per cent reduction in price equates to a loss of about 12.5 % of potential production, or about 1.5 million barrels per day. This is roughly equivalent to one half of the present level of shortfall induced by the oil embargo. Therefore, we are talking about effects which are serious.
This very rough computation allowed only for the ability to drill deeper wells in response to higher wellhead prices. Everything else remaining equal, an average price increase of 50 % would permit the depth of the average well to increase from around 5600 feet to circa perhaps 6800. In a special sense this means that 20 percent more sands may be tapped.
More generally, however, two additional effects contribute to a still greater increase in production as a consequence of a price increase. First, it is economically justified to explore for smaller or less certain deposits in older, less more shallow zones. Second, secondary or tertiary recovery projects may be implemented more thoroughly, increasing output both from new finds and also from older reservoirs. Finally, one can operate in deeper water offshore, increasing the scope for new discoveries, or one can develop lower-quality, higher-cost fields when found.
All of these factors contribute significantly to a higher yield of new energy supplies when price incentives are raised. But, conversely, such opportunities can be lost if prices are cut or tax incentives reduced. Especially at this time, when we have lost some 20 % of our oil supply as a consequence of our Middle Eastern policy, we should be cautious indeed before we jeopardize any fraction of our remaining domestic supplies of energy. These price rollbacks and tax modifications deserve the most careful scrutiny, lest we sacrifice future crops while savoring enjoying the seed corn.
Complex issues with complex ramifications cannot be resolved overnight nor even in 48 hours. The issues raised in this hearing deserve review, but once again, in conclusion, I urge the utmost caution and discretion.
TESTIMONY OF WARREN B. DAVIS, BEFORE THE SENATE INTERNATIONAL COMMITTEE, CONCERNING S. 2885, FEBRUARY 2, 1974
My name is Warren B. Davis. I am Director of Energy Economics for the Gulf Oil Corporation and reside in Pittsburgh, Pa. I was Chairman of the Coordinating Subcommittee of the National Petroleum Council's U.S. Energy Outlook Study.
I would like to discuss some of the aspects of S. 2885.
I believe the goal of 85-90 percent self-sufficiency in crude oil by 1980 will be an extremely difficult one to obtain. It will require an all-out effort to explore for and develop domestic oil supplies. In the context of the National Petroleum Council's Study on the U.S. Energy Outlook, only Cases I and II approach this goal. These cases both assume a finding rate about 50 percent above the past trend. Thus, it would be dangerous to count on them in laying plans. A more realistic possibility might be the Case I drilling rate which envisions an increase of six percent per year in drilling, combined with a discovery rate in line with past trends. This produces results similar to Case II which results in 80 percent of the U.S. energy requirements being supplied by domestic fuels in 1980.
Then if we are to be 85-90 percent self-sufficient by 1980, we will need to develop synthetic fuels at an even greater rate then the projections in any of the cases in the National Petroleum Council study. Thus, it will require an all-out effort, not only on domestic crude oil, but also on synthetic fuels.
I cannot forecast for you exactly what oil price is needed to encourage an all-out effort, and I doubt if anyone else can either. There is a great deal more involved than just the price of oil in encouraging all-out efforts in the development of fuels in this country. Rather than list other factors here, I would simply refer you to the National Petroleum Council study.
I think it worthwhile to try to compare the present situation with one that occurred in the past.
After World War II, war-time price controls were removed and the average price of crude oil increased from $1.22 per barrel in 1945 to $2.60 per barrel in 1948. Between 1946 and 1957, drilling increased from 28,000 wells to over 50,000 wells, and as a result U.S. crude oil reserves increased by about 50 percent. I cannot say for certain that the same would happen today, but it looks as if we face a similar situation. It is interesting that during this 1946-1957 period, the oil industry did not have extremely large profits for more than a very short period of time, because the high prices induced people to spend more money looking for and developing oil.
If the U.S. is to achieve a high degree of self-sufficiency, then we need prices that will induce very large investments in synthetic fuels. Referring again to the National Petroleum council study, the committee estimated synthetic oil from shale and coal to have costs, including a return on investment, in the range of $5.00-$8.00 per barrel. However, these estimates did not include land costs and there is great uncertainty about the magnitude of the environmental costs. Both of these factors tend to make the upper end of this range look more likely at the present time than the lower end. The most significant fact, however, is the basic uncertainty as to what oil price will encourage a forced-draft development of our synthetic fuel resources in this country. The results of the recent shale oil lease sale make it appear that the present new oil prices are sufficient to encourage the development of synthetics. It is questionable whether a substantially lower price would, and it is reasonably certain that putting an arbitrary ceiling price on the new oil price will be a discouraging factor.
A factor that is most discouraging to the idea of arbitrarily lowering the new oil price is the inability of anyone to accurately determine what will be the effect of an arbitrary reduction in price. At the present time, the new oil price in the U.S. is free of control and presumably is either seeking or has already found its natural level. I believe the course of action most likely to maximize the development of our domestic fuel resources is to continue to leave this price free of control. At least two factors are working to prevent free prices from resulting in "windfall profits" to producers: (1) When oil producers get more revenue, they traditionally use it to explore more territory and drill more wells. This normally has gone on until their profitability level is back somewhere near the level before the price increase, and instead of resulting in a lot more profit, it results in more production. (2) The only really good long-term solution to high oil prices is a substantial increase in supply. If the supply is great enough, the prices will go down, and the sooner we get to that point the better.
The dual price structure maintained by the Cost of Living Council has been livable, but it creates economic anomalies to have a single lease producing identical oil with two different prices. I endorse the statement made by the Cost of Living Council in the introductory material to its Phase IV Regulations, published August 17, 1973 in which they say, "The Council will continually monitor the ceiling prices of domestic crude petroleum and intends to make periodic upward adjustments in the ceiling price toward the higher world prices for crude petroleum."
In closing I would like to comment on Senator Jackson's remarks in the Congressional Record of January 24, 1974. On pages 727-728, the Senator interpreted the National Petroleum Council report as saying that the U.S. would achieve the greatest feasible level of domestic self- sufficiency with a crude oil price of $4.35 per barrel in 1975. I would like to call your attention to a statement on Page 39 of the Summary Report of the National Petroleum council's study which says, "These required 'prices' and production rates provide useful information about supply and price. However, they should not be construed as measures of supply-price elasticity." I would also like to point out that National Petroleum Council study was directed at the long-range outlook, particularly toward the period 1980-1985 and if any such interpretations are to be made, they should be directed to that period. I believe Mr. Vincent M. Brown, Executive Director of the National Petroleum Council, has commented on this matter and I endorse his comments.
If I seem to be uncertain about these matters, it is simply because there are many uncertainties. I don't know how many of them could be resolved with thorough study, but I strongly recommend that any action such as S. 2885 be delayed until some thorough studies can be made.
Mr. ROBERT C. BYRD. Mr. President, will the Senator yield?
Mr. FANNlN. I yield.
Mr. ROBERT C. BYRD. Mr. President, I ask unanimous consent, having discussed this request with the distinguished Senator from Arizona (Mr. FANNIN), that he be permitted to yield at this time to the distinguished Senator from Maine (Mr. MUSKIE), that Mr. MUSKIE be permitted to speak out of order for not to exceed 30 minutes, notwithstanding the Pastore rule of germaneness, that the distinguished Senator from Arizona not lose his right to the floor, and further that the statement of the distinguished Senator from Arizona not show an interruption in the RECORD.
The PRESIDING OFFICER. Is there objection? Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, first of all I thank my distinguished friend from Arizona for yielding for this purpose. This is the same general subject area which I seek to address, but it is not relevant to the conference report.
Mr. President, the foreign ministers of the world's major oil consuming nations are to meet in Washington next Monday at the invitation of our Government. Their agenda calls for action on world energy problems. Their meeting is of great importance.
Either it will prove a short-lived, frustrating exercise in crisis diplomacy, or it will make a belated start on the creation of a common policy toward the common problems of resource scarcity. The early indications are not encouraging.
In the month since the President issued invitations to the conference, evidence has mounted of sharp divergence between the aims of the United States and those of our Canadian, European, and Japanese allies. Officials here informed the Canadian Energy Minister last week that our main objective is to weld a common front against high oil prices – even to roll them back.
The Common Market countries, in defining their position Tuesday, specifically rejected any thought of confrontation between the oil consumer and producer nations. Instead, they prefer to expand the international dialog on energy to include both the countries which dominate the supply of crude oil and the developing nations which need fuel they can afford as badly as the industrialized world.
These aims need not be mutually contradictory. But the advance consultation necessary to reconcile them has not taken place. And, lacking such essential, ongoing contacts, historic partners have allowed lack of leadership and the contagion of self-interest to drive them into attitudes of rivalry and suspicion.
In the short months since Middle Eastern oil suppliers initiated the twin tactics of restricting production and inflating price, each consumer country has gone its own competitive way.
European and Japanese negotiators, for example, have reportedly already concluded $6 billion worth of bilateral agreements with the oil producing nations, bartering arms, technology and promises of industrial development assistance for guarantees of petroleum.
This competition – including another $5 billion in separate, similar negotiations said to be underway – strengthens the producers' bargaining position as surely as it weakens the political and economic cohesion of the industrial democracies. The Washington conference must make its first goal the essential one of curtailing such beggar-thy-neighbor policies.
But there can be little hope of the foreign ministers' agreeing to even a policy of mutual restraint unless America's own practices are coordinated with our rhetoric about international cooperation.
As host to the conference – and as the most powerful and temporarily best-placed of the consumer nations – we have a special responsibility to set an example others can trust and follow.
Until now, however, we have acted preoccupied and uncertain, substituting contradictory expedients for coherent policy. In the style of our diplomacy and the substance of our action, we have undercut our sincere calls for concerted action with postures that serve narrow, nationalistic goals.
While all of us admire the negotiating expertise of Secretary Kissinger, we know that he would agree that his heavy schedule of travel tends to interfere with the patient discussions allies must have to prevent minor misunderstandings from becoming major obstacles to coordination. Such talks are hard to hold in airport waiting rooms, as they recently were with the British Foreign Minister. And the French compliment to Dr. Kissinger's gift for "happy improvisation" is only a barbed reminder that "muddling through" one emergency only defers conflicts; it does not defuse them.
But even if we had talked less about consultation and practiced it more, our own initiatives for dealing with energy problems would have raised grave doubts among our partners. No matter what we preach abroad, Project Independence defines our policy at home primarily in terms of pursuing energy self-sufficiency, rather than emphasizing the broader goal of international cooperation. And the recently reported, secret Justice Department waiver of antitrust action against joint bargaining activity by our major oil companies can only suggest that we are unleashing our private buyers to compete for fuel in the marketplace against the governments of our allies.
If we mean to go it alone – the message France has already read from the present shape of Project Independence – we cannot realistically expect others to honor our calls for concerted action. Yet the President's energy message of January 23 made no mention of any hopes for an international approach to the problems the whole world faces. It emphasized only the important – but inward- looking – goals of developing alternative energy sources within the United States, of conserving essential fuel for ourselves, of expanding our research and development efforts so that by 1980, in the President's words:
We are no longer dependent to any significant extent upon potentially insecure foreign supplies of energy.
By contrast, the agenda proposed by Secretary Kissinger for the foreign ministers' conference envisages discussions on joint action by the oil-consuming nations on all the goals we set for ourselves in Project Independence, on international monetary and economic policy to deal with the consequences of the exorbitant oil prices and on plans for sharing and allocating fuel during emergencies.
That last item is especially puzzling.
Are we thinking of pooling our domestic energy supplies – now inadequate for our own needs – with those of other nations even more dependent than we on imported fuel? If such sacrifices are under consideration, the American people should be told of them. They have not been. Project Independence points in a much different direction, and the emphasis we have given it must surely make our allies question our willingness to consider even emergency fuel sharing proposals.
In fact, Project Independence need not contradict our efforts to secure international cooperation. At one level, it does add to the weight we carry in negotiations with the oil-producing states. At another – if we succeed in reducing U.S. demand for imported fuel – it frees resources we might have required for the use of others.
But unless it is refashioned to reflect the realities of our interdependent world, this policy will discourage concerted action. Our goal is not just one of freeing ourselves from reliance on "potentially insecure foreign supplies." Our aim is to insure a stable worldwide flow of energy supplies and, beyond that, of the supplies of all the raw materials the entire planet needs.
It is true that America is potentially in a better position to supply its own energy requirements than any other Western industrial nation. But we must already rely on others for more than 80 percent of the chromium, manganese, bauxite, tin, and nickel our power converts to manufactured products. And it is estimated that by the end of the century we will be importing more than half the tungsten, zinc, copper, iron, lead, and sulfur we will need.
All the self-generated energy in the world will be wasted if we lack the raw materials to convert to finished goods. And if we are unable now to limit the power of one monopoly cartel – the oil producers – to hold the industrial world to political and economic ransom, our failure can only invite the suppliers of other essential resources to adopt similar tactics in the near future.
Supply, of course, is simply one edge of the sword. Price is the other. And in that field, the interests of the buyers and the sellers converge. As Dr. Kissinger wisely said of the producers:
It cannot be in their interest to bring about a worldwide depression.
First, perhaps, the inflated prices will shake the economic structures of the most advanced countries, those whose prosperity, until now, has been built on the availability of cheap fuel and whose oil bills are likely to rise by $50 billion in 1974.
Second, the economies of the developing nations are equally exposed to calamity. To keep their fuel bills from increasing by $10 billion this year, as projected, they will have to curtail oil imports and forego essential growth.
Finally, of course, the suppliers might come to discover that they have not so much priced themselves out of the market as priced the markets into such turbulence that they collapse. Oil that no one can buy is of no use to those who would sell it.
If the first requirement of the foreign ministers' conference is a common policy to avert such disaster by suppressing the competitive rush to strike short-term oil bargains in the Middle East, it is nevertheless clear that agreement on such policy must be based on a broader consensus among the consumers. Joint action to develop alternative energy sources will surely be part of any longrun effort, but if such commitments are seen primarily as an immediate bargaining counterweight against the suppliers, they are likely to encourage a confrontation mentality and a fierce push by the suppliers to get the most now for what they have.
So the foundation for a concerted policy must be the recognition by all involved that cooperative effort cannot be limited to industrial nations. It must be a global aim.
The proper focus for our efforts should be the broadest one: Conservation of all the world's energy resources, not just our own; and development of alternative energy supplies for all users, not just ourselves. Such a coordinated approach assures that we – and others – recognize that the immediate shortage of supply are simply the precursors of a new world condition.
The abundance from which we have so long profited is past. Global scarcity is the new reality to which we must adapt.
On a shrinking planet, self-sufficiency is a delusion. The remedy for problems that poison the hopes of rich and poor alike is to be found in multilateral solutions that give hope to rich and poor alike.
Next week's conference was first announced as a prelude to a further meeting with the oil producers. The American aim, apparently, was to build a solid, joint bargaining position from which to negotiate supply guarantees and price reductions.
By itself, however, that goal would seem to be unrealizable. In any event, it is too narrow. The Common Market position – avoidance of confrontation and promotion of the role of both the producing and developing countries "in reinforcing international cooperation" – appears to offer a more hopeful, although far more complex approach. The fact is that the interest of the industrialized world in harmonizing relations with oil suppliers runs parallel to the interest of all nations in building a healthy international economic order.
Such progress is only possible through the slow, painstaking adjustment of competing national interests in international negotiations. It will have to be founded in new liberal trade arrangements between the developing countries and those they tend to see as exploiters of their relative weakness. It will have to be cemented by monetary agreements that guarantee against sudden dislocations. It will have to be molded by the leadership of the advanced nations, prepared to concede that their own survival and prosperity depend inexorably on the survival and prosperity of their poorer neighbors.
To give that leadership should be America's greatest goal. Instead of Project Independence, Project Interdependence should be our first priority, for interdependence is the overriding and overwhelming reality of our era.
Judging by his statement Wednesday about America's "profound interest in world cooperative relationships," Secretary Kissinger appears to recognize this reality. Based on that recognition, I am hopeful that he will be able to reconcile America's desire for rapid, decisive action in the energy crisis with our allies' policy of giving both the oil-producing and the developing nations key roles in building a new international consensus. For the conference that opens here Monday can begin the hard, long search for a way out of the immediate crisis and toward new, equitable, reliable international relationships. If it accomplishes only that – a beginning – it will have been well worthwhile.
But such a beginning must also put an end to American practices that divide us from our closest partners. It must reestablish a diplomacy based less on ingenuity and improvisation in fighting fires and more on policies of mutual interest and restraint which will insulate us against fresh outbreaks of fire.
Looking back on the history of the democracies between the two world wars, Winston Churchill wrote of the "absolute need of a broad path of international action pursued by many states in common across the years, irrespective of the ebb and flow of national policies."
We have now what may be our best, if not our last, opportunity to find that "broad path" again. If America fails now to open the way to international action, we will tumble over ourselves into the dead end of international disorder.
Mr. President, I yield back the remainder of my time, and I suggest the absence of a quorum.