liquids. The domestic supply of feedstocks cannot be increased by use of heavier liquids from crudes because they have been made prohibitively expensive from a competitive standpoint by the oil import program. In contrast to the situation in the United States, foreign producers are under no such restraints. They have unrestricted access to petroleum feedstocks at lower world prices. For these reasons, adequate access to foreign feedstocks is fundamental to the health and growth of the domestic petrochemical industry. A great deal is at stake: 1. The continued growth of U.S. exports of petrochemical products. Petrochemicals currently contribute more than $1.1 billion a year to the Nation's balance of trade. These exports will inevitably go the way of the steel industry's exports, but for different reasons, if the burdens of higher raw material costs are added to the adverse effects of the Kennedy round tariff changes. 2. The potential loss of a significant part of the domestic market for petrochemicals—a market whose size by 1972-75 will double and reach an estimated $35 billion. Lower raw material costs combined with lower tariffs will give overseas products a running start on sales in the U.S. market. The American consumer uses petrochemical products in nearly every area of his daily life. Therefore, needlessly high domestic prices for these products places an extra and unnecessary burden on him. 3. The possible outflow of large numbers of jobs and large sums of capital. If the petrochemical industry is unable to remain competitive from plants in the United States, it can only retain its market share by investing in foreign plants. Among many others, this would hurt the very domestic petroleum industry which the oil import program is designed to protect, because overseas plants will not use domestic petroleum, either as feedstocks or as fuel. These are the clearly foreseeable consequences unless the domestic petrochemical industry is allowed the access to the same low-cost raw materials which its foreign competitors enjoy. It should be pointed out that despite the fact that the petrochemical industry is the third to largest manufacturing industry in the United States, its demands for petroleum raw materials are small in comparison to the quantity of the oil going to the fuel and energy markets. This industry uses less than 5 percent of the total domestic demand for oil and natural gas liquid. The statement by the committee that "in each successive allocation period since then [1965] the set-aside for petrochemical use has been increased to its present level of 79,000 daily barrels ***" is erroneous. In 1966, 57,000 barrels per day were allocated via petrochemical or refinery quotas for production of petrochemicals in districts I-IV-not 30,000 barrels per day. In 1967, the petrochemical industry received allocations totaling 67,000 barrels per day and in the first half of 1968, the industry received allocations totaling 81,000 barrels per day. In the last half of this year, the industry will receive allocations of 79,000 Darrels per day, compared with allocations of almost 1 million barrels per day for energy uses and imports of almost another 1 million for esidual fuel. We would recommend that the committee determine whether or not a petrochemical industry oil quota program should be established pursuant to an independent national security determination. The essential feature of this recommendation is a recognition of the dis tinction between the primary fuel and energy markets of the petroleum industry and the petrochemical industries. The import for export program called for by the latest Presidential proclamation governing the oil import program should be implemented as soon as possible. We, the undersigned members of the House Committee on Interior and Insular Affairs, for the reasons stated above, hereby oppose the views and comments in the committee report on the mandatory oi import program as it relates to the domestic petrochemical industry HUGH L. CAREY, PATSY T. MINK. SEPARATE DISSENTING VIEWS TO THE REPORT ON THE MANDATORY OIL IMPORT PROGRAM We are voting against the committee report on the mandatory oil import program for a number of reasons: 1. The report admittedly does not deal with the problems existing in district V (which includes Alaska, Arizona, California, Hawaii, Nevada, Oregon, and Washington). 2. In a matter of this importance, we do not feel that the 3 days of hearings allowed sufficient time (particularly at the busiest period of the congressional session) to evaluate the many factors that must be weighed in this all-important area. We would like to hear more extensive testimony regarding the impact this program may have, if any, on air pollution, consumer prices, exploration and development incentives, and national security. 3. In our opinion, it is not possible on the basis of the hearings held thus far to form a considered and informed judgment on this very complex matter. It would have been preferable to hold more extensive hearings and we believe it would be highly desirable that the committee do this next year. (37) PHILLIP BURTON. VIEWS OF REPRESENTATIVES RYAN AND KUPFERMAN The quality of our environment is a matter of grave national concern. Air pollution may not yet be a major problem in certain sections of the southwest oil-producing States, but it is an inescapable fact of life for Americans living in urban areas across the country. Every program undertaken by the Federal Government should be administered, wherever possible, to improve the quality of our environment. Therefore, it is most disturbing that the report on the mandatory oil import program adopted by the committee describes the alleviation of air pollution as a purpose alien to the mandatory oil import program. Furthermore, the committee recommends that the program should not be used to alleviate air pollution. I cannot accept this narrow and restrictive approach which would deny the Secretary of the Interior the authority to utilize this program in order to remove impurities from the air. That high-sulfur residual oil causes serious damage to health. even death, through air pollution is incontrovertible. It is not in the national interest, in effect, to censure the Secretary of the Interior for the steps he has taken to increase the amount of low-sulfur residual oil available in the United States. The Secretary acted wisely when he promulgated revision 5, section 11A, of the oil import regulations, which provides that for each barrel of low-sulfur residual oil distilled from imported crude oil, a company is allowed to import another barrel of oil without it counting toward its quota. Following the Secretary's actions, the Los Angeles Department of Water & Power ordered that power companies now must burn lowsulfur (less than 0.5 percent) fuel all year round. Formerly, these companies were permitted to burn high-sulfur residual oil, a situation which greatly aggravated Los Angeles' critical air pollution problem. Unfortunately, the Secretary's order covers only district V which contains those States west of the Rocky Mountains. The Oil Import Administration has published a tentative proposal to the Secretary including the recommendation that he order a similar type of credit reimbursement program for districts I-IV which includes the east coast and the rest of the country. It is essential that the Oil Import Administration press for a credit reimbursement program in its final proposal. At the present, three major east coast areas, New Jersey, New York City, and Washington, D.C., have air pollution laws limiting sulfur content. The governments in these areas have set the following schedules: New Jersey State regulations for residual fuel oil applicable to the entire State except for certain rural counties are as follows: New York State regulations for residual fuel oil applicable to the New York City metropolitan area are as follows: Maryland State regulations for residual fuel oil are applicable to Montgomery and Prince Georges Counties. In addition, ordinances of certain northern Virginia communities in the Washington, D.C., metropolitan area provide for identical limits as follows: July 1, 1968. Date Sulfur limit Fuel users 1.5 All residual fuel oil users. It is clear that the demand for low-sulfur residual oil is going to increase in these areas in the future. In addition, it must be expected that governments in other major urban areas along the east coast and other sections of the country will be forced to enact air pollution control laws in the very near future, further increasing the pressure on the market for low-sulfur residual oil. It is clearly vital to the interests of the great majority of Americans that as much clean burning fuel as possible be on the market at a reasonable price. When the Oil Import Administration published its tentative proposal on May 24, Secretary of the Interior Udall said: The purpose of the proposal is to permit fuel oil users on the east coast to meet Federal, State, and local air pollution regulations. Air pollution is one of this Nation's most dangerous environmental hazards, and the Federal Government is totally committed to control this hazard with all of its available resources, including the oil import program. Certainly the Secretary of the Interior should order exemptions for districts I-IV similar to those now granted in district V. He should not be thwarted in any respect. The concern for the health of our citizens must be a paramount consideration. WILLIAM F. RYAN, THEODORE R. KUPFERMAN. |