APPENDIXES APPENDIX I Answers in Response to Questions Submitted by Senator Stone from the Federal Energy Administration and the Departments of State and Treasury. FEDERAL ENERGY ADMINISTRATION, Washington, D.C. Chairman, Committee on Interior and Insular Affairs, U.S. Senate, Washington, D.C. Hon. HENRY M. JACKSON, DEAR MR. CHAIRMAN: Enclosed are answers in response to Senator Richard Stone's questions relating to the January 31, 1975 hearing for inclusion in the record. If we can be of any further assistance, please do not hesitate to contact us. Sincerely, Enclosure. PAUL CYR, Director for Congressional Affairs. Question No. 1. What is being done to hold down the cost of utility fuel? Answer. Currently, less than half of the fuel used by electric utilities is oil or natural gas. FEA is attempting to reduce this dependence further by encouraging increased use of coal and expanded nuclear capacity, both of which should produce cheaper power than oil and gas. Coal accounts for about 50% of the thermal fuels used by utilities, or about 400 million tons per year. About 75% of that is on long-term contract, selling at $14-15/ton, equivalent to $3.75/barrel oil. FEA supports clarification of clean air requirements so that coal use can be further expanded. There are coal conversion plans being developed by FEA. Any artificial attempt to hold down the cost of utility fuel through such uneconomic devices as Federal fuel subsidies or inordinate fiscal relief would disguise the higher costs of producing electricity, thereby removing the incentive to reduce consumption. In accordance with Project Independence goals, FEA therefore encourages fuel switching plans to reduce utility costs. Question No. 2. What was the average, estimated cost per barrel of oil in 1974 to the oil companies which import oil to the United States from the OPEC countries-cost, including production, refining, royalties, transportation? What was the average price these oil companies sold this oil in 1974? Answer. The weighted average Landed Cost (including transportation charges) from OPEC countries to the approximately $11.73/Bbl in November, 1974, and is approximately $12.00 per barrel currently. U.S. oil companies do not, for the most part, sell crude oil, except in exchanges with other refiners. They sell the finished products which are refined from the crude. Question No. 3. What is the relationship between prices for new, unregulated, domestic oil and prices of imported oil? Which price leads the other? Answer. The price of imported crude oil tends to lead the price of new (uncontrolled) domestic oil. The current price of imported crude oil is $12.80 per barrel; new domestic oil is selling for $11.08 per barrel. With regard to the President's energy program, the price of new oil will increase by approximately the same amount as the tariff increase ($3.00 by April 1, 1975), although there will be a several month time lag for the new oil prices to rise to that level. Hon. RICHARD STONE, U.S. Senate, Washington, D.C. DEPARTMENT OF STATE, Washington, D.C., February 18, 1975. DEAR SENATOR STONE: Under Secretary Robinson has asked that I respond in his absence to questions which you raised during his testimony before the Senate Committee on Interior and Insular Affairs. The most recent information available on our trade, aid, and investment relations with member countries of the Organization of Petroleum Exporting Countries is enclosed. I understand that our officers are in touch with your staff concerning any further questions which you might have. I cannot emphasize too strongly the importance of our efforts in the International Energy Agency and of the President's energy program. Actions by oil consuming countries to provide a financial "safety net", to establish programs to conserve energy, and to accelerate the development of alternative energy sources are essential if we are to reduce our collective vulnerability to supply interruption and price manipulation. To realize these goals this country must provide leadership by example-we must move quickly to conserve energy and to set up mechanisms to accelerate our domestic energy production. We appreciate your interest in these important issues. If we can be of further help to you on these or other matters be sure to let me know. Sincerely, KEMPTON B. JENKINS, U.S. TRADE WITH ORGANIZATION OF PETROLEUM EXPORTING (OPEC) NATIONS, 1973-74 Source: U.S. Department of Commerce, FT990-December 1974, table E-3-U.S. Exports, U.S. Department of Commerce, FT990-December 1974, table 1-4A-U.S. General Imports. |