October 4, 1977
Page 32301
Mr. MUSKIE. Mr. President, I intend to vote against the Pearson-Bentsen proposal to decontrol natural gas prices, and I would like to explain my reasons why.
The argument in favor of decontrol is that gas producers need virtually unlimited additional financial incentives to explore for new sources of natural gas — and that they need such incentives now.
Frankly, I do not buy that proposal. Profit records for the major oil companies — which produce three-fourths of the Nation's natural gas — show a very healthy return on natural gas sales at present prices. In fact, a look at recent oil company profits shows a startling upward trend. For the period between 1972 and 1977, using current dollars, overall oil company profits have averaged an increase of over 100 percent. And some of the individual increases are astronomical —Standard Oil of Indiana, a 177 percent increase; Phillips Petroleum, a 240 percent increase. Of the top 21 producers, only two companies averaged less than a 50 percent increase over this period.
I am sure that the Nation's farmers — who produce an equally important commodity — would be delighted with this kind of profit record.
Now I cannot really blame the oil industry for wanting even higher profits.
But I certainly do not think that we should make national policy on the basis of that want — particularly when the policy being advocated is one that could throw our entire economy severely out of joint.
We are, after all, talking about something greater than the glowing health of one single industry.
Nevertheless, I do believe that whether one likes it or not, natural gas prices are going up. The question is when and by how much.
The question is: Are we going to adopt an orderly pricing policy which imposes limits on how high these increases can go, or are we going to simply adopt a hands off policy and the economic consequences be damned?
The industry would, of course, like total decontrol right now. Somehow they expect us to believe that an orderly scenario for gradually increasing prices up to a parity level with petroleum is not enough. They must have it all immediately.
The Pearson-Bentsen amendment would make the industry wait 2 years for decontrol — only slightly delaying their instant gratification.
Frankly, I find the greed of both options equally appalling.
But more importantly, such a pricing policy would mean economic chaos for the Nation. We can only guess as to the impact of decontrol on unemployment, on inflation, on the very shaky recovery we are slowly making from the worst recession in decades — a recession which, I might add, was brought on in large part by a precipitous increase in energy prices.
I find it hard to believe that the industry — and its supporters here in the Senate who are pushing the Pearson-Bentsen approach — can be so shortsighted that they do not remember what happened the last time somebody blew the lid off of fuel prices.
In fact, the Congressional Budget Office estimates that prices could go as high as $4 to $5 per thousand cubic feet if uncontrolled, leading to large windfall profits for producers. At the same time, CBO estimates that new supplies will bring less than 1 trillion cubic feet in additional production by 1985.
Mr. President, I believe in our private enterprise system. I believe that industry should receive ample return on the investments it makes. And I believe that the original Jackson compromise would do just that.
I do not believe that we should abandon all semblance of stability and order in the pricing policy we set. And I believe that decontrol — in any form — would do just that.
New England, and my State of Maine, have a direct stake in the outcome of this debate. Not because we stand to profit from higher prices. We have no indigenous supplies.
Nor is my principal concern that our consumers will have to pay higher costs if natural gas prices are decontrolled. Very few in my State are fortunate enough to have access to natural gas at any price.
We are concerned with this debate, because we know that any pricing policy which adversely affects the Nation's economy will wreak havoc with an already troubled New England economy.
Mr. President, I have already acknowledged that higher natural gas prices are inevitable — even desirable to a certain degree.
But I also think that there are other options we ought to consider which are more consistent with the needs of both the industry and the economy of the Nation as a whole.
Under the original Jackson compromise, for the example, natural gas prices would be permitted to rise substantially, to a level comparable to that for petroleum. The industry would receive plenty of financial incentives to explore for new natural gas. But we would have an orderly pricing policy, not a runaway pricing policy.
Mr. President, we do not know what will happen to the price of natural gas between now and 1985 if we move to decontrol. Some people think that price will stabilize at the petroleum price level. But they do not know that for sure.
I do not know that they are wrong. I do know that natural gas is the cleanest, most efficient, and generally most desirable fuel source which we have. And it seems entirely plausible to me that if uncontrolled, marketplace forces could drive the price of natural gas up to a level far higher than now anticipated.
In conclusion, Mr. President, it is clear to me that the interests of New England, and of the country as a whole, will be best served by the provisions of the original Jackson proposal.
Under that proposal, we will have higher natural gas prices.
Under that proposal, we will have an orderly process for letting those prices rise.
And under the proposal, we will eventually reach parity between natural gas and petroleum prices.
I believe that each of these results is in the best interests of the economy of New England.
I also believe that each of these results is in the best interest of the economy of the Nation as a whole.
And most importantly — I believe that each of these results is in the best interests of a stable, long range energy policy, one which will ease, not exacerbate, the economic shocks of the future. And that, after all, is what this debate is supposed to be all about.