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respect to the unavailability of supplies and the minimal effect on health and welfare.

Senator MCCLURE. What was the length of time involved in that; do you recall, from beginning to end?

Mr. TRAIN. I would guess about 2 weeks, I am guessing.

Senator MCCLURE. I have no further questions for Mr. Train, if he would like to leave now.

Mr. TRAIN. I understand the committee over there is already waiting for me so I had best go.

The CHAIRMAN. Do you have any other questions?

Senator HANSEN. He suggested that we might have an exchange of letters and that would be acceptable to me.

Mr. TRAIN. I would be delighted to do that and of course, I would be delighted to come back.

The CHAIRMAN. As of now, there is no need to come back.
We are going right on into the evening, if it is necessary.

Senator MCCLURE. If you would like to come back, it is the best show in town today. [Laughter.]

The CHAIRMAN. Thank you very much, Mr. Chairman.

I appreciate your courtesy and patience in being with us today. Senator MCCLURE. I have in my hand an article that appears on November 2, written by John A. Moore, which said, Law already on the books to handle agency shortages. Agency invites White House to use it, referring to the Defense Production Act, and the authority contained thereunder.

Do you feel the Defense Production Act authorities are sufficient to deal with the current crisis, Mr. Wakefield?

Secretary WAKEFIELD. Not completely. Most particularly our solicitor feels that the Clean Air Act Amendments of 1970 have superseded the Defense Production Act of 1950 to the point that we would not have authority under that act to grant variances.

Senator MCCLURE. If the Foreign Petroleum Supply Committee reacted as has been suggested?

Secretary WAKEFIELD. I believe they met 2 weeks ago and the Emergency Petroleum Supply Committee is meeting today.

Senator MCCLURE. They met once and that is the end of their responsibility?

Secretary WAKEFIELD. In terms of the Foreign Supply Committee, probably yes, because their purpose is merely to advise us as to the severity of the existing situation and they have done that.

The second step we have under the voluntary agreement which is pursuant to the Defense Production Act is activation of the Emergency Petroleum Supply Committee and they are meeting today. Senator MCCLURE. I think that is very helpful and a very hopeful sign.

I think that authority is there with these things. I suppose some people might take that as criticism but I, for one, applaud the initiative being taken under that act.

Let me get back for just a moment as to the degree of shortfall.

I referred earlier to the memorandum from the Office of the Secretary of Defense, dated October 23, in which they outlined the source of Arab oil coming into the United States as being 3 million barrels a day.

I noted in the chairman's opening remarks today that he outlined a number of things that can be done and he uses at the end of his statement, it is estimated this program when implemented, will save the equivalent of about 3 million barrels of oil a day.

The President referred to 2 million, and I think that is the figure you used.

Would you care to comment on that?

Secretary WAKEFIELD. I think the difference is the basis of the two figures.

We have tried in our figures to project the foreseeable shortage over the next 6 months directly relating to the Arab embargo.

We feel there will be 2 million barrels a day directly from crude oil imports and indirect that have been interdicted by the embargo. As I understand the Defense Department studies they attempt to take it from looking at total demand and how much under optimum conditions if it were fully available we would have liked to have imported.

Looking at some of those numbers, particularly the amounts they projected we thought we could get from Canada and Western Europe, the numbers seemed too high to us.

Also, they did not include drawdown on inventories which are some 400,000 or 500,000 barrels a day.

Senator MCCLURE. How long can we continue to draw down on inventories?

Secretary WAKEFIELD. Throughout the winter. That will occur in any event.

Senator MCCLURE. We were told in September to not worry because stocks were up over the previous year. The demand was up 10 or 12 percent. So in relation to demand instead of being better off, we were worse off.

Secretary WAKEFIELD. I never said: "Don't worry about inventories." I have always been concerned with them. They were equal to last year and last year was the low for the past 3 years. The demand is up some 10 percent this year.

Senator MCCLURE. Well, if we look at an inventory that is 8 to 10 percent below demand, that really doesn't give us a very great reassurance, does it?

Secretary WAKEFIELD. No, but there is that difference in the two figures and that accounts for some 400,000 barrels a day.

Senator MCCLURE. The figures we developed in my office indicate that 3 million barrels a day is conservative and the figures we have used up until this time have proven to be quite conservative.

I think maybe, again without looking at the details to the greatest degree, we ought to be concerned about whether we are approaching a crisis using the wrong data.

It is suggested in the bill that we can make some changes in mass transit and effect immediate savings.

How rapidly can the Government move in capital investment in mass transit that would effect immediate shortages of fuels during this winter?

Secretary WAKEFIELD. Secretary Brinegar could answer that more fully but I wouldn't think as far as capital expenditures are concerned, we could do it this winter.

Senator MCCLURE. The suggestion that we could make capital investments in mass transit and solve our problem this winter are overstated?

Secretary WAKEFIELD. I would not anticipate a significant saving this winter, no.

Senator MCCLURE. One of the things I wanted to bring up while Administrator Train was here was the Governors' letter which was referred to by Senator Hansen.

It referred to a meeting that was held at the Press Club, the day following that he had a meeting of Governors here.

Growing out of that were certain actions taken by EPA including the letter referred to by Senator Hansen of October the 18th or about 1 month after that meeting.

That letter has now been placed in the record and the letter will speak for itself. But the letter makes absolutely no reference to coal. It invites the Governors to request variance shifting from one kind of a petroleum fuel to another kind of a petroleum fuel, but makes no reference to shifting from petroleum to coal.

[The letter referred to appears on p. 112.]

Senator MCCLURE. Do you think we can make substantial savings of petroleum supplies by an immediate shift to coal, particularly in the Northeast?

Secretary WAKEFIELD. Most definitely. I think as far as the shift. from one type of oil to another is concerned, that may have been pertinent.

Senator McCLURE. What time did the Middle East break out? Secretary WAKEFIELD. The embargoes commenced the 18th of October.

Senator MCCLURE. What time did the fighting break out?

The CHAIRMAN. October 6.

Senator MCCLURE. I am aware of that. I appreciate the advice given to the panel. Indeed, it was, and it was 2 weeks later that the Administrator wrote this letter.

I think, as a matter of fact, the letter stated it was the same day that the embargo was announced.

If we are looking only at the substitution of oil for oil and not coal for oil, we are missing one of the greatest opportunities we have to ease the crisis that confronts this country.

I am happy to see that the President last night not only said what he did but stopping the shift from coal to oil, but also reversing that shift where it is possible to do so.

I think it was alluded to by the Administrator that perhaps a 1-year period was not enough with respect to variances in order to make that shift as meaningful as it ought to be.

What period would you suggest?

Secretary WAKEFIELD. I would like to see it done permanently.
Senator MCCLURE. Even though it is high-sulfur fuel?

Secretary WAKEFIELD. Either through the lower sulfur coals or through combustion.

Senator MCCLURE. AS somebody already pointed out, we used to get all of the sulphur out of the stack gases, not just coal, and we used present technology which Administrator Train says would, in Japan, 25 percent of the time; 75 percent of the time it doesn't, but that proc

ess will produce a calcium sludge and that sludge itself presents a problem.

There will be enough sludge produced to cover 160 square miles of our country 1 foot deep every year.

I don't know where we are going to put all of that sludge, but that in itself becomes a problem and we are only trading one problem for another.

Mr. Chairman, thank you very much. I will not take any more time. The CHAIRMAN. Thank you, Senator McClure.

Any further questions of the panel?

[No response.]

The CHAIRMAN. The Chair hears no further questions. We thank you gentlemen for your patience and responsiveness to the questions. May I say we will want to have your recommendations in statutory legislative form in the morning.

May I add one other thing: It seems to me, and I make this general comment, there is a need for some consideration regarding the staffing you will find necessary in connection with what is going to be done here.

If you could relay that back to Governor Love, so that if there is any special authority they want in connection with that aspect of it, we ought to have that, too.

I neglected to make that suggestion this morning.

Thank you, gentlemen.

Secretary WAKEFIELD. Thank you.

The CHAIRMAN. The next group of witnesses will be John N. Nassikas, Chairman of the Federal Power Commission; Mr. Kenneth H. Tuggle, Acting Chairman of the Interstate Commerce Commission; Mr. Robert Sherer, Director of the Bureau of Economics, Civil Aeronautics Board; Mr. William Caldwell, Director of the Bureau of Operations Rights, Civil Aeronautics Board; Mr. Thomas Heye, Administrative Assistant to the Chairman, Civil Aeronautics Board.

STATEMENT OF HON. JOHN N. NASSIKAS, CHAIRMAN, FEDERAL POWER COMMISSION, ACCOMPANIED BY DREXEL D. JOURNEY, DEPUTY GENERAL COUNSEL; FRANCIS ALLEN, CHIEF, BUREAU OF NATURAL GAS; ROBERT B. BOYD, DEPUTY CHIEF, BUREAU OF POWER; RICHARD F. HILL, ADVISER ON ENVIRONMENTAL QUALITY; EMMETT J. GAVIN, ASSISTANT TO THE CHAIRMAN; DANIEL GOLDSTEIN, ASSISTANT GENERAL COUNSEL; WARREN MORRISON, ASSISTANT TO THE CHIEF, OFFICE OF ECONOMICS; ALEXANDER GAKNER, HEAD, SECTION ON FUELS AND ENVIRONMENTAL ANALYSIS, BUREAU OF POWER; HON. KENNETH H. TUGGLE, ACTING CHAIRMAN, INTERSTATE COMMERCE COMMISSION; ROBERT SHERER, DIRECTOR, BUREAU OF ECONOMICS, CIVIL AERONAUTICS BOARD; WILLIAM CALDWELL, DIRECTOR, BUREAU OF OPERATIONS RIGHTS, CIVIL AERONAUTICS BOARD; THOMAS HEYE, ADMINISTRATIVE ASSISTANT TO THE CHAIRMAN, CIVIL AERONAUTICS BOARD

The CHAIRMAN. We are sorry to be late, gentlemen, but we are trying to move on this and we are going right around the clock.

I think we can start out. Mr. Nassikas, you have a prepared statement and I am wondering if you would care to read it into the record. Mr. NASSIKAS. Yes.

The CHAIRMAN. The same is true of Mr. Tuggle, who is Acting Chairman of the ICC as well and Mr. Heye, who is the Administrative Assistant to the Head of the CAB, who will be testifying. I think we can save a lot time in that manner.

The chairman will suggest in the interest of time that each Senator be limited to 5 minutes and we will go around in accordance with that procedure.

Mr. NASSIKAS. Mr. Chairman and members of the committee; I support the need for legislation to establish a federally centralized emergency fuels and energy allocation procedure in the executive branch to protect the public health, safety and welfare and to minimize the impact of current petroleum disruptions upon the Nation's economy. Current governmental controls at the Federal and State levels which affect fuel use and fuel availability are not designed to meet current conditions on a unified basis. These problems are both organizational and policy formulation.

I would like to applaud you and this committee, if I may, for meeting a crisis with a sense of urgency which this crisis demands. I would also like to say the President's message last night was most timely.

There is, No. 1, a lack of a clearly stated unified national policy on fuel use; No. 2, divided governmental responsibility in the discharge of the Nation's fuel policies as they have evolved; No. 3, unclear lines of governmental authority and accountability in the areas where fuel use, energy development and environmental controls come together. The present national energy emergency warrants further governmental action than is provided under existing legislation of the type contemplated in Public Law 93-28, approved April 30, 1973, The Defense Production Act of 1950, as amended, 50 U.S.C. App. 2061, et seq., or the emergency fuel allocation actions which are possible under the Natural Gas Act, 15 U.S.C. 717c-717w.

To meet foreseeable near term emergency conditions, there is need for clear-cut Federal authority:

To establish fossil fuel allocations and priorities for all uses; To coordinate the uses of fossil fuels in electric generation with environmental controls, particularly air and water;

To interrelate and adjust tax policies so as to help in meeting added costs of current fuel conditions as they would otherwise fall to utilities and their customers;

To maximize the use and coordination of existing departments and agencies of the Government in implementing the fuels and allocation priorities;

To provide for transitional authority allowing the Nation's economy to move back when the existing petroleum conditions are eased to nonemergency conditions.

A primary objective of S. 2589 (committee print No. 1, November 6, 1973) is to require substitute fuels, particularly coal, to displace the equivalent of about 1.2 million barrels a day of crude oil and petroleum products estimated as the potential shortfall from the Mideast and Arab countries.

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