Letters Continued Gill, Hon. Thomas P., Lieutenant Governor, State of Hawaii, to Griffith, Maurice F., Natrona County High School District and Havdahl, B. G., executive director, Montana Petroleum Association, Table.-Taxable values, oil-producing counties, Montana, 1968- Hummel, Jack L., Marathon Oil Co., Denver Research Center, Little- Lengnick, Lewis W., Hawaiian Electric Co., Inc., Honolulu, Hawaii, Mink, Hon. Patsy T., to Hon. Wayne N. Aspinall, dated March 17, Moore, Eddie, president, Wyoming Wool Growers Association, to Schwinn, Tom L., Kansas Independent Oil & Gas Association, Wichita, White, Vincent L., Casper, Wyo., to Representative John Wold, dated March 10, 1970. Wilder, Richard, president, Wyoming Retail Merchants Association, Casper, Wyo., to Hon. John S. Wold, dated March 20, 1970 (plus table) Table.-Oil industry valuations, 1969. Winger, John G., the Chase Manhattan Bank, National Association, Page 676 6 736 737 609 692 691 608 685 6 5 667 4 575 576 512 512 713 Additional information: Kansas Senate Concurrent Resolution No. 61. 668 Oklahoma enrolled House Concurrent Resolution No. 1037, dated 668 Oklahoma enrolled Resolution No. 1073, dated March 26, 1970. Wyoming Wool Growers Association resolution adopted February 20, 1970.. 581 6 OIL IMPORT CONTROLS MONDAY, MARCH 9, 1970 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MINES AND MINING OF THE Washington, D.C. The subcommittee met, pursuant to call, at 10 a.m., in room 1324, Longworth House Office Building, Hon. Éd Edmondson (chairman of the subcommittee) presiding. Mr. EDMONDSON. The Subcommittee on Mines and Mining will come to order. This morning is the first of a series of hearings which will be held by the subcommittee to examine recent executive actions with regard to the oil-import quota program. I might say initially that we are very pleased to have with us this morning as our first witness on behalf of the administration, the Hon. George Lincoln, director of the Office of Emergency Preparedness, who is newly named the chairman of a Presidentially designated Oil Policy Committee. I know that the members of the committee are going to be extremely interested in the testimony which General Lincoln gives us here this morning. This subcommittee has jurisdiction over the mines and mining industry of the United States. We are always concerned about anything that appears to affect the basic health and viability of this major industry. We have for quite some time taken an interest in the operation of the oil import control program. I think the hearings by this committee go back to the 1950's on this subject, and as one member of the subcommittee, I am deeply and very, very seriously disturbed by press reports that have reached the committee indicating that a report was impending from a Presidential Cabinet task force which was going to recommend the scrapping of the mandatory oil import program and the substitution of a totally new approach to the problem of oil import controls, an approach which was widely publicized as one that would confer great benefits upon the American consumer but which has as its announced objective the depressing by a very substantial amount the market price on crude oil in the United States. To my knowledge, this is the first instance in which any executive agency has ever proposed the use of a tariff plan to depress substantially the price of a domestically produced product of major importance, and in the process confer a very significant benefit upon a foreign industry and foreign investors. The committee undertook to schedule hearings upon this report as soon as information that it was before the President came out. It initially scheduled hearings in February and was informed that the members of the Presidential group would not be available at that time for questioning and so the hearings were rescheduled for March 9 and 10. I have read hurriedly, I must confess, the complete report of the oil import question, and I find much in it that is in many ways a repetition of some of the findings of this subcommittee in hearings that we have held on the administration of the oil import control program. I also find in it much that I think is very, very highly debatable in the way of conclusions that have been reached and it is my overall judgment that it is a report that will require a very searching examination by the committees of Congress that have jurisdiction on this subject. I hope that these hearings serve to provide a forum for that examination and I hope that we can have frank testimony from the administration witnesses who will be speaking to the points in this report. I personally believe the issue that is before this subcommittee is an issue of life and death for a great American industry and for literally tens of thousands of American workmen who are involved in that industry and literally millions of Americans who have a stake in continuing to have a strong and viable domestic petroleum industry. I yield at this time to the chairman of the committee. Mr. ASPINALL. Mr. Chairman, I, of course, find myself in agreement with the position that you have taken. Mr. Chairman, and members of the committee, I want to make a brief statement regarding this committee's interest in the matter of minerals in general and oil imports in particular. I also want to refer to previous committee hearings, held during 1968 and earlier, as the chairman has already done on the general topic of domestic and foreign oil supplies. The committee's interest in oil imports came about as a result of our responsibility for the stability and well-being of the domestic mining and minerals industry, of which petroleum and other energy fuels are an important part. To the extent that a change in the import program has an impact on the domestic industry and its ability to produce minerals in time of war or peace, we have an interest and must assume our responsibility. In many respects our responsibility is oversight; nevertheless, this committee does have a responsibility for the well-being of the domestic mining industry and we shall exercise that responsibility without infringing upon the more direct legislative responsibility of other committees. The consideration of oil import by this committee is not a new matter, as the chairman has stated. During the last Congress we held extensive hearings on the mandatory oil import program and issued a report on our findings and recommendations. We found that the mandatory oil import program had many deficiencies. We also found that most of these deficiencies were not the fault of the basic program, which was founded upon national security needs, but that they were deficiencies in administration and because of the use of the program to serve purposes other than national security needs. Exceptions became the rule. The program was used as a means of stimulating local economies, to establish foreign trade zones and to relieve individual and collective hardship situations. The fact that the program was used for many uses other than national security detracted from its effectiveness. There was no other alternative. It was my position 2 years ago, and it is my position today that if a meaningful program is to be continued, it is imperative that a clear and definite policy be established under which the domestic petroleum industry and all other interested parties are fully informed as to the ground rules and the future of the program. If national security is of paramount consideration, together with the preservation of the domestic petroleum industry, then the program should be used for that purpose. If considerations other than national security are to be given equal or greater weight, whether these be hardship cases, price control, or temporary shortage or whatnot, then in fairness and equity to all, these should be spelled out, and defined for all to know and all to follow. If these hearings accomplish nothing else I hope they can clarify the future of this program. How will it be used and for what purpose in the days ahead? These hearings are timely as the President has recently made available the report of the Cabinet Task Force on Oil Import Control. He has also established a new Oil Policy Committee. I am sure that members of this Committee will be interested in learning some of the thinking that went into the Cabinet task force report and will also be interested in the plans of the recently established Oil Policy Committee. I want to mention that originally we had scheduled these hearings for February 16 and 17. However, as the Cabinet task force report had not then been submitted to the President, they were rescheduled at this time. Now I would like to say something else. This committee is not representing any influence, any operation, or any particular issue that is involved in this program. We are looking at this as a national security proposition or whatever it is supposed to be, and not sitting here trying to make headlines, trying to pull somebody's irons out of the fire and reheat them, or anything at all like that. We want the facts. By some means or other, we will get them sooner or later, and I would suggest to those who are going to testify today that they give us the facts as they know them. If they do not have them, be honest and say so, and get them to us later. Thank you very much, Mr. Chairman. Mr. EDMONDSON. Does the gentleman from California care to make a statement at this time? Mr. HOSMER. Not at this time. Mr. EDMONDSON. Any other members care to make a statement? Mr. EDMONDSON. Mr. Wold. STATEMENT OF HON. JOHN S. WOLD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WYOMING Mr. WOLD. First of all, I would take this opportunity to commend my colleague, the chairman of this subcommittee, for taking the initiative in calling these hearings so the petroleum industry and the oil producing States can have the opportunity to present their views on the recommendations of the task force. It is all very well to have hypotheses and theoretical models of an industry and an economic system. I do not think, however, we should adopt the model to practice without a great deal of questioning. This is especially true when we are dealing with a segment of the American economy which is so vital to both the national defense and to the livelihoods and incomes of thousands, even millions, of Americans. These are the reasons I am so pleased that we are having 4 days of hearings scheduled for spokesmen of the industry and the producing States. They are the ones who would be most affected by the proposals of the task force. Therefore, it is vital that they be given a full opportunity to express their feelings about the recommendations. I have invited three gentlemen from the industry who are taking the stand these first 2 days. Two are independent oil operators from my district, the great State of Wyoming-Dave True and Joe Fusselman. The other is Robert Burch, president of the Rocky Mountain Oil & Gas Association, out of Denver. There were a great number of others from my district who would have liked to appear in person, but are unable due to the limitations of the subcommittee's schedule and to their own heavy commitments. Nonetheless, I believe they should be heard and ask unanimous consent that letters from them be inserted in the official record of hearings at this point. Mr. EDMONDSON. Without objection, so ordered. (The letters follow :) VINCENT L. WHITE, PETROLEUM GEOLOGIST, Casper, Wyo., March 10, 1970. Representative JOHN WOLD, Washington, D.C. DEAR CONGRESSMAN WOLD: The observations made herein regarding the President's Task Force imports study represent not only my own but my colleagues' questions and criticisms of certain conclusions and assumptions made by the Task Force. 66 Throughout the report, broad-brush conclusions are offered without apparent basis in fact. As an example, Item 406 states, we do not predict a substantial price rise in world oil markets over the coming decade." If indeed the import demand ratio were increased to 51% as pointed out under a later conclusion (412) at a $2.00/bbl. price, the U.S. dependence on foreign crude in 1980 would be so great that we as a nation could never withstand pressure for price increases at the pleasure of the supplier. The inference by the Task Force that we would simply produce our own oil in the face of such pressure is not valid because by that time our own reserves will have diminished to one-half of present-day figures. In regard to reserves, it is obvious the Task Force was influenced (excessively, we feel) by the possibility of Alaskan fields producing upwards of ten billion barrels based on preliminary reserve estimates. We in Wyoming have a classic example of the error of overestimating productivity in the Reno Field, which was predicted in 1965 to contain a minimum of 100 million barrels of producible crude whereas, five years later we know it will have an ultimate recovery of less than 10 million. Alaska certainly has potential but how much will not be known until adequate time and money has been spent to properly evaluate such potential. It seems premature to, in effect, put 50% of our eggs in the Alaska basket before we have all the facts. The so-called "saving" to the American consumer is baffling at best. The figure of five billion dollars annually cannot be justified unless domestic production is curtailed by an equivalent amount. |