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On March 18 and 19, 1971, the writer received the following information from Harry A. Lindberg, Chief of the Construction and Maintenance Division of the Office of Highway Operations in the Federal Highway Administration, Mr. Lindberg's office has been attempting to follow closely the situation with which this memo is concerned, and on February 5, 1971, worked with the Office of the Secretary of the Department of Transportation in composing a letter addressed to the Secretary of the Interior expressing such concern. A reply was received from the Department of the Interior on March 3, 1971, which referred to the supply and demand for asphalt, and left an impression that things were “not too rosy." According to Mr. Lindberg the letter indicated that in some ways 1971 will probably not be much different from 1970 as far as asphalt shortages in the country are concerned.

Mr. Lindberg said that if the difficulty is to be repeated this year, there will be trouble in the Northeast section of the country for the road building program. A report received August 13, 1970, from the New England area showed that 48 out of 52 projects had experienced some delay due to the contractors' inability to get a sufficient supply of asphalt. In Massachusetts contractors were working only three days a week due to the shortage.

Contractors who had submitted bids under normal conditions in the spring of 1970, have been caught by the higher asphalt prices which have come into being and are bidding higher prices now with the possibility of even greater price increases and shortages in asphalt.

The price of asphalt was around $20 per ton for about 15 years, but with the shortage that started in the summer of 1970, the cost has gone up from $5 to $7 a ton more, and may well continue. Nevertheless, this increase in price may be the incentive to our refineries to process the raw product and produce more asphalt.

Although Canada has been able to supply only 8,000 barrels a day, the contractors who have imported have been paying from $25 to $50 a ton, in spite of the fact that a contractor from the Boston area had declared at the conference that the trucking from Canada required about 24 hours, whereas his usual Boston supply took only four hours to accomplish.

In 1969, the total U.S. supply of asphalt was 410,000 barrels a day, which included 13,000 barrels imported. In 1970, the total supply was 437,000 barrels a day, including 17,000 barrels imported. Starting in 1970, the demand has not been supplied. There has been a steady demand in the last ten years, increasing at the rate of 3.9% each year. In 1970, the demand on the East Coast rose to 13.6%.

U.S. DEPARTMENT OF TRANSPORTATION,
FEDERAL HIGHWAY ADMINISTRATION,

July 27, 1971. Subject: Asphalt demand data.

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FHWA Notice dated May 13, 1971, on asphalt supply shortages, requested assistance in completing a questionnaire on asphalt demand and the effects of an apparent asphalt shortage. The information obtained from the response to that Notice has been tabulated and is attached for your information. The data represent all States, the District of Columbia, and Puerto Rico, and Federal highway projects work. The following summarizes the responses received.

It is evident that the demand for “paving” asphalt exceeded the available supply during some period in 1970 in certain parts of the United States. Except in some of the western States, this condition apparently resulted in an overall price increase in asphalt products as this was the effect most reported by the States. Thirty States reported recent price increases attributable to the shortage of asphalt. The median increase was about 50 cents per ton of paving mix with a preponderance of the reported increases in the 30-cent to 65-cent range. These increases affect over 31.262.000 tons of paving mix on more than 1,400 projects.

According to the reports no delays or shortages occurred prior to 1970, however, significant delays to on-going construction projects or deferments of proposed projects were experienced during 1970 by 15 States and Region 15. Most of these delays or deferments ranged from about 1 week to 6 months. Significant 1970 quantity shortages were reported by five States clustered in the northeast as well as five other States scattered throughout the eastern half of the United States.

Nearly paralleling the response on contract work was the response on 1970 maintenance programs. Twelve States reported delays, deferments, modifications, or postponements in these programs resulting from the unavailability of asphalt. Again, five of the affected States are clustered in the northeast United States.

Comments on other evidence or effects of an apparent asphalt shortage were received from States that had not reported delays or the other previously mentioned effects. The most common comments related to prices being higher during the past 3 years, followed by references to the necessity of using sources of supply not normally used.

The response from the States relative to a projection of estimated needs indicates that most States envision a modest increase in usage. No projections are shown in the attachment, however, since five States could not provide this information because of fiscal uncertainties and the data were therefore not complete.

The timely response given the aforementioned questionnaire is greatly appreciated. The submitted information has been furnished to the Office of Emergency Preparedness for their use in determining an appropriate course of action.

R. R. BARTELSMEYER,

Deputy Administrator. 1. The total paving asphalt used by the States in construction and maintenance during 1970, according to category was:

Tons Liquid asphalt--

2, 292, 914 Emulsion asphalt-

1, 151, 638 Asphalt cement.--.

7,930, 211 2. The relative usage as compared to need, as reported by the States which experienced shortages, is listed below :

[In tons/

State

Liquid asphalt

Emulsion

asphalt

Asphalt cement

14,000 21, 000

15, 000 21, 000

29, 000 35,000

4,800
6, 400

1,200
1,600

159, 785 213, 000

17,568 18, 228

5, 067 9, 467

28, 191
33, 191

1, 330
2,030

120, 600
131, 600

Maine:

Actual usage

Needed. Massachusetts:

Actual usage

Needed. New Hampshire:

Actual usage.

Needed. New Jersey:

Actual usage

Needed. Maryland:

Actual usage.

Needed... Florida:

Actual usage.

Needed. Illinois :

Actual usage.

Needed. Nebraska:

Actual usage

Needed. Virginia:

Actual usage

Needed
Tennessee:

Actual usage
Needed..

15, 873
16, 236

34,604
35, 348

47, 260 61, 815 185, 895 255, 895

259,000
369,000

24,000
30,000

703, 000
765, 000

37,850 40, 370

102, 610 106, 145

39,000 42,000

80,000
90,000

3. The following tabulation presents the shortages indicated in 2 above as a percent of each State planned usage :

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4. At least 265 on-going construction projects having a value in the order of $134,000,000 were delayed significantly and eight proposed projects having a value of $2,084,000 were deferred significantly as a result of nonavailability of asphalt in 1970. No similar reporting was received for the years prior to 1970. The delayed on-going projects and their dollar amount are tabulated below as reported :

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5. Over 39 on-going projects having a value of $31,570,000 and one proposed project were modified by specification or typical section change to avoid delay in 1970. No comparable cases were reported for prior years. The 1970 tabulation follows:

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i On-going. 2 Proposed. 3 Some. * Not given.

6. As with previous items, maintenance activities were curtailed by the shortage only in the year 1970. The following tabulation is a nationwide summary of the responses. Not all States provided absolute numbers and dollar value, therefore, those shown are minimum values.

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7. Nationwide the shortage of liquid asphalt, emulsion asphalt, and asphalt cement was 132,421 tons, 18,244 tons, and 229,352 tons respectively, of a needed 2.425,335 tons, 1,169,882 tons and 8,159,563 tons in the same respective categories. Expressing the State shortages as percentages of these total nationwide shortages results in the following:

[To the nearest percent]

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1 Negligible.

Note: The large shortage reported by the State of Illinois, as evidenced in the above tables, is related to some extent to an accelerated highway program.

Mr. D'Amico. Mr. Chairman, we have a paper written by Adm. I. C. Kidd, Jr., U.S. Navy, Chief of Naval Materiel. It bears upon the security problems involved with the importation of oil. Briefly, he indicates that perhaps a minimum of 100 new ships would be needed to safeguard the tankers coming across.

With the permission of the Chair, I offer it for the record.

Mr. HOWARD). Without objection, it will become a part of the appendix

(The item referred to may be found in the appendix on page 1067.)

Mr. HOWARD. Our next witness this morning is Mr. John N. Nassikas, Chairman of the Federal Power Commission.

Welcome to the subcommittee.

Will you please identify the gentlemen who are with you, and you may proceed as you wish.

STATEMENT OF HON. JOHN N. NASSIKAS, CHAIRMAN, FEDERAL POWER COMMISSION; ACCOMPANIED BY THOMAS JOYCE, CHIEF OF THE BUREAU OF NATURAL GAS, FEDERAL POWER COMMISSION; ROBERT B. BOYD, DEPUTY CHIEF, BUREAU OF POWER, FEDERAL POWER COMMISSION; EMMETT J. GAVIN, ASSISTANT TO THE CHAIRMAN; DREXEL D. JOURNEY, DEPUTY GENERAL COUNSEL, FEDERAL POWER COMMISSION; DANIEL GOLDSTEIN, ASSISTANT GENERAL COUNSEL, FEDERAL POWER COMMISSION; AND FRANKLIN GOULD, ATTORNEY, FEDERAL POWER COMMISSION

Mr. NASSIKAS. On my left is Mr. Thomas Joyce, who is the Chief of the Bureau of Natural Gas for the Federal Power Commission, and on my right is Mr. Drexel Journey, who is the Deputy General Counsel, primarily concentrating on electric matters.

Mr. Chairman, I have a prepared summary statement for delivery here this morning; and with your permission, I would like to present for the record a more lengthy statement with appendixes.

Mr. Howard. Without objection, your prepared statement will appear in the record at this point.

(Statement referred to follows:)

STATEMENT OF Hon. John N. NASSIKAS, CHAIRMAN, FEDERAL POWER

COMMISSION

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Mr. Chairman: The national energy situation—the subject of these hearingspresents a number of problems. As requested in your letter of July 25, 1972, I have directed this statement to those problems, categorized by energy from, principally natural gas and electric power. The Federal Power Commission has regulatory jurisdiction over these industries. It does not regulate coal, nuclear or oil. I discuss the latter energy forms, but only in relation to matters of jurisdictional concern to the Commission. Your letter asked that I direct my remarks to "electricity, oil, gas, coal and nuclear.” The Department of the Interior and the United States Atomic Energy Commission are most directly concerned with coal, nriclear energy and oil.

In responding to your detailed questions, I have set forth relevant factual information and outlined what I believe to be the associated major policy concerns or policy imperatives. Your letter states that you wish ** to restrict the scope of these hearings to an exploration of the problems only *** reserving any consideration of solutions for a later date." Accordingly, I have not proposed legislative solutions for the problems raised. I do, however, mention certain pending legislative measures where relevant to the problems discussed.

Jurisdiction. The Federal Power Commission is charged by the Congress with the economic regulations of the interstate aspects of the electric power and natural gas industries, i.e., the wholesale for resale of bulk transactions. This activity is conducted under the Natural Gas Act, 15 U.S.C. 717 et seq., and the Federal Power Act, 16 U.S.C. 791 (a) et seq. Additionally, the Federal Power Act provides for Commission regulation of the development of hydroelectric resources by non-Federal entities which are located upon streams over which the Congress has jurisdiction, upon public lands and reservations of the United States, and at Government dams, 16 U.S.C. 792-823. The Commission does not license hydroelectric plants which are constructed by the United States, nor does it have any certificate or licensing jurisdiction over other facilities of the

1 The extent of shortages: the geographic distribution of shortages : when shortages will occur (near-team 1972-1975, medium-term 1975-1985, long-term 1985-); the causes of the shortages; and the effects that will result from the shortages.

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