August 9, 1978
Page 25090
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. WEICKER. I yield for a question.
Mr. MUSKIE. I want to make a point for the record, and I will do it in the form of a question.
Is the Senator aware that the first refinery proposed in New England, at Machiasport, Maine, was killed not by the environmentalists but by the oil industry, which influenced the Johnson administration to deny the issuance of an import quota to fuel that inventory, and was denied a free port license, which, by the explicit language of the statute, assured a trade-free zone to any port in the United States that applied for one?
Those two decisions, which were made down here, killed the Machiasport refinery, not environmentalists. It was supported by me. It was supported by the then Governor of Maine. It was supported by every Senator from Maine in that generation, as I recall it. It was our attempt to contribute to the refinery capacity of this country and to do it by fueling it with the only oil available to us, which was from the Middle East, because the domestic oil industry was not interested in building a refinery in New England.
I come from the most energy poor State in an energy poor region. The State of Maine imports more than 90 percent of the energy it consumes. And the great bulk of the energy we import comes from sources outside the United States.
As the difficult work toward a national energy policy has proceeded in the Congress, I have been guided by two responsibilities. The first and most important has been the adoption of policies which balance out the cost of energy among areas which import oil and oil products and areas which produce it. The second has been the development of a national energy policy which treats all regions equally, because a policy which promotes regional competition is a policy doomed to fail.
Congress, reacting to the Arab oil embargo and the threat it posed to our economic future, agreed with those of us from New England and other energy importing regions that a policy which promotes economic benefit to some areas at the expense of others will in the end damage the American economy. We adopted a system of entitlements designed to roughly equalize the cost of all crude oil by spreading the cost of imported oil among all areas. We recognized that in our complex and inter-locked economy a recession for some areas would in the end result in suffering for all. But the policy we adopted was incomplete on at least one major point. We did not spread the majority of costs of refined residual oil out across the country. I will not review the circumstances which led to that decision, but the decision was made.
Now, as we review a long-range energy policy which promotes the use of coal and alternatives to oil for fuel, the Energy Department has undertaken a review of our policy toward residual oil, and agreed that our region needs relief.
Yesterday and today, a group of Senators including myself and my distinguished colleague from Louisiana, Senator JOHNSTON, met to discuss that proposal.
I want to commend my colleague for his diligent efforts at helping shape a compromise which I believe will ease the cost of residual oil in the Northeast.
Federal energy policy after the Arab oil embargo helped my region avoid economic catastrophe. But I am convinced that it did not insulate my region from serious economic difficulty. The policy we agree to today recognizes this fact. And it recognizes that the Northeast must play an active part in our national drive toward energy independence.
Briefly, the agreement is this: That the value of entitlements for residual oil be increased to 50 percent of the difference in cost between foreign oil and domestically refined oil. Further, we have asked President Carter to waive the 63 cent per barrel import fee on residual oil. The net result will be a substantial easing of prices in the Northeast.
We have also agreed that energy independence means the abandonment of policies which discourage American producers from competing in portions of the American marketplace. Therefore, the so-called reverse entitlements program would also be eliminated. The effect of this would be to remove the barriers blocking east coast producers from competing in oil markets in the northeast.
Finally, we recommend a national refinery development policy which has several broad goals. First, we believe that Government policy should encourage new refinery and fuel desulfurization
capacity. Second, where possible, our demand for oil should be met by domestic refineries. Third, when new refineries are built to serve the U.S. market, they should be built in the United States. Fourth, the policy should recognize the difficulties independent refiners now face. Finally, and importantly, State and local policies for refinery siting should be developed consistent with environmental standards.
Mr. President, the development of siting, construction and operation guidelines consistent with environmental responsibility is not an easy task. But I am convinced it can be done, and that careful site selection and development can lead to domestic refineries whose benefits exceed their costs.
I think my region is willing to commit a portion of its resources to the national energy policy from which it also receives substantial benefit.
So when the Senator says that we are not supposed to defend ourselves in this region which has no indigenous energy sources, that we are not supposed to defend ourselves in the face of that kind of zig-zagging influence by this oil industry, I do not agree with it.
I have been fighting this fight when the oil industry was against refineries in New England, again when the oil industries were for refineries in New England, when the oil industry in this country was for imported oil, when it was against imported oil. I have been told over and over that what they really want is a free market, and I know that is not so.
What the Senator from Connecticut is arguing for is an application of free market principles. I have not seen it, not in 20 years, in this field.
Mr. WEICKER. Mr. President, I appreciate and accept the summation of the facts relative to Machiasport as stated by the distinguished Senator from Maine. On the other hand, that issue was resolved in the sixties, I believe. Here it is in the late 1970's.
Mr. MUSKIE. It was still an issue—
Mr. WEICKER. I do not yield.
Mr. MUSKIE. The Senator asked a question.
Mr. WEICKER. I accepted the statement of facts.
However, the bottom line is that there is no refining industry in New England today. Just now, just of late, have we decided that this is something we should get moving on. But the fact remains that today we have a program of controls — why should I have to defend a free market? It seems to me that those who have advocated controls have to defend a system of controls, in light of what the price of energy is in this country today.
I am talking about fossil fuels. Those who have advocated controls have to defend that program in light of the unstable supplies available to this country. But that has not occurred. All of a sudden those who want a change in the game plan, one which would take us to a free market, are the ones expected to stand up. If any track record had been established in any other way as has been established by the system of controls and entitlements, it would have been wiped off the boards a long time ago. But there is just a basic political dishonesty going on around here that makes people believe that in whatever section of the country, we can have cheap energy in the environment we live in today. We are Senators living in the year 1978. The world has changed entirely and we are unwilling to change with it.
I want to know how many men are going to go out on the campaign trail this year and advocate rationing and mandatory conservation, so no longer only elderly Americans, black Americans, poor Americans have to go ahead and ration or be rationed by price? How many are going to go out there and advocate some mandatory change in lifestyle?
Certainly, up to this point we have had a program of volunteerism, and again, as in the system of controls, how do you go ahead and justify the success of a program that has raised by 1,000 percent the consumption of oil? How do you justify that with a program of volunteerism? You cannot.
How do you justify the price of oil or an imbalance of payments in light of the control program?
No. I feel clearly the shoe should be on the other foot. But what I am warning all of you is this, and this is the point I am trying to make here today: Every step along the line requires one more bend of the pretzel and what you saw here today was a compromise negotiated between the Senator from Louisiana and some of my New England colleagues, and the reason why they put another bend in the pretzel was because it emanated from another pretzel-bending exercise, simply that of controls, and it goes on, and goes on.
Mr. LONG. Mr. President, will the Senator yield?