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Energy Independence Authority (5)
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Energy Independence Authority (5)
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James M. Cannon Files (Ford Administration)
James Cannon's Issues Files
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The original documents are located in Box 13, folder "Energy Independence Authority (5)"
of the James M. Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 13 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
Jim Requested
Re mn conversations, 2
transcripts enclosed
I believe yourcalle
was talking about Oct
2 version; Oct, 6
much better Land I also.
edited it. ]
Hugh
FORD is LIBRARY GERALD
REMARKS OF THE VICE PRESIDENT
AT THE ENERGY CONFERENCE
WITH BUSINESS EXECUTIVES
WASHINGTON, D. C.
October 6, 1975
This country, up to the 1960's, was the major producer
and exporter of oil, and had the reserves to export additional
amounts if necessary. So when on two or three occasions other
nations around the world tried to raise the prices of oil substan-
tially, we just exported more and were able to hold the price.
Then as we got into the mid-60's, OPEC had been formed
and we became a net importer. We didn't have the reserves to
dominate world prices and therefore, triggered by the conflict
in the Middle East, the Arab countries finally moved and in two
years raised prices 500 percent.
At that point, the Eastern Seaboard particularly suffered
quite a setback because of the boycott and the price increase.
The boycott wasn't as overwhelming as it might have been because
there were enough leaks and there were enough countries that didn't
join it. I was at that point Governor of New York and deeply
concerned, but Libya allowed oil to go to one of the British
islands in the Caribbean and to be refined there and to come into
New York for power and so forth. If they had really tightened down,
we would have been in a much more difficult situation.
The President, as you all know, spent a lot of time
discussing the economics and having the summit meetings when he
first took office last fall, a year ago. One of the major subjects
was this question of energy. He came out of those meetings with a
clear determination to achieve energy independence as essential to
this country's national security; secondly, that this should be
achieved by 1985.
GERALD FORD LIBRARY
Page 2
He then worked out the details of legislation which
would encourage private enterprise to accelerate production
domestically because energy has always been a private enterprise
operation in this country, except for the Naval reserves. I don't
think we really have recognized quite as clearly as it seems to
me we should that the free market system should do this without
Government intervention, except through a framework of laws which
would give incentive.
The framework of laws has never been achieved. It was
complicated when the United States Government controlled the
price of interstate gas at a very low price so that the most desirable
fuel turned out to be the cheapest fuel. It really hit the coal
industry over the head, so that our greatest resource was the least
developed. Gas when it was first controlled was in surplus, a
byproduct of oil and being burned to get rid of it. The price
was set so low that, as people shifted to gas, they were unable to
get the increased production needed; or even if they could get
production, -- as in the case of Texas -- they couldn't ship it
on the interstate lines.
We had a meeting in this room with a group of Governors
who came in, organized by Jim Rhodes of Ohio, pointing out that
they had lost 600,000 man-days of work last year due to the shortages
of gas. That was a warm winter -- and it is going to be worse next
year. The industrial groups in his State were willing to finance
production of gas at higher prices if they could just get permission
to move it on interstate pipelines -- if the concept of a common
carrier to be adopted rather than a regulated price. That has been
very slow in coming because the Federal Power Commission was afraid
that if it made such a ruling, they would be challenged in the
courts by the ecologists and would then be overruled. So they
wanted legislation.
page 3
Thus we see where government stepped in to regulate one
phase of theenergy industry, it totally disrupted the industry.
This shows very clearly what can happen through government regulation.
The President, as you know, has fought regulation; he has been for
decontrol. He wanted an orderly decontrol on oil. He wanted 39
months. But then we go back to what has happened in Congress.
He sent up a 500-plus page bill. This bill was complicated. I
don't think the public has really paid attention to it since the
energy crisis that they saw two years ago, when there were lines
waiting for gasoline. It was really sort of personified at a
meeting of the Midwestern Governors, where none other than Governor
Exon asked me if there really was an energy crisis. He said, "How
can there be an energy crisis when there is plenty of oil and gas
around?" I said, "You have really expressed the whole thing right
there. There is plenty of oil and gas around because we are importing
now almost 40 percent of our consumption. The fact that we are
importing is the crisis.
"Domestic consumption is going down. So as long as we
import it, there isn't a crisis in the sense that you are thinking
of it; but if the Middle East situation blew up again, or if for
some other reason the imports were shut off, we could then find
ourselves in the middle of a full-blown crisis which for certain
parts of the country would be total disaster. I don't think anyone
has really figured out how this country would survive a really effective
boycott; we don't have transportation from the west to the east to
handle the movement of energy in sufficient quantities to keep our
operations going, our society going."
We have just seen a 10 percent increase take effect in the
world oil prices and Congress has not taken any effective action;
little pieces of action, but no comprehensive action. Finally, the
management-labor committee had some concepts as to how to encourage
industry through incentive to invest more domestically. That
legislation hasn't gotten off the launching pad in Congress.
Page 4
So we find ourselves in a free market industry, but the
free market has been a world market. Now national policy expressed
by the President is that we should be a self-sufficient, independent
producer of energy. We have the resources -- nobody knows yet at
what price. That is a national policy superseding a free market
position because the free market was an international one.
A great many people have felt that this OPEC price
structure would break down as production increased. Walter Levy,
who is one of the most sophisticated people in the business has
said right along there wasn't a chance this would happen; that they
would do exactly what they did do. He predicted that six or eight
months ago, or even longer, that they would not decrease the price;
they would not break the price; they would hold and they would
increase the price. That is what has happened.
So when people say that the use of Federal funds through
a structure that is in a sense comparable to the RFC, conceptually,
but not for bailouts, but for stimulating new industry or new
production, and they say this is an allocation of capital and
this is going to take it from a whole lot of other things, the
answer on the allocation of capital is very simple. The President
has said our national policy is self-sufficiency by 1985.
The estimates vary but between $600 billion and $800
billion will be required to achieve that objective out of about
$4 trillion $300 billion that has been estimated as industry's
capital requirements during this ten-year period for meeting
needs of the American people and our responsibilities in the world.
We will fall short of that estimate by about $600
billion.
Nobody knows hoe much money will come back into
investments from Arab countries where the accumulation of capital
is taking place. But I would imagine that Saudi Arabia alone is
up to about $7 billion now in investment in Treasuries. These
Page 5
securities, were this corporation to be passed by the Congress on
the $100 billion basis, with ten years as the life of the corporation,
would probably average out to about $10 billion a year. If this
country moves towards self-sufficiency, it would take a total of
$60 billion to $80 billion a year and so $10 billion is 12 to 14
percent of the total capital that will be required.
The conditions determining how this money would be used
are two, basically: One, that it contribute to the self-sufficiency;
two, that it be used for financing through private enterprise
where sufficient capital cannot be obtained by private enterprise
alone.
Take a look at the utility industry. Atomic power is
the great potential we have in this country for energy. The
others are important, but the long-term, major producer of energy
is atomic, for the time being; solar and thermal are out further
in time.
Seventy percent of the atomic power plants that were
planned have been cancelled. There is a complicated series of
reasons as to why. One factor is local regulations of the State
Public Service Commissions, where they can't get rate increases
SO they can'tearn enough money to be able to borrow the money.
You can't get the increase until you are on line with your power.
These atomic power plants, the most efficient ones, cost about
$1 billion. Therefore, you would have $1 billion tied up --
not for four years as it used to be, but now with all of the
filings that you have to make on impact statements and with the
local suits, it is up to between 10 and 11 years -- $1 billion
tied up for 10 or 11 years with no basis forearning. That is
one very good reason.
Another is the uncertainties as to all kinds of laws
and regulations from Washington. The labor-management recommendations
were to encourage a greater accumulation of capital by corporations.
ALD LIBRARY FORD
Page 6
Of course, the bill was immediately tagged by the opposition as
being just a special interest bill for big business and big industry
and for capital rather than for the people -- which is an easy,
cheap shot politically, but it isn't going to help the country.
So that bill hasn't gotten off.
how
The real question has to be, first does government --
when it has set a national policy that cuts across a free market
operation --- work with the industry involved -- in this case
domestic oil production?
The first approach of the President was this very
comprehensive legislation.
One has to ask whether the Congress -- going through
the same evolutionary change that all of our establishment
institutions have gone through -- is unable to organize itself
in spite of the oppositions overwhelming majorities in both houses.
Is the structure of 300 different committees, which the Congress
has in both Houses, so cumbersome that when you have a comprehensive
piece of legislation of this kind, it makes it impossible for the
Congress to act effectively and rapidly in the national interest
because of jurisdictional disputes within the House and between
the Caucus and the committees?
Or does one come reluctantly to the suspicion that there
would be those in Congress in the opposition party, who would just as
soon have the issue -- who would just as soon see us run short of
energy, have the President take off controls because they lapsed and
not be able to work out an orderly extension, and then have chaotic
conditions in 1976 -- and maybe this would be politically advantageous.
One hesitates to even think that anyone, for political
purposes, would be willing to see the Nation run the risks which we
are running and have the people suffer in a way that they might suffer
very easily were such a chaotic situation to exist. But one can't
eliminate that possibility entirely.
Page 7
Whatever the situation is, there is no action. We
are in a stalemate and the problem is getting worse. We are
now close to $30 billion a year for imported oil. Luckily, our
farmers have been tremendously productive, a major new source
of foreign exchange, and other areas have been also able to
export, so our balance of payments is reasonable at the moment.
But with consumption going up, with production going down, with
the depletion allowance taken off, with the old oil still likely
to be under control, nobody can afford to put the money into the
secondary retrieval of oil because it falls under old oil.
So we have a situation where our production is declining
and our consumption is increasing and nobody thinks there is a crisis.
Let's go to the areas that this corporation might serve.
The best illustration is Rubber Reserve under Bernie Baruch in
World War II, which did a great job. They contracted with six or
seven private companies to develop synthetic rubber production;
of that group, I think four or five came through with processes or
variations of a basic process which were successful. They sold
the company, the plants and the process, to private enterprise
and we have a new industry in the United States. It was a self-
liquidating operation.
The concept is a self-liquidating corporation to finance
those risks which private enterprise cannot or will not undertake
at the present time to contribute to self-sufficiency and to do
it to the maximum degree possible with private capital participation
and through private industry and then sell it as rapidly as possible.
Some people ask what we need this for if we have ERDA?
ERDA's powers go to laboratory experiments relating to energy. But
they do not have the funds or the authority to take those laboratory
experiments into a full commercial production. Of course, here you
move from a limited expense to a much larger expense, but the
commercial production is essential to find out what the cost of
energy would be.
page 8
For instance, gasification of coal is being done and
so is liquefaction of coal in South Africa. It comes out between
$30 and $40 a barrel of oil in equivalent energy, but it does
produce gas. It is essential.
There are new methods which might reduce it to $20 a
barrel equivalent of oil, or even down to $11. There is the
possibility of in-situ operations, drilling a hole down into a deep
coal mine, setting off an explosion, setting it on fire; the heat does
the same thing underground that is done on top and you would draw
up the gas that is created by the burning of the coal underground.
There are those who feel that this will be a far cheaper method but
an experiment like that would cost $200 million to find out.
A surface gasification plant costs about $1 billion.
There is a need for 18 to 24 surface gasification plants to be built
right now if we are to meet the demand for gas. This is what the gas
industry is looking for. There, right away, is $18 billion to
$24 billion needed to produce gas by the traditional, most expensive
way.
Coal, of course, gets tied up with the whole ecological
problem. I visited one of the most fascinating mines near Gillette,
Wyoming, where they took off. 23 feet of surface, then 70 feet of
coal. They took the topsoil off first and stacked it; then took the
rest off, put it behind where they are digging the hole, and then
they end up by putting the topsoil back on, making six lakes on
6,000 acres. The only difference you will find is you will have
lakes which you never had before, and it will be 123 feet lower than
it was before. The growth is as good as before or better. I was
there: The antelope were grazing still, right around the mining
operation.
This mine produces 20 million tons of coal a year with 55
people. Everything is automated; it is a superb operation. In other
words, it can be done. If, as a nation, we decide to produce low-
sulphur coal in the west, I am confident the ecological problems
can be worked out. This whole thing has got to be done so that we
don't get our energy at the expense of our environment. I am confident
that production and the ecological research can be done together.
Page 9
But then you come to the problem that a lot of railroads can
only move coal cars at the rate of ten miles an hour, because of
the condition of the roadbeds. There is about $11 billion of roadbed
work to be done in this country. It is conceivable that this
corporation could lend but I don't think the railroads can borrow
the money. Therefore, the corporation might buy preferred stock
in a railroad to give them the funds to fix up their roadbeds and
those funds could then be earned out of coal -- all of this being
contingent upon a conversion of eastern power plants from oil to
coal. This this happens, the coal has got to be produced. It has
got to be transported. You have to have the government in a position,
or somebody in a position, to be the catalyst -- the fallback
position where private enterprise cannot or will not finance the
effort to achieve this independence.
As to oil, we have tiwice as much oil in shale in this
country as the Arabs have oil in the Middle East in known reserves.
The problem is to get it out. You can mine the shale. You can cook
the oil out. Then you end up with what I call talcum powder, which
is in a much larger volume than the shale you have mined, because
it has been cooked and so it is not dissolved. There is very little
water where the shale is. Therefore, what do you do with the stuff?
You could fill a valley -- but if you have a heavy wind, this stuff
is going to blow all over the west.
Again, you can do an experiment (for $200 million) of
trying to develop in-situ production of shale oil: drill down,
put off an explosition, set it on fire, draw off the gasified
oil and condense it. The Livermore Laboratories have done some
work on this with Edward Teller. They feel, although nobody else
is willing yet to agree with the, that this might be produced at
a cost of $7 and $8 a barrel.
This could be one of the great bonanzas in the history
of this country if that cost could be achieved. It would be
fantastic.
GERALD FORD LIRRES
Page 10
Occidental Oil is the only company that I know of
that has done any major work in the field, but they can't afford
to carry through on an experiment of this magnitude.
Many companies bought over $1 billion total in leases
in Colorado for shale, but they were going to do surface mining.
None of them have gone ahead because of the uncertainties and the
ecological problems.
One of the standard methods of financing, is the
lease-purchase operation. It is perfectly conceivable that an
atomic power plant costing $1 billion could be financed by the
government under a contract with a private company for lease-
purchase, and with a contract with the Public Service Commission
that as and when that plant comes on line, the rates will be such
that this company can earn, the funds necessary to pay back.
The President in his message to the Congress last
January said we need 200 atomic power plants by 1985. We now have
about 60. Of the remaining ones, 70 percent were cancelled.
California will vote on proposition next June banning all atomic
power plants in California. Oregon has the same issue. If this
country bans atomic power plants, and we don't move in these other
fields, we are going to be totally in a situation which some
ecologists would like to see --- a no-growth society. A no-growth
society means no jobs for the young people that are coming on.
Our whole society has been geared to increased employment based
on increased productivity. I happen to think that is the hallmark
of America. It is our strength. It is our success. I happen to
think that we can meet the ecological side of this problem as well
as the development side.
Industries in 18 States are going to be in a serious
condition if they don't get gas this winter. If we have a cold
winter, even if the interstate pipelines are allowed to be used
there is still going to be a shortage because there isn't enough
gas being produced to sell.
page 11
That means that industry which depends on gas would
probably buy up propane gas that the farmers depend on to dry
their crops and to heat their homes. Farmers are small buyers,
so the next thing you would have to have would be control of
propane. This is just going to take this government, one by
one, further and further into controls -- and the more government
gets into controls, in my opinion, the more they distort the economy
and make it difficult for us to get back on a sound basis.
Therefore, in conclusion, it seems to me that this
idea of the government acting as a catalyst to help get us
off dead center in becoming self-sufficient in energy as a nation,
across the board, in all of these fields and on a self-liquidating
basis, is essential to our national security, to our industrial
growth, and to employment.
If we don't do it, in my opinion, there are elements
in this country, some of them in the Congress, who would like to
see industry fail --- not be able to meet the needs of the country.
These elements would then say, fine, we told you the system was
no good; that capitalism doesn't work; that private enterprise
doesn't work. Therefore, we have got to take it over.
Then we will move as the British moved, taking over one
industry after another, with all the problems that grow out of
that; then they start subsidizing; then unions demand far higher
wages because they say the government has unlimited capacity to
pay and, therefore, you get into the most difficult situation and
the most dangerous situation where you have neither a capitalist
system nor a socialist system and you have the worst of both. Nobody
can make an investment because they don't know what the conditions
are going to be, what the regulations are going to be, what the
resources are going to be. Therefore, you have higher unemployment
and demands for more expenditures by the Federal Government -- which
the President has had the courage to resist to a degree that is
perfectly extraordinary. If he didn't, we would have even more
FORD
inflation.
GERALD R
Page 12
Fabian socialists like inflation because that is the
quickest way to equalize capital. You don't have to expropriate
anything. People's values are gone because inflation just wipes
them out. The Germans went through that and we know what happened
as a result.
The President has already said we have to have an
allocation of capital when he announced the goal of energy
self-sufficiency. He has asked private enterprise to do it. So
it isn't a question of taking the capital from housing and all of
these other areas that people talk about. There is plenty of money
right now in the savings and loan associations. People haven't
got enough confidence to invest in housing. So it isn't that.
Secondly, as far as the EIA's being a step towards
socialism is concerned, I think it is exactly the opposite. I
think it is government's showing their concern for the present
system -- free enterprise and capital -- trying to help stimulate
and bridge over this period.
The Energy Independence Authority would have the responsibility
of acting as the clearing house for ecological and regulatory
functions of government at State, Federal and local levels. It
would make recommendations to simplify these structures, based on
experience. A private operation which was investing in capital
to achieve energy self-sufficency could also use this corporation
as the clearing house for its contacts with government. The objective
is a system which would cut down on the time lost through
bureaucratic delays and law suits, a very, very serious thing in
terms of cost, expense and delayed production.
The way the legislation is being drafted would give
the EIA's five-man board the discretion to make all of the key
decisions SO we can get it rolling and get action fast and decisions
made the way they are made in private enterprise as distinct from
the way they are done too often in government.
Page 13
What makes me think it will go through Congress?
This is something that labor wants very badly. It means
jobs through industry and not jobs through a dole. Therefore, I am
pretty sure labor is going to give it very strong support. If
indusltry at the same time feels it is desirable and worthwhile
and gives it support, then I think its passage has got very great
potential.
But if industry is opposed to it, that will nullify labor
support and probably nothing would happen.
I think this is a turning point for this country and if we
don't have enrgy we are not going to have growing industry. If we
don't have a growing industry, we are not going to have jobs and
we are going to have a lot of problems. We have got them, but they
will be worse.
Are there any questions?
QUESTION: Mr. Vice President, could you relate this program
to the $6 billion synthetic fuel program that we read about recently?
Is it part of it?
THE VICE PRESIDENT: The $6 billion synthetic fuel program
is one that Senator Jackson has proposed. It hasn't passed yet.
So what we did in the thinking on this was to just make a provision
that they would be complementary if that passes. The Jackson proposal
would be an outright expenditure -- putting the money in the federal
budget. EIA would provide a loan, or an investment, or a guarantee
of a loan, all on a self-liquidating basis. That is the difference.
But if the Jackson proposal passes, fine; whatever they do with that
wouldn't have to be done by EIA. They would be totally complementary.
QUESTION: Mr. Vice President, you know there is a process
of drafting in Washington whereby you can direct a piece of proposed
legislation that will go to a standing committee. My question is
addressed to where would the thrust of this legislation lie so that
we could determine what the standing committee would be or is it a
multiple reference to the standing committees?
page 14
THE VICE PRESIDENT: You are obviously very well aware of
the whole committee structure and the sensitivity of this and of
course there are the jealousies as to who gets what. That is being
analyzed very carefully by experts. It could be considered as a
financial question. It could be considered as an energy question.
There are two or three different ways it could go. I think the effort
will be to find out where it could be most expeditiously dealt with.
But if you have a suggestion, I would be very grateful.
QUESTION: Mine is a negative suggestion, Mr. Vice
President. Don't make it so that it is a multiple reference.
THE VICE PRESIDENT: Absolutely; on that, we are all in
agreement. If you want to tell me confidentially afterwards which
one of the group, I would appreciate it.
QUESTION: Mr. Vice President, you mentioned many of the
traditional sources of energy but you hardly touched on solar energy.
I wonder. Here is one that has few ecological problems and would
it be participating in this program and how?
THE VICE PRESIDENT: Solar energy and thermal energy are
very important parts. They are large scale producers of energy
immediately, but they are very important parts of the program.
Any group which wants to produce any new process or develop equipment
or whatever it may be for solar energy would, if they can't get the
funds themselves, be eligible for assistance in the way of a loan
or a loan guarantee from this authority. Conservation is included
here, support for the conservation of energy. Pipelines are included
in this as eligible if they can't get the private financing.
Alaska could produce an awful lot more oil if they opened
up more lands; five, six, seven million barrels a day. That would
take four or five pipelines. So you are talking a lot of money and
that has to be balanced out.
QUESTION: Mr. Vice President, you had mentioned the
government-owned, contract-type of plant such as the rubber plants
in World War II. Is there any way you are going to insure that this
legislation is so worded that someone of a different philosophical
outlook cannot turn this energy independence agency into a Federal
oil and gas corporation running the same way as TVA?
Page 15
THE VICE PRESIDENT:
It requires that everything be
sold and that it be self-liquidating and it be done through
private enterprise and with private enterprise participation.
I think the private enterprise participation is one of the most
important aspects. For instance, if you build an atomic power
plant under a lease purchase contract, with a contract with the
Public Service Commission, you actually then have a contractural
relationship that, the ownership is in the hands or will be in
the hands of private enterprise. Nothing will be done where the
government sets up some new form of TVA.
It happens that the Governor of Pennsylvania, who is a
declared candidate for the Presidency, Governor Schapp, has got
a program where he has been trying to get other Governors in the
Eastern Seaboard to join in sponsoring which involves a TVA at the
mine-heads to produce electricity at the mine heads, which would
be owned by the government, mined and then distributed from there.
So I think we are on the verge. I flew to the coast
Thursday night with a Senator who has introduced a bill to break
up the oil business and have just producers, distributors, marketers
-- each one would be in a separate company. I only mention that.
This is a Republican and it shows that people are looking to Congress
for ways of being responsive to the public but not, in my opinion, too
clear as to what the impact would be on our system.
QUESTION: Mr. Vice President, you indicated that this
authority would be able to produce hopefully about 14 percent
THE VICE PRESIDENT: Of the capital needed to meet the
self-sufficiency.
page 16
QUESTION: Is there some way this could be helpful if
private industry does not come forth with the other 86? Do you
think there is any problem in that other 86 being raised during
that peiod of time?
THE VICE PRESIDENT: Let's take a case in point. Let's
say they invested $200 million in either an in-situ gasification
of coal or in-situ gasification of oil project and it proved to be
within, let's say, lower than the cost of present imported oil
prices. I don't think you would have to worry about it because
the government would not continue in the business. They would sell,
either sell the process or make it available, whatever the procedure
would be, whatever they did in the Rubber Reserve type of thing.
I think you would find, then, a tremendous amount of private capital.
Capital goes where it can get earnings. If capital can find
attractive earnings in producing energy in this country for self-
sufficiency, they will invest in it. If they can't, they will invest
in the MacDonald Hamburger stands, not that I am against them.
I am for them. (Laughter) But they are not going to solve our
energy problem. We have a free capital market. They go where the
returns are. The question is: Can the government help point the
way to good returns?
QUESTION: Sir, you mentioned in connection with the
nuclear power plants a contract between the Federal Government
and the State Public Service Commission. I don't think you will
get many States that will willingly enter into such contracts,
but if you do you could do that right now without having to have
the lease-back arrangement and the Federal Government build the
plants.
THE VICE PRESIDENT: Great. Then we wouldn't have to put
any Federal money in.
QUESTION: I would think that would be the place to look;
is the Federal Government using its influence with the State
commissions to get the rates up? That will bring the capital in
and you won't have to build the plants through the government.
Page 17
THE VICE PRESIDENT: There is only one flaw in your
argument, if you will forgive me -- at least a political flaw;
and, that is, as one who only two years ago left the Governorship
and who saw the beginning of the pressures due to, first, ecology
on using non-sulphur fuels and the increased cost in getting the
non-sulphur coal, non-sulphur oil; then the embargo and then the
world price increase of 500 percent. These poor public service
commissioners have had to take double and triple the cost of
electricity to consumers, if not more.
There problem right now is that they have gone through
so many increases. When I got a new Chairman of the New York State
Public Service Commission, who had been a strong consumer advocate,
I said, "Look, in your advocacy of the protection of the consumer
do you include -- (this is before I offered him the job) -- the
protection of the consumers' need for additional power in the future?
If so, so you visualize that that is going to take higher rates
and more money in order to get the capital in?" He said, "I read
you. I agree with you and you have no problem." I took him on.
He did a superb job. He was pilloried by the public.
He was sued by my own Attorney General (laughter) -- it was
purely political, I love him, too and he was sued by the City.
In other words, these people have been in the most difficult political
situations because every consumer of electricity --- I can only speak
for New York, but I suppose it is very similar in other parts -- has
just gone through the most unbelievable increase in cost.
Page 18
So my reason for thinking what I say is that the Public
Service Commissions would be so glad to see something built that
will protect the needs of the community but doesn't have to raise
the rates until further down the road when they may not even be
on the commission. (Laughter) They would be very happy, in my
opinion -- this is a political judgment --- to sign a contract for the
future whereas they could not go through another major increase now,
particularly as the people aren't going to get the benefit for 11
years. The alternative to this is, what is happening again in
New York State, where we had an authority which was created to
develop hydro-electric power on the St. Lawrence with Canada. Each
of us has a power authority. We run it jointly.
This power authority now being the only one that could
raise the money has already built one atomic power plant. It is
now going into a second atomic power plant. It has built the grid
to connectit and the first thing you know you are going to see
this same thing happen -- that government is going to come into
meet the demands. I just think if you believe in private enterprise,
if you believe in the capitalist system, you have to stand us and
see what it takes to help that system work? You have got the very
simple and right answer-- if government would just get off our
backs, then we wouldn't have any problem. But this is a democracy.
Government is the creation of the people and it has got politicians
like myself in it, and they may not always be as totally objective
in their views of what is needed, because of political pressures.
Therefore, I think here is a possibility. If we can do what you
say, perfect. They will try. But we talked about shortcutting
some of the environmental requirements. If you did that, the
legislation would be killed. So we have got to live within this.
Let's have a central point where we can clear all of this, and
where you develop, perhaps, standard forms and so forth and to the
degree we can get what you suggest, wonderful. Then no money would
be needed.
page 19
QUESTION: Mr. Vice President, I am wondering about the
effect of this plan on competition within the LNG industry. For
example, if one small project were to be given substantial
Federal help or one Alaska pipeline, what would the effect be
on other applicants who didn't get help?
THE VICE PRESIDENT: There is a very interesting thought
here and that is, I think -- don't hold me on this one -- but I
think it will be in the legislation that no loan would be made below
the rates of what a prime producer of energy can get in the open
market.
In other words, the government won't come in and take a
weak company -- this is not a bailout. This is not going to be for
the bailing out of a defunct company. This will only be to produce
energy to achieve these goals. But the rate of the loan would not
be lower than what the prime rate would be for a successful company.
Most companies will not want to borrow from the government,
I imagine, if they can get it from private sources.
QUESTION: What provision is made, Mr. Vice President,
in the event that loan is in default?
THE VICE PRESIDENT: I think the plant, the operation,
whatever it is, would be completed and the property sold. They
take a loss. If you are in this business of trying to produce at
risk or go into risk areas, you are going to have some major
successes and some failures. I think that is why 25 percent of
the capital or 25 percent of the $100 billion will be equity and
75 percent loans.
I hope that they will make enough successes which they
can sell at a profit to overcome the losses where there would be
a default. But then they have just got to sell it. This is
specifically stated not to become a government operation.
QUESTION: Mr. Vice President, please detail a little more
of this clearing house concept. What authority would that have?
Is it advisory primarily? Is it in the ecology field only? Or
could it spread to other areas of agencies?
Page 20
THE VICE PRESIDENT: This authority would specialize in
government clearances of all types, and so if there is a project
which contributes towards energy self-sufficiency, financed or not
financed, partially or not by the government, they would be eligible
to have all of their clearances done through this division.
This could very well lead to recommendations -- I think
it will be so stated in the legislation -- as to simplification of
clearances. A most interesting case: A friend of mine who is a
lawyer in New York tried to set yp a corporation for the seven
utility companies in New York State last year, which would be a
financing-construction company. The credits weren't strong enough
to do it themselves so they wanted to set up a joint company.
He said there were, I have forgotten, 14, 17 different
regulatory bodies, State and national, which were involved. He
could not devise a corporation which could meet all of those,
including antitrust, and so forth and so forth. So they finally
had to give it up.
If there is a central group and you get some very
able people who understand the law, the ecology, production, and
so forth, I think this unit could become an extremely efficient
unit.
I am not sure why in many cases these things can't
be standardized. Why do you have to spend a great deal of money
each time you file an impact statement, starting from scratch?
The impacts can't be that different. There are certain criteria
that go into them. I have a feeling this could be a very interesting
and useful step.
FOR IMMEDIATE RELEASE
OCTOBER 2 1975
OFFICE OF THE VICE PRESIDENT
(Washington, D. C.)
REMARKS OF THE VICE PRESIDENT
AT THE "CONFERENCE ON REGIONAL VERSUS
THE NATIONAL INTEREST. IN ENERGY LUNCHEON
ARLINGTON ROOM, MADISON HOTEL
WASHINGTON, D. C.
October 2, 1975
(AT 1:15 P.M. EDT)
Thanks, Mel. You sort of challanged me. I feel I
maybe really ought to speak about New York State. The only
thing I can say is that Mel Laird chose to leave Washington
and go to New York State. So that has got to say something.
We are awfully glad you are there, Mel. And we are awfully
glad that the little magazine with you is there, too. That
is kind of a nice stable institution to have.
I have to say about Pat Brown, that he did agree
to hold off their population growth until I got through the
election the second round so I wouldn't face this kind of
stuff I just got now from Mel.
I appreciate, Mel, the opportunity of being here.
I am delighted to be with this distinguished group of
speakers which you have. I am sorry not to be able to
listen to them, Pete and Mike from the Congress and two
distinguished Governors from Oklahoma and lassachusetts,
Bill Baroody, whose watch I borrowed so I would not run over,
and to Mrs. Clusen who is President of the League of Women
Voters, an organization for which I have always had the
most tremendous respect, and who still loves New York and
is very active in that State.
To all of you in this National Conference, thanks
for letting me be with you. Let me just briefly outline the
current situation regarding the concept of the energy
corporation which really grows out of the realities of the
times in which we live. Very simply, this country for many
years was an energy exporter, self-sufficient, dynamic.
Then as our growth increased and as our consumption
of energy increased, we became importers, and then net
importers, and then dependent on imports.
The other producing nations joined together a
good many years ago in an organization called OPEC. They
made a few attempts to raise the prices but because of the
GERALD FORD LIBRARY
component position of the United States, they were unable
to do so until we got into this very strong net importing
position.
Then with the blow up in the Middle East, we
acted as a catalyst to dramatic action by the OPEC countries,
particularly led by the Arab countries relating to the
political situation. We saw the embargo and then the 500
percent increase in the oil prices in the period of two
years which changed the whole world situation, both industrial
nations and the developing nations.
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Page 2
The President spent a great deal of time
studying the situation last fall in a series of meetings
on economy and energy. He then came up with a really
comprehensive program for Congress which he presented
in his State of the Union Message, based on the concept
that this country must, for financial security reasons,
for the strength and vitality of our economy, for the
reactivation of economic growth, become self-sufficient
in energy by 1985.
What I think has been missed by a lot of people
is the fact that energy has traditionally been a free
enterprise operation, a free market operation as far as
the United States Government is concerned. That free
market concept was not limited to the domestic area alone.
The free market concept was an international free market
concept. But the minute the President declared a national
policy that self-sufficiency was our goal, this automatically
cut across the basic free market structure and concept.
But our Government has not traditionally had
the kind of relationships with private enterprise that
countries like Japan has developed, where labor, industry,
finance and Government have a capacity to work together.
They don't have the problem of anti-trust
concepts that we do. Therefore, we have a totally dif-
ferent situation. Congress was posed with a very difficult
problem, let us face it, of how to size up this question
with international prices rising rapidly, a large domestic
production which was then held to a fixed price and with
a falling increase in production; and as a matter of fact,
a falling net increase.
During the past eight months, nine months, ten
months there has been no evident response in any dramatic
form that was commensurate with the urgency and the scale
of the problems we face as a nation by the Congress.
Let's face it, it is difficult, complex and has many
unattractive features in the sense that becoming self-
sufficient involves higher costs.
That is a very unattractive thing, particularly
in looking forward to an election year. So, there has
been no effective action taken. Here we are now two years
since the boycott. Instead of being dependent somewhat
on imported oil, we are now almost 40 percent dependent.
We are spending $26 billion a year in imports, going out
of this country, money that could be used for employment
in the period when we have a very high unemployment, and
now a 10 percent increase which will add another
$2,600,000,000, bringing us close to $30 billion a year.
This country, on the other hand now looking at
the good side of the picture, is blessed with unusual
natural resources. We have in shale oil alone twice as
much oil as the Mediterranean has in known reserves. We
have five times as much coal as we have oil. Then there
is the potential for extraordinary amounts of energy
produced through atomic power plants.
Gas is another field. Gas is an area that is
very important. But gas is one that the Government has
Page 3
regulated years ago. The price of gas, you all know. I
don't have to get into that. The result of the regulation
was a by-product where gas prices were held.
It is the most desirable for all concerns, for
home or industry. It is the cheapest, by Government
regulation. Unfortunately, at present prices it doesn't
pay to produce the quantities that are necessary. Therefore,
our production is falling off. If we have a cold winter
we are going to have the most serious situation which is
going to result in additional high unemployment in a dozen
or 18 States in this country, which depend on gas and they
can't get it.
So that we have got a lot of very complex problems.
There was a very interesting case during World War II of
rubber. I happened to be here and was a close friend of
Jesse Jones and was very active in the Western Hemisphere
picture trying to preserve the ceiling to provide the flow
of rubber from the Amazon Basin, which was the last place
we could get it.
The Government through the RSC went into what was
known as the Rubber Reserve Corporation. This corporation
under the able leadership of -- what is his name? You all
know him. I will think of it in a minute. A very good
friend of everybody's here, who is over 50.
(Laughter.)
He contracted with private groups to develop
synthetic rubber. Five or six of those processes proved
to be successful. The Government sold the processes in
the plants. The successful ones had been recaptured.
Thereupon, it created a new industry and the Government
was the catalyst. There was no expense to the Government
in the process and we became self-sufficient in synthetic
rubber.
Through the ERDA which is doing research in fuels,
they are developing in laboratories a wide range of potential
sources right across the board, fossil fuels and atomic
energy. But they don't have the authorization or the funds
to translate those into commercial production.
Translating laboratory work into commercial pro-
duction is very expensive and it is very risky. If you
don't know what the price is then you are faced with a very
difficult situation and the question is, under the present
regulations, free enterprise has not been willing to invest
the necessary money to develop these new sources of energy
production and to meet the co-equal requirements in relation
to ecology. They must go hand in hand.
I am totally confident that we can meet our
requirements together. It takes research, capital invest-
ment and a risk. Therefore, the concept of the corporation
is to accelerate the whole experimental operation, translating
scientific and technical knowledge into commercial production,
accelerate the independence of this country in terms of
energy supply.
To give a few illustrations of the kind of thing
that can be done, for instance, if it were possible to produce
a C-2 production of oil from say, oil by drilling down, put-
ting off an explosion, setting it on fire, taking the gas
then formed out by pipe, condensing it, if that could be done
as is estimated at a price between $7.00 and $8.00 a barrel,
we are home free for a long time to come in oil.
Page 4
But it is a $200 million, at least, experiment
and nobody is willing -- Occidental has done work in this
field -- but nobody is willing to do it on their own. The
same is true for gas and oil, same process, the cost can
be approximately the same range.
Where if you make gas from oil after mining the
coal, the gas runs $24 a barrel, equivalent in oil prices
or liquified gas is even more. So that we have got these
experiments that need to be done commercially. This is in
the gas, coal and oil field.
If you move over into atomic energy, some 70 percent
of the atomic plants have been cancelled. The President
said in his message in January that he wanted 200 new atomic
oil plants. Seventy percent of those under consideration
have been cancelled. One of the reasons is the risk
involved in the capital. The problem relating to that is
if you invest a billion dollars, which is approximately what
a big plant costs, you can't get your money and your rate
base until you are on line with the new ecological require-
ments that are there, the filing of impact statements and
so forth.
It is now an 11-year process rather than a 4-year
process. Therefore, to tie up $1 billion until you get on
line with an 11-year process is an impossibility. On a
lendees, lease-purchase contract with a private company,
with a contract with the Public Service Commission of the
State, you could bill and be ready and then sell on a lease-
purchase basis over a period of years. So that ten years,
nine years, eleven years from now, we will have electric
energy required.
Let's face it, we can't run an economy, an industry
economy without adequate energy. You can have new jobs
resulting in the opportunities for employment.
This is really a stimulant to the private sector
to meet the needs of the country, domestically, out of our
own resources where the President is to set the goal. The
capital investment estimated to achieve this goal is between
$600 billion and $800 billion in the next 10 years out of a
total capital investment requirement estimated for the nation
in all areas of about four trillion two.
I think that this will act as the catalyst that
is necessary to get it off dead center. If we get the energy
program off dead center with ecology going hand in hand, this
is going to, I think, help very importantly get the economy
as a whole off dead center and really rolling, which gives
the opportunity for employment, the restoration of strength,
the opportunity for production of goods and services that
are necessary to meet our ecological needs, to restore what
nature has given us and to provide the jobs which people want
and to fulfill our responsibilities of the world.
It is big, okay. But it is less than 10 percent
or it is a little more than 10 percent of the total capital
investment. When people talk about diverting capital from
other sources through Government channels, that has already
been done. The President declared that as his objective.
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Page 5
I don't think I have any more to say about it,
except answer questions. I have got lots of figures. I
think we have got to remember a great many things in order
to preserve the strength and vitality of a democracy, and
do for our people as free citizens or provide the opportunity
for them, which is the heritage we have been so fortunate
to have for the past 200 years. So we will have the vitality
in the next 200 years that we have enjoyed in the past.
Without going any further on this, I think I better
answer any questions you all would like to ask. So, we go to
questions.
I hope I didn't overwhelm them.
(Laughter.)
QUESTION: How is this then received by the Congress?
What do you think the pragmatic possibilities are?
THE VICE PRESIDENT: Of course, the bill hasn't been
sent up yet.
QUESTION: But you are reading it.
THE VICE PRESIDENT: I think, frankly, that as far
as the country is concerned, labor is very enthusiastic about
it. That has got some relation to Congress.
(Laughter.)
Industry, I think, is getting desperate for energy,
particularly those who are worried about gas. I was at a
Midwestern Governors' meeting and Governor Exon, of all
people, asked me, "I don't think anyone really believes there
is an energy crisis." He says there is plenty of oil around.
I said, "Well, you summarized it. There sure is plenty of
oil around because we are importing it. But if it is cut
off we have had it."
Those of us who live on the East Coast are now
between 80 and 90 percent dependent on imported oil. I think
we could, if another war broke out in the Middle East and
things really got out of hand, which I hope to God doesn't,
then I think we could see a situation that would really bring
chaos to the whole eastern seaboard. We went through a taste
of it, but only a very small one.
I think that in industry, there are some who are
opposed on the ground that this is capital allocation by
Government. There are others who are opposed for any
Government intervention. There are others who say this would
be a first step to a take-over by Government, socialization.
GENALD FORD LIBRARY
I think that the only way our system is going to
work is if we keep research and development in the applica-
tion of that going to meet the needs of our people. I think
the risk is so great here in this interim period that private
enterprise is hesitant to make the investments which are
essential to our national interests.
So when President Roosevelt said in the beginning
or during World War II, "We are going to have 60,000 planes,"
and we ended up developing 120,000 planes, this shows this
country can do anything it sets its mind to. We have
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Page 6
the resources, the capability, technical knowledge. We
have got everything. We combine them. Government's role
is to see that the peoples' needs are met. This is one of
the needs. This is on a self-limiting basis for under a
period of 10 years. After that, no new commitments will
be made.
My personal feeling is despite what one sees, I
think that this is going to be well received when it is
understood and when the alternatives are seen. I think
that the employment facet of it is a very significant one.
It doesn't add to the deficit which is the problem that the
President is facing in trying to hold down inflation.
QUESTION: Mr. Vice President, you compared the
situation today to the situation before and during World
War II, when we found we could build 120,000 planes, for
example. But before Pearl Harbor, we found we had trouble
building tanks and planes. We found that the answer was
something like the War Production Board.
But Pearl Harbor had to create it. Right now we
have a number of energies, allotments in energy and environ-
mental fields all competing for one another. The poor
person who is constructing an energy plant is bedeviled
from one side or another. What is the solution?
THE VICE PRESIDENT: Absolutely. This law or the
plan, calls for this agency acting as the clearing house
for all regulatory agencies, both State and local, on any
project in which the Government would be a participant.
They would only be a participant in private capital if
private capital could not do it alone. They would only
act as a clearing house for all of these Government
regulations.
Then to be in a position to make recommendations
for legislative changes might facilitate both the social
objectives for which the regulations are created and to
facilitate an acceleration of getting the job done without
the delays which are now inordinate and the uncertainties
which are part of the job.
One of the reasons that things are not being
done is people don't know if they invest $100 million on
the basis of their present calculations and present rules
and regulations, whether those are going to be changed and
therefore, their ability to make a profit is declined.
Therefore, their tendency is not to make the commitment.
You are right on target on this subject.
QUESTION: Some economists are not as enthusi-
astic about your plan as apparently labor and industry are.
GERALD FORD LIBRANT
THE VICE PRESIDENT: Some industry isn't either.
QUESTION: Some have suggested that your off-
budget financing has played an insignificant or at least
not a significant role as in New York. How do you'deal
with this kind of criticism within this context?
THE VICE PRESIDENT: I think it depends on good
management to be perfectly honest. You can't run anything
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Page 7
even a complicated Swiss watch unless you understand how
the watch works and how to handle it. What you are refer-
ring to is the Urban Development Corporation. The Urban
Development Corporation produced or is completing 30,000
units of housing in the State which desperately needed
housing and did it in record speed. It had a cash flow
problem which resulted from the lack of implementation
of the plan which was the financial plan, when there was
a change of administration between one Governor and the
next, from one party to the next.
So that $200 million of obligations were not
purchased which were part of the plan. I have to think
that when the new Governor came in and hadn't had much
experience in New York State's problems that this was an
organization of a previous administration which looked
like it was going to have trouble.
He thought that might be a political plus.
What I think he realizes now is this was a start of what
turned out to be a very serious political minus.
UDC has now completed the sale of its long-term
bonds and is in perfect shape and is back on its feet
because its credit was good. So if you set up something
that is complicated, you have got to have people who
understand it and have the ability to manage it.
But I think Government's function is to do those
things for people which they can't do for themselves, but
to preserve the system.
QUESTION: Mr. Vice President, would this
corporation have the authority to relax environmental
restrictions on its project?
THE VICE PRESIDENT: No, sir.
QUESTION: Mr. Vice President, how would you
respond to those who would charge that Government support
which will in all likelihood go to many of the major
energy companies who have in the past developed their
domestic resources, that this kind of Governmental support
to them for development is unconscionable because they are
not provided with a good standing ground now?
THE VICE PRESIDENT: I understand what you are
saying. Of course, it goes to the question of whether you
believe in the private enterprise system. If you believe
in it and you expect them to produce, and the risks are too
great for them to make the investment through the production
that is necessary, then the Government has got to step in
and provide incentives.
If you believe in socialism, you might say, "Well,
the Government should take the whole thing over." I don't
think we have done too well in the management of some of the
things we have taken over by Government. When it starts
out, it is always going to be very simple. When you get
into it, just like the railroads and other things, it
becomes more complicated. So it becomes a philosophical
question really. This country has chosen to buy its
military equipment through private enterprise, while they
are setting up a government complex.
Page 8
You can make the same argument there. Why
shouldn't the Government manufacture airplanes or guns or
whatever it is, instead of contracting private companies?
This is exactly the same thing. We are contracting private
groups to accomplish an objective as a national interest.
QUESTION: Mr. Vice President, from a practical
point of view, how would you go about deciding which
companies actually cannot make the investment for themselves
versus companies which might simply be seeking to have the
Government subsidize the highest risk part of the venture?
THE VICE PRESIDENT: That is a good question. It
depends on the capability of the management. There are two
criteria. One is a contribution to self-sufficiency or
independence in energy production. The other is, can it be
financed by private capital? Both of those have to be met.
It has to be to the maximum possible self-
liquidating. There is a risk in some of these. But it has
to be sold afterwards, and to the highest bidder, which might
be an existing company or it might be a group of private
investors who joined together to buy it.
I think that that is a judgmental factor, which
really if you talk to the bankers, you talk to the people
who are involved, you can pretty quickly find out why some-
thing was not built. The truth of the matter is we are
losing ground as far as self-sufficiency is concerned
rather than gaining it. We are totally vulnerable as a
nation from a security point of view. As a result of the
position we are in, not only vulnerable, but also subject
to blackmail because of the vulnerability which is the most
subtle way of doing it.
QUESTION: Mr. Vice President, there are two phases
to the shortage. One is supply. The other is demand. Do
you have anything for any plan coming up for energy conser-
vation?
THE VICE PRESIDENT: Yes. The President has sent
recommendations to Congress for legislation that would
encourage energy conservation by giving tax deductions to
home owners who put insulation in the homes, for low-income
families actually subsidizing insulation. The whole series
is a very interesting complex series of legislative action.
My feeling on this particular direction is that the
most important area, for instance, I mentioned both of them --
if you mine shale that has oil in it and then cook it and
take the oil out, then they get what I call talcum powder.
There is no water or very little water where the shale is.
What do you do with talcum powder? So there is a very
serious ecological and environmental problem.
However, if you grow it underground, then you have
got no environmental problem. This is the kind of thing
you have to take into consideration. The same is true of
coal. If you go to gasified coal or liquified coal under-
ground which would save a lot of environmental problems, I
think these are discretionary questions that give great hope
for things being done. But nobody is willing to take those
risks yet.
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Page 9
I think that is the role of government, to take
some risks for the benefit of the people, in the broadest
sense of the word.
I thank you all very much.
END
(AT 1:45 P.M. EDT)
FORD LIBRARY & GERALD
FOR RELEASE UPON DELIVERY
SEPTEMBER 22, 1975
EXPECTED ABOUT 11:05 A.M. PDT
2:05 P.M. EDT
Office of the White House Press Secretary
(San Francisco, California)
70
THE WHITE HOUSE
E/A
REMARKS AT AFL-CIO
CONSTRUCTION TRADES MEETING
Last January, I went to a testimonial dinner in Washington honoring
Bob Georgine. I asked Bob and the skilled construction trades to
help America achieve energy independence -- and he has helped.
I have just seen a copy of the September issue of the AFL-CIO
"American Federationist" in which Bob Georgine again speaks out
on the energy crisis. Bob, nothing could make me happier than
your report that unions are still pressing so vigorously for
energy growth.
I know that construction workers are among those suffering the
heaviest impact of recession and the energy crisis. When you
suffer, America suffers.
The mission of the skilled construction trades represented here
is to build America. That is also my goal as President. Two
centuries of construction enabled America to achieve its special
status among the nations. I salute you as representatives of
the millions of men and women who have had a part in this great
building process. As America completes two hundred years of
history, we face some very serious problems. But we -- you and
I together -- will solve those problems. If any nation or group
of nations in the world -- including those favored by nature with
great oil resources -- think America is finished, that we no
longer control our destiny and our finances, then they have
another think coming.
The four million skilled construction workers you represent, and
multitudes of other Americans will show the world that Uncle Sam
isn't about to say "Uncle."
You and I know we can produce our own energy.
You and I know we can protect ourselves against arbitrary price
increases by foreign nations.
You and I know we can provide more jobs.
You and I know we can bring an end to the intolerable situation
in which America exports more than $25 billion a year to pay for
imported oil, while plenty of energy is potentially available at
home. The money we will pay out this year for foreign oil would
pay the wages for one million more American workers.
When I talk about energy I am talking about jobs -- American jobs.
Last year, about three-fourths of all planned nuclear plants,
and over one-fourth of all coal plants scheduled to be built in
the next 10 years were postponed or cancelled. Domestic oil
production right here in the good old U.S.A. has fallen by 11
percent since early 1973. Natural gas production has declined
so seriously that thousands of jobs are threatened this very
winter.
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2
Last year the average American home paid about $360 for foreign
oil compared with only $45 in 1970. 011 producing nations know
that we are more dependent and more vulnerable than ever.
There is now a possibility that the OPEC nations' foreign oil
cartel will once again raise prices. We don't have to take this
lying down -- and we won't!
For starters, let's spend here at home for American jobs some of
the billions we've been spending abroad for foreign oil and
foreign payrolls. We can create construction jobs for workers,
capital for industrial expansion, and new energy for all
Americans. That's what independence is all about.
In response to those nations which would control our energy
supply and prices and hence our future, I say to industry, to
construction workers, and to all Americans: "Let's go into
business for ourselves." Let's produce American energy in
America with American workers.
Last January, I asked the Congress to act. The comprehensive
program I then outlined was based upon my deep belief in America.
By 1985 I envisioned:
--
200 major nuclear power plants.
--
250 major new coal mines.
--
150 major coal-fired power plants.
--
30 major new oil refineries.
--
20 major new synthetic fuel plants.
---
the drilling of many thousands of new oil wells.
--
the insulation of 18 million homes.
--
and the manufacture and sale of millions of new
automobiles, trucks and buses that use much less fuel.
I happen to believe we can do it. In another crisis - the
one in 1942 --- President Franklin D. Roosevelt said this
country would build 50,000 warplanes a year. Our enemies scoffed.
But by 1943, our production reached 125,000 aircraft annually.
We did it then. We can do it again.
Frankly, we can't wait any longer for Congress to act on my
comprehensive energy program.
Long-range security, jobs, and energy are inseparable. The
time has come for action on energy independence.
Accordingly, I will shortly ask the Congress to erase all doubt
about the capacity of America to respond. I will propose an
entirely new $100 billion Government corporation to work, with
private enterprise and labor, to gain energy independence for
the United States in ten years or less.
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3
This Energy Independence Authority will have the power to take
any appropriate financial action **** to borrow and to lend -- in
order to get energy action. It will serve as a catalyst and
stimulant, working through --- not in place of American industry.
It can stimulate economic growth.
It can create new jobs.
It can give us control over our own destiny.
It can end runaway energy prices imposed by foreign
nations.
---
It can give foreign nations a new look at what Americans
can do with our great resources when we stop talking and
start acting.
That is my answer to those who tell us, Americans can no longer
do what they set out to do.
I speak today to the great majority who believe in American capa-
cities rather than in American incapacity. I speak to all Ameri-
cans who know that this is still the same nation that made up its
mind during World War II to develop synthetic rubber -- and did
so; who know this is still the same nation that decided to harness
the atom by the Manhattan Project and accomplished that objective;
who know that this is still the same nation that said it would put
the first man on the moon --- and did SO. People said all these
projects were impossible. But Americans have done the "impossible. il
The proposed Energy Independence Authority would have a ten-year
life and be self-liquidating. It is designed to achieve what many
regard as impossible --- energy independence by 1985. But it is a
program to secure our jobs, our standard of living, and the na-
tional interest of the United States.
This new government corporation would be an independent Federal
authority reporting directly to the President. This concept is
bigger than partisanship. I am determined to appoint as its
directors Americans of stature without regard to partisan
considerations.
The new Energy Independence Authority will seek:
New technologies to support or directly produce or
transport American energy,
Technologies to support American nuclear development;
Electrical power from American coal, nuclear and
geothermal sources.
The Energy Independence Authority will undertake only those
projects which private business cannot undertake alone. It will
not replace the private enterprise system -- it will supplement
it. My vision is of dramatic action to produce oil and gas from
toal, safe and clean nuclear and coal-generated electric power,
harness the energy of the sun and the natural heat within the
earth and build numerous other energy facilities. The Energy
more
GERALO FORD VIBRARY
4
Independence Authority would act to finance those projects vitally
needed for America's energy independence that will not be financed
even by America's great private capital resources.
We will need over $600 billion of energy investments over the next
decade to finance American energy independence. As always, most
of that investment will come from private sources. But I am con--
vinced that we cannot wait for our emerging technologies to become
conventional technologies. We must act now to speed their develop-
ment. We must also ensure that conventional projects with very
large capital needs will have adequate access to investment re-
sources.
The central defect of America's present energy system is that it
relies most on our least plentiful domestic energy sources -- oil
and natural gas -- and relies least on our most abundant energy
resources --- coal and nuclear power.
My vision is of crash development -- in harmony with environmental
protection -- of these abundant resources. America's oil shale
resources are more vast than all the oil reserves of the Middle
East. America's coal resources are ten times greater than our oil
shale resources. And America's ability to harness the atom is
legendary --- with the known potential of producing unlimited amounts
of clear, safe energy.
Without this Energy Independence Authority, these vast treasures
of America might never be developed --- or developed too late to
keep America's leadership in the world. With an Energy Indepen-
dence Authority, we will have the financial means to tap all this
energy during the next crucial decade.
The Energy Independence Authority will be an important new element,
but only one element in our total national energy independence
effort.
We need dramatic action to produce synthetic fuels -- at least a
million barrels a day -- floating nuclear power plants mounted on
barges, new pipelines for oil and gas and vast energy parks
throughout America.
My vision is of America going back to work as a chain reaction of
economic activity spreads throughout all fifty States. To build
energy is to create energy -- and jobs -- in all sectors of
national life.
It has been estimated that for each job created directly in indus-
try, the ripple effect throughout the economy creates at least
another unrelated job. The total number of jobs generated will
more than double the energy-related jobs.
Let me cite an example:
Four hundred thousand man years of labor are required to construct
plants and manufacture equipment for fifty nuclear plants. This
represents 650,000 man years of labor in the time frame required.
I want to see millions of new jobs in the next ten years with
healthy widening ripples of growth throughout the economy. I am
directing my energy and economic advisers to take all steps re--
quired, in the shortest time possible, to make this vision a
reality. And I am also counting on you, the construction workers
who will do the job. You have the skills. You have the courage.
You have the dedication which enabled America to defend itself in
times of war and to develop in times of peace.
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5
I am confident of your ability and that of all Americans, labor
and management; Democrats and Republicans, and Independents ;
employed and unemployed: rich, poor, and struggling; old and
young; to unite behind this bold new program.
As America's population grows, and our economy expands, we must
create some eleven million more jobs by 1980. This is a big
order. It cannot be filled by Government alone or by industry
alone, or by unions, or by politicians acting on their own.
But the problem can and will be solved if we all work together,
just as you in this hall are today united to building America.
The door to the White House will remain open, as it has since
I have been President, to those who champion the cause of
America's working people. Nor will I ever close my heart to
the millions of Americans who are now unable to find work.
I will not rest as long as any American who wants to work cannot
find employment. Too many people remain without jobs. I have
heard references to so-called "acceptable" rates of unemployment.
I do not recognize the acceptability of any level of unemployment
as long as people can't find jobs. I am determined to help create
new jobs, on a sound economic basis --- good jobs, real jobs and
not make-work $2 an hour jobs.
When statistics are issued on the loss of jobs, there are some
losses which are not published. I refer to the loss of hope
among the young people seeking their first real job, the loss
of self esteem among heads of households who are laid off, the
loss of security and standards of living that people worked for
years to achieve, and, most important, the loss of faith in
America's future.
These are tragic losses. They are losses that the United States
of America cannot and will not permit.
The need for skilled construction workers to build new energy
installations and for new operators to run them will be enormous.
By planning and working now, we can ensure that development
is orderly and that progress is continuous.
As we enter our third century, Americans can look back with
great pride upon our achievements in providing safe, healthful,
stable and productive jobs. But we still have much to do.
Let's go to work together.
Thank you very much.
# # #
EIA MEETING WITH VICE PRESIDENT
Friday, October 10, 1975
9:30 a.m.
Vice President's Office
ERALD R. FORD
THE WHITE HOUSE
WASHINGTON
E/A
October 13, 1975
File
MEMORANDUM FOR THE VICE PRESIDENT
A copy of your remarks at the Energy Conference with Business
Executives in Washington, D.C. on October 6, 1975 was returned
in the President's outbox with the following no tation:
"Excellent - Get someone to put in
Congressional Record so it can be
distributed. 11
Jim Comm
Speak Om In
FORD THERATE is
for Digin
The following summarizes the reactions that Bill Whyte got
after the Vice President's remarks:
The general reaction was that the Vice President had
done an excellent job of selling a difficult subject. Most of the
businessmen that were there had opinions that were based on the
bad press that the idea had been getting, but when they heard the
Vice President's explanation and his answers to the many
questions, they saw merit in the program. The feeling was that the
Vice President or someone else has to do a selling job and an
explaining job to the American people.
FORD LIBRARY & GERALD
er/co
REMARKS OF THE VICE PRESIDENT
AT THE ENERGY CONFERENCE
WITH BUSINESS EXECUTIVES
WASHINGTON, D. C.
October 6, 1975
This country, up to the 1960's, was the major producer
and exporter of oil, and had the reserves to export additional
amounts if necessary. So when on two or three occasions other
nations around the world tried to raise the prices of oil substan-
tially, we just exported more and were able to hold the price.
Then as we got into the mid-60's, OPEC had been formed
and we became a net importer. We didn't have the reserves to
dominate world prices and therefore, triggered by the conflict
in the Middle East, the Arab countries finally moved and in two
years raised prices 500 percent.
At that point, the Eastern Seaboard particularly suffered
quite a setback because of the boycott and the price increase.
The boycott wasn't as overwhelming as it might have been because
there were enough leaks and there were enough countries that didn't
join it. I was at that point Governor of New York and deeply
concerned, but Libya allowed oil to go to one of the British
islands in the Caribbean and to be refined there and to come into
New York for power and so forth. If they had really tightened down,
we would have been in a much more difficult situation.
The President, as you all know, spent a lot of time
discussing the economics and having the summit meetings when he
first took office last fall, a year ago. One of the major subjects
was this question of energy. He came out of those meetings with a
clear determination to achieve energy independence as essential to
this country's national security; secondly, that this should be
achieved by 1985.
GERALD R. FORD
Page 2
He then worked out the details of legislation which
would encourage private enterprise to accelerate production
domestically because energy has always been a private enterprise
operation in this country, except for the Naval reserves. I don't
think we really have recognized quite as clearly as it seems to
me we should that the free market system should do this without
Government intervention, except through a framework of laws which
would give incentive.
The framework of laws has never been achieved. It was
complicated when the United States Government controlled the
price of interstate gas at a very low price so that the most desirable
fuel turned out to be the cheapest fuel. It really hit the coal
industry over the head, so that our greatest resource was the least
developed. Gas when it was first controlled was in surplus, a
byproduct of oil and being burned to get rid of it. The price
was set so low that, as people shifted to gas, they were unable to
get the increased production needed; or even if they could get
production, -- as in the case of Texas -- they couldn't ship it
on the interstate lines.
We had a meeting in this room with a group of Governors
who came in, organized by Jim Rhodes of Ohio, pointing out that
they had lost 600,000 man-days of work last year due to the shortages
of gas. That was a warm winter -- and it is going to be worse next
year. The industrial groups in his State were willing to finance
production of gas at higher prices if they could just get permission
to move it on interstate pipelines -- if the concept of a common
carrier to be adopted rather than a regulated price. That has been
very slow in coming because the Federal Power Commission was afraid
that if it made such a ruling, they would be challenged in the
courts by the ecologists and would then be overruled. So they
wanted legislation.
page 3
Thus we see where government stepped in to regulate one
phase of theenergy industry, it totally disrupted the industry.
This shows very clearly what can happen through government regulation.
The President, as you know, has fought regulation; he has been for
decontrol. He wanted an orderly decontrol on oil. He wanted 39
months. But then we go back to what has happened in Congress.
He sent up a 500-plus page bill. This bill was complicated. I
don't think the public has really paid attention to it since the
energy crisis that they saw two years ago, when there were lines
waiting for gasoline. It was really sort of personified at a
meeting of the Midwestern Governors, where none other than Governor
Exon asked me if there really was an energy crisis. He said, "How
can there be an energy crisis when there is plenty of oil and gas
around?" I said, "You have really expressed the whole thing right
there. There is plenty of oil and gas around because we are importing
now almost 40 percent of our consumption. The fact that we are
importing is the crisis.
"Domestic consumption is going down. So as long as we
import it, there isn't a crisis in the sense that you are thinking
of it; but if the Middle East situation blew up again, or if for
some other reason the imports were shut off, we could then find
ourselves in the middle of a full-blown crisis which for certain
parts of the country would be total disaster. I don't think anyone
has really figured out how this country would survive a really effective
boycott; we don't have transportation from the west to the east to
handle the movement of energy in sufficient quantities to keep our
operations going, our society going."
We have just seen a 10 percent increase take effect in the
world oil prices and Congress has not taken any effective action;
little pieces of action, but no comprehensive action. Finally, the
management-labor committee had some concepts as to how to encourage
industry through incentive to invest more domestically. That
legislation hasn't gotten off the launching pad in Congress.
FORD LIBRARY is SERALD
Page 4
So we find ourselves in a free market industry, but the
free market has been a world market. Now national policy expressed
by the President is that we should be a self-sufficient, independent
producer of energy. We have the resources -- nobody knows yet at
what price. That is a national policy superseding a free market
position because the free market was an international one.
A great many people have felt that this OPEC price
structure would break down as production increased. Walter Levy,
who is one of the most sophisticated people in the business has
said right along there wasn't a chance this would happen; that they
would do exactly what they did do. He predicted that six or eight
months ago, or even longer, that they would not decrease the price;
they would not break the price; they would hold and they would
increase the price. That is what has happened.
So when people say that the use of Federal funds through
a structure that is in a sense comparable to the RFC, conceptually,
but not for bailouts, but for stimulating new industry or new
production, and they say this is an allocation of capital and
this is going to take it from a whole lot of other things, the
answer on the allocation of capital is very simple. The President
has said our national policy is self-sufficiency by 1985.
The estimates vary but between $600 billion and $800
billion will be required to achieve that objective out of about
$4 trillion $300 billion that has been estimated as industry's
capital requirements during this ten-year period for meeting
needs of the American people and our responsibilities in the world.
We will fall short of that estimate by about $600
billion.
Nobody knows hoe much money will come back into
investments from Arab countries where the accumulation of capital
is taking place. But I would imagine that Saudi Arabia alone is
up to about $7 billion now in investment in Treasuries. These
Page 5
securities, were this corporation to be passed by the Congress on
the $100 billion basis, with ten years as the life of the corporation,
would probably average out to about $10 billion a year. If this
country moves towards self-sufficiency, it would take a total of
$60 billion to $80 billion a year and so $10 billion is 12 to 14
percent of the total capital that will be required.
The conditions determining how this money would be used
are two, basically: One, that it contribute to the self-sufficiency;
two, that it be used for financing through private enterprise
where sufficient capital cannot be obtained by private enterprise
alone.
Take a look at the utility industry. Atomic power is
the great potential we have in this country for energy. The
others are important, but the long-term, major producer of energy
is atomic, for the time being; solar and thermal are out further
in time.
Seventy percent of the atomic power plants that were
planned have been cancelled. There is a complicated series of
reasons as to why. One factor is local regulations of the State
Public Service Commissions, where they can't get rate increases
so they an'tearn enough money to be able to borrow the money.
You can't get the increase until you are on line with your power.
These atomic power plants, the most efficient ones, cost about
$1 billion. Therefore, you would have $1 billion tied up --
not for four years as it used to be, but now with all of the
filings that you have to make on impact statements and with the
local suits, it is up to between 10 and 11 years -- $1 billion
tied up for 10 or 11 years with no basis forearning. That is
one very good reason.
Another is the uncertainties as to all kinds of laws
and regulations from Washington. The labor-management recommendations
were to encourage a greater accumulation of capital by corporations.
Page 6
Of course, the bill was immediately tagged by the opposition as
being just a special interest bill for big business and big industry
and for capital rather than for the people -- which is an easy,
cheap shot politically, but it isn't going to help the country.
So that bill hasn't gotten off.
The real question has to be, first does government --
when it has set a national policy that cuts across a free market
operation -- work with the industry involved -- in this case
domestic oil production?
The first approach of the President was this very
comprehensive legislation.
One has to ask whether the Congress -- going through
the same evolutionary change that all of our establishment
institutions have gone through -- is unable to organize itself
in spite of the oppositions overwhelming majorities in both houses.
Is the structure of 300 different committees, which the Congress
has in both Houses, so cumbersome that when you have a comprehensive
piece of legislation of this kind, it makes it impossible for the
Congress to act effectively and rapidly in the national interest
because of jurisdictional disputes within the House and between
the Caucus and the committees?
Or does one come reluctantly to the suspicion that there
would be those in Congress in the opposition party, who would just as
soon have the issue -- who would just as soon see us run short of
energy, have the President take off controls because they lapsed and
not be able to work out an orderly extension, and then have chaotic
conditions in 1976 -- and maybe this would be politically advantageous.
One hesitates to even think that anyone, for political
purposes, would be willing to see the Nation run the risks which we
are running and have the people suffer in a way that they might suffer
very easily were such a chaotic situation to exist. But one can't
eliminate that possibility entirely.
Page 7
Whatever the situation is, there is no action. We
are in a stalemate and the problem is getting worse. We are
now close to $30 billion a year for imported oil. Luckily, our
farmers have been tremendously productive, a major new source
of foreign exchange, and other areas have been also able to
export, so our balance of payments is reasonable at the moment.
But with consumption going up, with production going down, with
the depletion allowance taken off, with the old oil still likely
to be under control, nobody can afford to put the money into the
secondary retrieval of oil because it falls under old oil.
So we have a situation where our production is declining
and our consumption is increasing and nobody thinks there is a crisis.
Let's go to the areas that this corporation might serve.
The best illustration is Rubber Reserve under Bernie Baruch in
World War II, which did a great job. They contracted with six or
seven private companies to develop synthetic rubber production;
of that group, I think four or five came through with processes or
variations of a basic process which were successful. They sold
the company, the plants and the process, to private enterprise
and we have a new industry in the United States. It was a self-
liquidating operation.
The concept is a self-liquidating corporation to finance
those risks which private enterprise cannot or will not undertake
at the present time to contribute to self-sufficiency and to do
it to the maximum degree possible with private capital participation
and through private industry and then sell it as rapidly as possible.
Some people ask what we need this for if we have ERDA?
ERDA's powers go to laboratory experiments relating to energy. But
they do not have the funds or the authority to take those laboratory
experiments into a full commercial production. Of course, here you
move from a limited expense to a much larger expense, but the
commercial production is essential to find out what the cost of
energy would be.
page 8
For instance, gasification of coal is being done and
so is liquefaction of coal in South Africa. It comes out between
$30 and $40 a barrel of oil in equivalent energy, but it does
produce gas. It is essential.
There are new methods which might reduce it to $20 a
barrel equivalent of oil, or even down to $11. There is the
possibility of in-situ operations, drilling a hole down into a deep
coal mine, setting off an explosion, setting it on fire; the heat does
the same thing underground that is done on top and you would draw
up the gas that is created by the burning of the coal underground.
There are those who feel that this will be a far cheaper method but
an experiment like that would cost $200 million to find out.
A surface gasification plant costs about $1 billion.
There is a need for 18 to 24 surface gasification plants to be built
right now if we are to meet the demand for gas. This is what the gas
industry is looking for. There, right away, is $18 billion to
$24 billion needed to produce gas by the traditional, most expensive
way.
Coal, of course, gets tied up with the whole ecological
problem. I visited one of the most fascinating mines near Gillette,
Wyoming, where they took off 23 feet of surface, then 70 feet of
coal. They took the topsoil off first and stacked it; then took the
rest off, put it behind where they are digging the hole, and then
they end up by putting the topsoil back on, making six lakes on
6,000 acres. The only difference you will find is you will have
lakes which you never had before, and it will be 123 feet lower than
it was before. The growth is as good as before or better. I was
there: The antelope were grazing still, right around the mining
operation.
This mine produces 20 million tons of coal a year with 55
people. Everything is automated; it is a superb operation. In other
words, it can be done. If, as a nation, we decide to produce low-
sulphur coal in the west, I am confident the ecological problems
can be worked out. This whole thing has got to be done so that we
don't get our energy at the expense of our environment. I am confident
that production and the ecological research can be done together.
Page 9
But then you come to the problem that a lot of railroads can
only move coal cars at the rate of ten miles an hour, because of
the condition of the roadbeds. There is about $11 billion of roadbed
work to be done in this country. It is conceivable that this
corporation could lend but I don't think the railroads can borrow
the money. Therefore, the corporation might buy preferred stock
in a railroad to give them the funds to fix up their roadbeds and
those funds could then be earned out of coal -- all of this being
contingent upon a conversion of eastern power plants from oil to
coal. This this happens, the coal has got to be produced. It has
got to be transported. You have to have the government in a position,
or somebody in a position, to be the catalyst -- the fallback
position where private enterprise cannot or will not finance the
effort to achieve this independence.
As to oil, we have tiwice as much oil in shale in this
country as the Arabs have oil in the Middle East in known reserves.
The problem is to get it out. You can mine the shale. You can cook
the oil out. Then you end up with what I call talcum powder, which
is in a much larger volume than the shale you have mined, because
it has been cooked and so it is not dissolved. There is very little
water where the shale is. Therefore, what do you do with the stuff?
You could fill a valley --- but if you have a heavy wind, this stuff
is going to blow all over the west.
Again, you can do an experiment (for $200 million) of
trying to develop in-situ production of shale oil: drill down,
put off an explosition, set it on fire, draw off the gasified
oil and condense it. The Livermore Laboratories have done some
work on this with Edward Teller. They feel, although nobody else
is willing yet to agree with the, that this might be produced at
a cost of $7 and $8 a barrel.
This could be one of the great bonanzas in the history
1980 LIBRARY & QERALD
of this country if that cost could be achieved. It would be
fantastic.
Page 10
Occidental Oil is the only company that I know of
that has done any major work in the field, but they can't afford
to carry through on an experiment of this magnitude.
Many companies bought over $1 billion total in leases
in Colorado for shale, but they were going to do surface mining.
None of them have gone ahead because of the uncertainties and the
ecological problems.
One of the standard methods of financing, is the
lease-purchase operation. It is perfectly conceivable that an
atomic power plant costing $1 billion could be financed by the
government under a contract with a private company for lease-
purchase, and with a contract with the Public Service Commission
that as and when that plant comes on line, the rates will be such
that this company can earn, the funds necessary to pay back.
The President in his message to the Congress last
January said we need 200 atomic power plants by 1985. We now have
about 60. Of the remaining ones, 70 percent were cancelled.
California will vote on proposition next June banning all atomic
power plants in California. Oregon has the same issue. If this
country bans atomic power plants, and we don't move in these other
fields, we are going to be totally in a situation which some
ecologists would like to see -- a no-growth society. A no-growth
society means no jobs for the young people that are coming on.
Our whole society has been geared to increased employment based
on increased productivity. I happen to think that is the hallmark
of America. It is our strength. It is our success. I happen to
think that we can meet the ecological side of this problem as well
as the development side.
Industries in 18 States are going to be in a serious
condition if they don't get gas this winter. If we have a cold
winter, even if the interstate pipelines are allowed to be used
there is still going to be a shortage because there isn't enough
gas being produced to sell.
page 11
That means that industry which depends on gas would
probably buy up propane gas that the farmers depend on to dry
their crops and to heat their homes. Farmers are small buyers,
so the next thing you would have to have would be control of
propane. This is just going to take this government, one by
one, further and further into controls -- and the more government
gets into controls, in my opinion, the more they distort the economy
and make it difficult for us to get back on a sound basis.
Therefore, in conclusion, it seems to me that this
idea of the government acting as a catalyst to help get us
off dead center in becoming self-sufficient in energy as a nation,
across the board, in all of these fields and on a self-liquidating
basis, is essential to our national security, to our industrial
growth, and to employment.
If we don't do it, in my opinion, there are elements
in this country, some of them in the Congress, who would like to
see industry fail -- not be able to meet the needs of the country.
These elements would then say, fine, we told you the system was
no good; that capitalism doesn't work; that private enterprise
doesn't work. Therefore, we have got to take it over.
Then we will move as the British moved, taking over one
industry after another, with all the problems that grow out of
that; then they start subsidizing; then unions demand far higher
wages because they say the government has unlimited capacity to
pay and, therefore, you get into the most difficult situation and
the most dangerous situation where you have neither a capitalist
system nor a socialist system and you have the worst of both. Nobody
can make an investment because they don't know what the conditions
are going to be, what the regulations are going to be, what the
resources are going to be. Therefore, you have higher unemployment
and demands for more expenditures by the Federal Government -- which
the President has had the courage to resist to a degree that is
perfectly extraordinary. If he didn't, we would have even more
inflation.
Page 12
Fabian socialists like inflation because that is the
quickest way to equalize capital. You don't have to expropriate
anything. People's values are gone because inflation just wipes
them out. The Germans went through that and we know what happened
as a result.
The President has already said we have to have an
allocation of capital when he announced the goal of energy
self-sufficiency. He has asked private enterprise to do it. So
it isn't a question of taking the capital from housing and all of
these other areas that people talk about. There is plenty of money
right now in the savings and loan associations. People haven't
got enough confidence to invest in housing. So it isn't that.
Secondly, as far as the EIA's being a step towards
socialism is concerned, I think it is exactly the opposite. I
think it is government's showing their concern for the present
system -- free enterprise and capital -- trying to help stimulate
and bridge over this period.
The Energy Independence Authority would have the responsibility
of acting as the clearing house for ecological and regulatory
functions of government at State, Federal and local levels. It
would make recommendations to simplify these structures, based on
experience. A private operation which was investing in capital
to achieve energy self-sufficency could also use this corporation
as the clearing house for its contacts with government. The objective
is a system which would cut down on the time lost through
bureaucratic delays and law suits, a very, very serious thing in
terms of cost, expense and delayed production.
The way the legislation is being drafted would give
the EIA's five-man board the discretion to make all of the key
decisions so we can get it rolling and get action fast and decisions
made the way they are made in private enterprise as distinct from
the way they are done too often in government.
Page 13
What makes me think it will go through Congress?
This is something that labor wants very badly. It means
jobs through industry and not jobs through a dole. Therefore, I am
pretty sure labor is going to give it very strong support. If
indusltry at the same time feels it is desirable and worthwhile
and gives it support, then I think its passage has got very great
potential.
But if industry is opposed to it, that will nullify labor
support and probably nothing would happen.
I think this is a turning point for this country and if we
don't have enrgy we are not going to have growing industry. If we
don't have a growing industry, we are not going to have jobs and
we are going to have a lot of problems. We have got them, but they
will be worse.
Are there any questions?
QUESTION: Mr. Vice President, could you relate this program
to the $6 billion synthetic fuel program that we read about recently?
Is it part of it?
THE VICE PRESIDENT: The $6 billion synthetic fuel program
is one that Senator Jackson has proposed. It hasn't passed yet.
So what we did in the thinking on this was to just make a provision
that they would be complementary if that passes. The Jackson proposal
would be an outright expenditure -- putting the money in the federal
budget. EIA would provide a loan, or an investment, or a guarantee
of a loan, all on a self-liquidating basis. That is the difference.
But if the Jackson proposal passes, fine; whatever they do with that
wouldn't have to be done by EIA. They would be totally complementary.
QUESTION: Mr. Vice President, you know there is a process
of drafting in Washington whereby you can direct a piece of proposed
legislation that will go to a standing committee. My question is
addressed to where would the thrust of this legislation lie so that
we could determine what the standing committee would be or is it a
multiple reference to the standing committees?
page 14
THE VICE PRESIDENT: You are obviously very well aware of
the whole committee structure and the sensitivity of this and of
course there are the jealousies as to who gets what. That is being
analyzed very carefully by experts. It could be considered as a
financial question. It could be considered as an energy question.
There are two or three different ways it could go. I think the effort
will be to find out where it could be most expeditiously dealt with.
But if you have a suggestion, I would be very grateful.
QUESTION: Mine is a negative suggestion, Mr. Vice
President. Don't make it so that it is a multiple reference.
THE VICE PRESIDENT: Absolutely; on that, we are all in
agreement. If you want to tell me confidentially afterwards which
one of the group, I would appreciate it.
QUESTION: Mr. Vice President, you mentioned many of the
traditional sources of energy but you hardly touched on solar energy.
I wonder. Here is one that has few ecological problems and would
it be participating in this program and how?
THE VICE PRESIDENT: Solar energy and thermal energy are
very important parts. They are large scale producers of energy
immediately, but they are very important parts of the program.
Any group which wants to produce any new process or develop equipment
or whatever it may be for solar energy would, if they can't get the
funds themselves, be eligible for assistance in the way of a loan
or a loan guarantee from this authority. Conservation is included
here, support for the conservation of energy. Pipelines are included
in this as eligible if they can't get the private financing.
Alaska could produce an awful lot more oil if they opened
up more lands; five, six, seven million barrels a day. That would
take four or five pipelines. So you are talking a lot of money and
that has to be balanced out.
QUESTION: Mr. Vice President, you had mentioned the
government-owned, contract-type of plant such as the rubber plants
in World War II. Is there any way you are going to insure that this
legislation is so worded that someone of a different philosophical
outlook cannot turn this energy independence agency into a Federal
oil and gas corporation running the same way as TVA?
Page 15
THE VICE PRESIDENT: It requires that everything be
sold and that it be self-liquidating and it be done through
private enterprise and with private enterprise participation.
I think the private enterprise participation is one of the most
important aspects. For instance, if you build an atomic power
plant under a lease purchase contract, with a contract with the
Public Service Commission, you actually then have a contractural
relationship that, the ownership is in the hands or will be in
the hands of private enterprise. Nothing will be done where the
government sets up some new form of TVA.
It happens that the Governor of Pennsylvania, who is a
declared candidate for the Presidency, Governor Schapp, has got
a program where he has been trying to get other Governors in the
Eastern Seaboard to join in sponsoring which involves a TVA at the
mine-heads to produce electricity at the mine heads, which would
be owned by the government, mined and then distributed from there.
So I think we are on the verge. I flew to the coast
Thursday night with a Senator who has introduced a bill to break
up the oil business and have just producers, distributors, marketers
-- each one would be in a separate company. I only mention that.
This is a Republican and it shows that people are looking to Congress
for ways of being responsive to the public but not, in my opinion, too
clear as to what the impact would be on our system.
QUESTION: Mr. Vice President, you indicated that this
authority would be able to produce hopefully about 14 percent
THE VICE PRESIDENT: Of the capital needed to meet the
self-sufficiency.
page 16
QUESTION: Is there some way this could be helpful if
private industry does not come forth with the other 86? Do you
think there is any problem in that other 86 being raised during
that peiod of time?
THE VICE PRESIDENT: Let's take a case in point. Let's
say they invested $200 million in either an in-situ gasification
of coal or in-situ gasification of oil project and it proved to be
within, let's say, lower than the cost of present imported oil
prices. I don't think you would have to worry about it because
the government would not continue in the business. They would sell,
either sell the process or make it available, whatever the procedure
would be, whatever they did in the Rubber Reserve type of thing.
I think you would find, then, a tremendous amount of private capital.
Capital goes where it can get earnings. If capital can find
attractive earnings in producing energy in this country for self-
sufficiency, they will invest in it. If they can't, they will invest
in the MacDonald Hamburger stands, not that I am against them.
I am for them. (Laughter) But they are not going to solve our
energy problem. We have a free capital market. They go where the
returns are. The question is: Can the government help point the
way to good returns?
QUESTION: Sir, you mentioned in connection with the
nuclear power plants a contract between the Federal Government
and the State Public Service Commission. I don't think you will
get many States that will willingly enter into such contracts,
but if you do you could do that right now without having to have
the lease-back arrangement and the Federal Government build the
plants.
THE VICE PRESIDENT: Great. Then we wouldn't have to put
any Federal money in.
QUESTION: I would think that would be the place to look;
is the Federal Government using its influence with the State
commissions to get the rates up? That will bring the capital in
and you won't have to build the plants through the government.
Page 17
THE VICE PRESIDENT: There is only one flaw in your
argument, if you will forgive me -- at least a political flaw;
and, that is, as one who only two years ago left the Governorship
and who saw the beginning of the pressures due to, first, ecology
on using non-sulphur fuels and the increased cost in getting the
non-sulphur coal, non-sulphur oil; then the embargo and then the
world price increase of 500 percent. These poor public service
commissioners have had to take double and triple the cost of
electricity to consumers, if not more.
There problem right now is that they have gone through
so many increases. When I got a new Chairman of the New York State
Public Service Commission, who had been a strong consumer advocate,
I said, "Look, in your advocacy of the protection of the consumer
do you include --- (this is before I offered him the job) --- the
protection of the consumers' need for additional power in the future?
If so, so you visualize that that is going to take higher rates
and more money in order to get the capital in?" He said, "I read
you. I agree with you and you have no problem." I took him on.
He did a superb job. He was pilloried by the public.
He was sued by my own Attorney General (laughter) -- it was
purely political, I love him, too and he was sued by the City.
In other words, these people have been in the most difficult political
situations because every consumer of electricity -- I can only speak
for New York, but I suppose it is very similar in other parts -- has
just gone through the most unbelievable increase in cost.
Page 18
So my reason for thinking what I say is that the Public
Service Commissions would be so glad to see something built that
will protect the needs of the community but doesn't have to raise
the rates until further down the road when they may not even be
on the commission. (Laughter) They would be very happy, in my
opinion --- this is a political judgment -- to sign a contract for the
future whereas they could not go through another major increase now,
particularly as the people aren't going to get the benefit for 11
years. The alternative to this is, what is happening again in
New York State, where we had an authority which was created to
develop hydro-electric power on the St. Lawrence with Canada. Each
of us has a power authority. We run it jointly.
This power authority now being the only one that could
raise the money has already built one atomic power plant. It is
now going into a second atomic power plant. It has built the grid
to connectit and the first thing you know you are going to see
this same thing happen -- that government is going to come into
meet the demands. I just think if you believe in private enterprise,
if you believe in the capitalist system, you have to stand us and
see what it takes to help that system work? You have got the very
simple and right answer-- if government would just get off our
backs, then we wouldn't have any problem. But this is a democracy.
Government is the creation of the people and it has got politicians
like myself in it, and they may not always be as totally objective
in their views of what is needed, because of political pressures.
Therefore, I think here is a possibility. If we can do what you
say, perfect. They will try. But we talked about shortcutting
some of the environmental requirements. If you did that, the
legislation would be killed. So we have got to live within this.
Let's have a central point where we can clear all of this, and
where you develop, perhaps, standard forms and so forth and to the
degree we can get what you suggest, wonderful. Then no money would
be needed.
page 19
QUESTION: Mr. Vice President, I am wondering about the
effect of this plan on competition within the LNG industry. For
example, if one small project were to be given substantial
Federal help or one Alaska pipeline, what would the effect be
on other applicants who didn't get help?
THE VICE PRESIDENT: There is a very interesting thought
here and that is, I think -- don't hold me on this one -- but I
think it will be in the legislation that no loan would be made below
the rates of what a prime producer of energy can get in the open
market.
In other words, the government won't come in and take a
weak company -- this is not a bailout. This is not going to be for
the bailing out of a defunct company. This will only be to produce
energy to achieve these goals. But the rate of the loan would not
be lower than what the prime rate would be for a successful company.
Most companies will not want to borrow from the government,
I imagine, if they can get it from private sources.
QUESTION: What provision is made, Mr. Vice President,
in the event that loan is in default?
THE VICE PRESIDENT: I think the plant, the operation,
whatever it is, would be completed and the property sold. They
take a loss. If you are in this business of trying to produce at
risk or go into risk areas, you are going to have some major
successes and some failures. I think that is why 25 percent of
the capital or 25 percent of the $100 billion will be equity and
75 percent loans.
I hope that they will make enough successes which they
can sell at a profit to overcome the losses where there would be
a default. But then they have just got to sell it. This is
specifically stated not to become a government operation.
QUESTION: Mr. Vice President, please detail a little more
of this clearing house concept. What authority would that have?
Is it advisory primarily? Is it in the ecology field only? Or
could it spread to other areas of agencies?
Page 20
THE VICE PRESIDENT: This authority would specialize in
government clearances of all types, and so if there is a project
which contributes towards energy self-sufficiency, financed or not
financed, partially or not by the government, they would be eligible
to have all of their clearances done through this division.
This could very well lead to recommendations -- I think
it will be so stated in the legislation -- as to simplification of
clearances. A most interesting case: A friend of mine who is a
lawyer in New York tried to set yp a corporation for the seven
utility companies in New York State last year, which would be a
financing-construction company. The credits weren't strong enough
to do it themselves so they wanted to set up a joint company.
He said there were, I have forgotten, 14, 17 different
regulatory bodies, State and national, which were involved. He
could not devise a corporation which could meet all of those,
including antitrust, and so forth and so forth. So they finally
had to give it up.
If there is a central group and you get some very
able people who understand the law, the ecology, production, and
so forth, I think this unit could become an extremely efficient
unit.
I am not sure why in many cases these things can't
be standardized. Why do you have to spend a great deal of money
each time you file an impact statement, starting from scratch?
The impacts can't be that different. There are certain criteria
that go into them. I have a feeling this could be a very interesting
and useful step.
GERALD R. FORD
FOR IMMEDIATE RELEASE
October 6, 1975
Office of the Vice President
(Washington, D. C.)
REMARKS OF THE VICE PRESIDENT
AT THE ENERGY CONFERENCE
WITH BUSINESS EXECUTIVIES
AT 10:40 A.M.EDT
THE VICE PRESIDENT: I apologize for being late. I was
on the phone raising money for the Capitol Hill Club. It is a
worthy cause. I just got a prospect. They called in. So I
had to stay for that call. If the Capitol Hill Club was foreclosed
just as the President got going for next year, it would be kind
of tough. Well, that is another subject. (Laughter)
I want to thank all of you very much for coming here
today and for giving me a chance to visit with you,try to outline
first briefly the conceptual thinking in back of this program
and then answer or at least discuss your questions. I will do
my best to answer them.
I think the legislation will go up this week. The
subject is a complicated one and there have been varying points
of view as you all know by reading the press. Therefore, it has
caused some difficulty in trying to get the thing worked out
so that it could be put in detailed language for the legislation
and the message.
I hesitate to talk about the whole subject because I
know everybody in this room is totally familiar with the subject,
but let me just for the record give you a brief outline of the past
and how it came about as to where we are now.
This country of course up to the 1960's was the major
producer and exporter and had the reserves to export additional
amounts if necessary and so when on two or three occasions other
nations around the world tried to raise the prices of oil substan-
tially, we just exported more and were able to hold the price.
Then as we got into the mid-60's OPEC had been formed
and we became a net importer, didn't have the reserves to
dominate world prices and therefore triggered by the conflict
in the Middle East, the Arab countries finally moved and in two
years raised prices 500 percent.
At that point, particularly the Eastern Seaboard
of this country suffered quite a setback because of the boycott
and the price increase. The boycott, let's face it, there were
enough leaks and there were enough countries that didn't join it
so that it really wasn't as overwhelming as it might have been.
I was at that point Governor of New York deeply concerned;
but Libya allowed oil to go to one of the British Islands
in the Caribbean and be refined there and come into New York
for power and so forth which if they had really tightened down
we would have been in a much more difficult situation.
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Page 2
The President, as you all know, spent a lot of time
discussing the economics and having the summit meetings when he
first took office last fall a year ago. One of the major subjects
was this question of energy. He came out of those with a clear
determination for energy independence as being essential for
this country's national security; secondly, that this should be
achieved by 1985.
He then worked out the details of legislation which
would encourage private enterprise because energy has always
been a private enterprise operation in this country except for
Naval reserves, which would encourage private enterprise to accele-
rate production domestically.
I don't think we really have recognized quite as
clearly as it seems to me the fact exists that this -- because
there is a great deal of talk about the free market system ---
that the free market system should do this and that they should
be the ones that without Government intervention except through
a framework of laws which would give incentive.
Allright. The framework of laws has never been achieved
because one can speculate here -- but first it is a complicated
subject and it was complicated when -- I have to again go back
a second. It was complicated when the United States Government
controlled the price of interstate gas at a very low price
so that the most desirable fuel turns out to be the cheapest fuel.
What it did was of course it really hit the coal industry over the
head so that our greatest resource was least developed and had
more problems and while gas when it was first controlled was a
byproduct of oil and was being burned and therefore was in surplus.
The price that was set was so low that as people shifted to gas
they were unable to get the production, the increased production
or even if they could get production -- like in the case of Texas --
they couldn't ship it on the interstate lines.
Now as you know --we had a meeting in this room, as a
matter of fact, with a group of Governors who came in organized
by Jim Rhodes of Ohio pointing out that they had lost 600,000
man days of work last year due to the shortages of gas and it
was going to be a lot -- that was a warm winter -- worse next
year and his people, the industrial groups in his State were willing
to finance production of gas at higher prices if they could just
get permission to move it on interstate pipelines and the concept
of a common carrier be adcpted rather than a regulated price.
That has been very slow in coming because the Federal
Power Commission was afraid that if they made such a ruling that
they would be challenged in the courts by the ecologists and
that they would then be overruled. So they wanted legislation.
I only mention this because where government stepped
in to regulate one phase of the energy industry it totally disrupted
the industry and shows very clearly what can happen through
government regulation. The President, as you know, has fought
regulation and he has been for decontrol. He wanted an orderly
decontrol on oil. He wanted 39 months. But then we go
back to what has happened in Congress. He sent up a 500 and some-
page bill.
This bill was complicated and the public I don't think
has really since the energy crisis that they saw two years ago
when there were lines waiting for gasoline -- has eased off.
It was really sort of personified at a meeting of the Midwestern
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Page 3
Governors' where none other than Governor Exon asked me if
there really was an energy crisis. He said, "How can there be
an energy crisis when there is plenty of oil and gas around?"
I said, "You have really expressed the whole thing right there.
There is plenty of oil and gas around because we are importing
now almost 40 percent of our consumption."
Domestic consumption is going down. So as long as
we import it there isn't a crisis in the sense that you are
thinking of it, but if the Middle East situation blew up again or
if for some other reason other than price or through a boycott
we could then find ourselves in the middle of a full-blown crisis
which for certain parts of the country would be total disaster.
And I don't think anyone has really figured out how this country
would survive a really effective boycott because we don't have
transportation from the west to the east to handle the movement
of energy in sufficient quantities to keep our operations going;
our society going.
We just have seen a 10 percent increase take effect
in the world oil prices and as I say Congress has not taken
any effective action; little pieces of action, but no comprehensive
action. Finally, the management-labor committee had some concepts
as to how to encourage through incentive industry to invest more
domestically.
That legislation hasn't gotten off the launching
pad in Congress.
So as I view the situation we find ourselves in a free
market industry, but the free market has been a world market.
Now national policy expressed by the President is that we
should be a self-sufficient, independent producer of energy.
We have the resources. Nobody knows yet at what price. That
is a national policy superceding a free market position because
the free market was an international one. Then a great many
people have felt that this OPEC price structure would break
down as production increased.
Walter Levy. who is one of the most sophisticated
people in the business and many of you know him, has said right
along there wasn't a chance; that they would do exactly what they
did do. He predicted that six or eight months ago, or even
longer maybe, that they would not decrease the price; they
would not break the price; they would hold and they would increase
the price. That is what has happened.
So when people say that the use of Federal funds through
a structure that is in a sense comparable to the RFC conceptually,
but not for bailouts, but for stimulating new industry or new
production, and they say this is an allocation of capital
and this is going to take it from a whole lot of other things,
the answer on the allocation of capital is very simple. The
President has said our national policy is self-sufficiency by
1985.
The estimates vary between $600 billion and $800 billion
will be required to achieve that object. That is out of about
$4 trillion $300 billion that has been estimated as industry's
capital requirements during this ten-year period for meeting needs
of the American people and our responsibilities in the world.
We will fall short of that as estimated -- again
these are all estimates; therefore, they are just guestimates -- fall
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Page 4
short by about $600 billion.
So there is going to be a shortage. Nobody knows how
much money will come back into investments from Arab countries
where the accumulation of capital is taking place. But I would
imagine that Saudi Arabia alone is up to about $7 billion now
in investment in treasuries. These securities, were this
corporation to be passed by the Congress on the $100 billion
basis over ten years because that is the life of the corporation,
would probably average out to about $10 billion a year.
If this country moves towards self-sufficiency it would take
$60 billion to $80 billion a year and so $10 billion is 12, 14
percent of the total that is required.
What would the conditions be in determining how this
money would be used? The conditions are simply two basically:
One, that it contributes to the self-sufficiency; two, that it
would be used for financing through private enterprise just as
the Military buys its equipment through private enterprise where
those objectives, those investments cannot be obtained by private
enterprise themselves; in other words, where they either can't
get the money or for some reason are unwilling to; primarily
can't get it, can't get it because they can't earn.
If you take a look at the utility industry -- what, 70
percent of the atomic power plants? -- and of course atomic power
is the great potential we have in this country for energy. The
others are important, but the long-term, major producer of energy
is atomic for the time being; solar and thermal, out further.
I will come back to gas, coal and oil in a minute. But
let's say these 70 percent or 70 percent of the atomic power
plants that were planned were cancelled. There is a whole very
complicated series of reasons as to why. Local regulations of the
State Public Service Commissions where they can't get rate
increases so they can't earn enough money to be able to borrow
the money is one factor. Also you can't get the increase you are
on line with your power. These atomic power plants, most efficient
ones, cost about billion. Therefore, you would have $1 billion
up not for four years as it used to be, but now with all of the
filings that you have to make on impact statements, the
local suits, it is up to between 10 and 11 years. So you have
$1 billion tied up for 10 or 11 years with no basis for earning.
That is one very good reason.
Also uncertainties are another and all kinds of
regulations from Washington. The labor-management recommendations
vere to encourage and allow for a greater accumulation of capital
by corporations.
Of course, the bill was immediately tagged by the
opposition as being just a special interest bill for big business
and big industry and for capital rather than for the people which
is an easy, cheap shot politically, but it isn't going to help
the country.
So that bill hasn't gotten off. The real question has
to be first how does government when it has set a national policy
that cuts across a free market operation work with the industry
in trying to work that out; in this case domestic production?
The first approach the President has was this very
comprehensive legislation.
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One has to ask is it that the Congress going through
this evolutionary change that all of our establishment institutions
have gone through is unable with such an overwhelming majority
by the opposition to the Executive Branch -- in other words,
the Democratic Party as distinct from the Republican Party --
is it unable to organize itself and does the committee structure
of 300 different committees which the Congress has in both Houses,
is it so cumbersome and does t'involve so many committees when
you have a comprehensive piece of legislation of this kind,
does this make it impossible for the Congress to act effectively
and rapidly in the national interest through jurisdictional
disputes, et cetera, et cetera and within the House the Caucus
which is in conflict with the committees?
Or does one come to the conclusion reluctantly
or just as a suspicion even -- not a conclusion -- that there would
be those in Congress in the opposition party who would just as
soon have the issue or would just as soon see us run short of
energy, have the President take off controls because they lapsed
and not be able to work out an orderly extension and then have
perhaps chaotic conditions in 1976 and maybe this would be
politically advantageous?
One hesitates to even think that anyone for political
purposes would be willing to see the Nation run the risks which we
are running and have the people suffer in a way that they might
suffer very easily were such a chaotic situation exist. But one can'
eliminate that possibility entirely.
But whatever the situation is, there is no action.
Therefore, we are in a stalemate. The problem is getting worse
and we are up to now close to $30 billion with a 10 percent
increase in foreign exchange imports. Luckily our farmers have
been tremendously productive. So they are producing a major new
source of foreign exchange. Other areas have been able to
export. So our balance of payments is reasonable at the moment,
but with consumption going up, with production going down, with
the depletion allowance taken off, with the old oil still under
control -- it is not under control at the moment but possibly
under control -- nobody can afford to put the money into the
secondary retrieval of oil because it falls under old oil.
So that we have the situation where as I say our
production is declining and our consumption is increasing and
nobody thinks there is a crisis.
Let's go to the areas that this corporation might serve.
The best illustration is rubber reserve under Bernie Baruch
in World War II which did a heck of a job. They contracted with
six or seven private companies to develop synthetic rubber
production and of that group I think four or five came through
with processes or variations of a basic process which were
successful. They sold the company, the plants and the process
and we have a new industry in the United States. It was a self-
liquidating operation.
This comporation, the concept of this corporation is a
self-liquidating corporation to finance those risks, which
private enterprise cannot or will not undertake at the present
time to contribute to self-sufficiency and do it to the maximum
degree possible with private capital participation and through
private industry and then sell it as rapidly as possible.
Let me take three or four different areas. First,
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we have ERDA. Some people say what do you need this for if you
have ERDA? ERDA's powers go to labaratory experiments relating
to energy. But they do not have the funds or the authority to
take those labaratory experiments and take them out onto a full
commercial production. Of course, here you move from a limited
expense to a much larger expense. The commercial production is
essential in order to find out what the cost of energy would be.
For instance, gasification of coal is being done and
so is liquefaction of coal in South Africa. It comes out between
$30 and $40 a barrel equivalent energy. But it does produce gas.
It is essential.
There are new methods that can come up that would take
a little longer to go down the line which might reduce it to $20
a barrel equivalent of oil or even down to $11, plus the fact
that there is then the possibility of In-Situ, drilling a hole
down in the deep coal mine, setting off an explosion,
setting it on fire; the heat does the same thing underground
that is done on top and you would draw up the gas that is created
by the burning of the coal underground.
There are those who feel that this will be a far cheaper
method but an experiment like that would cost $200 million to find
out.
A gasification plant, surface plant is about $1 billion.
There is a need for 18 to 24 surface gasification plants,
traditional, known, proven style right now for the next -- having
to be built right now if we are going to meet the gas supplies
and this is what the gas industry is looking for. There right
away is $18 billion to $24 billion tp produce gas the most
expensive way.
Some may have to be produced. Laws change. We can get
them changed so that gas can be purchased in another area,
surplus gas and piped through the interstate gas system.
It is complicated. But that is one area.
Coal, of course, gets tied up with the whole ecological
problem. I visited out in Wyoming Gillette, one of the most
fascinating mines where they took off 23 feet of surface, then 70
feet of coal, clay underneath; they took the topsoil off first,
stacked it; then took the rest off, put it behind where they
are digging the hole and then end up by putting the topsoil
back on, making six lakes, 6,000 acres. The only difference you
will find is you will have lakes which you never had before.
The growth will be as good if not better and the only
other differenceis it will be 123 feet lower than it was before.
But I was there. The antelope were grazing still right around
where the mining operation was going on. This whole mine which
produces 20,000 -- I guess 20 million tons a year, has 55 people.
Everything is automated, the whole thing. It is a superb
operation. In other words, it can be done. But they had to
build their own railroad to get it to the main line. They are
servicing midwestern cities. If you want -- let's say if as a
nation we decide or it proves to be feasible -- to produce low-
sulphur coal in the west and the ecological problems are worked
out and this whole thing has got to be done so that we don't
get our energy at the expense of our environment. I am confident
we can do both together and the research can be done together.
But then you come to the problem that a lot of railroads
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can only move coal cars at the rate of ten miles an hour because
of the condition of the roadbeds. There is about $11 billion
of roadbed work to be done in this country.
It is also conceivable that this corporation could loan,
but I don't think the railroads can borrow money. Therefore,
they might buy preferred stock in a railroad to give them the
funds or to invest the funds to fix up their roadbeds which
could then be earned out of coal; all of this being contingent
upon a conversion of eastern power plants from oil to coal.
If they do, they have got to have coal. The coal has got
to be produced. It has got to be transported so that you have
got to have the government in a position or somebody in a position
to be the catalyst, the fallback position where private enterprise
cannot or will not finance the effort to achieve this independence.
All of it then could be sold. No loans are made after;
no commitments made after ten years.
Oil, we have got twice as much oil in shale as you all
know in this country as the Arabs have oil in the Middle East
in known reserves. The problem is to get it out. You can mine
the shale. You can cook the oil out. Then you end up with what
I call talcum powder which isin a much larger volume than the
shale you have mined because it has been cooked and so it is
not disolved. There is very little water where the shale is.
Therefore, what do you do with the stuff? You could fill a valley
but if you have a heavy wind, this stuff is going to blow all
over the west.
Again, you can do an experiment for $200 million of
trying to develop In-Situ production of shale oil, drill down,
put off an explosion, set it on fire, draw off the gas, the gasified
oil and recondense it..
The Livermore Labaratories have done some work on this
with Edward Teller and they feel, although nobody else is willing
yet to agree with them, that this might be produced at the rate
of between the cost of $7 and $8 a barrel.
If it were that, this would be one of the great bonanzas
that has happened to this country. It would be fantastic.
The Occidental company is the only company that I know
that has done any major work in the field but they can't afford
this kind of an experiment.
Many of the companies bought I think over $1 billion
in leases out in Colorado for shale, but they were going to do
surface mining. None of them have gone ahead because of the
uncertainties and the ecological problems. So that is another
area.
Then you come down -- I have covered the coal, oil,
gas; not covered it but mentioned them -- to the question of
electricity through atomic.
One of the standard methods of financing, whether
it is airplanes or a lot of other things in this country, is the
lease purchase operation where somebody finances an airplane
and the company purchases it. It is perfectly conceivable that an
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atomic power plant costing $1 billion could be financed by the
government under a contract with a private company for lease
purchase with a contract with the Public Service Commission
that as and when it comes on line the rates will be such that
this company can earn whatever is necessary to pay back.
The President in his message to the Congress in January
said we need 200 atomic power plants by 1985. We now have maybe
60. The remaining ones, 70 percent were cancelled. California
has the proposition next June banning all atomic power plants in
California; and Oregon on Friday; they have got one of the same.
If this country bans atomic power plants and we don't
move in these other fields, we are going to be totally in a
situation which there are some ecologists who would like to see
a no-growth society. A no-growth society means no jobs for
the young people that are coming on because our whole society
has been geared to increased employment based on increased
productivity.
I happen to think that that is the hallmark of America.
It is our strength. It is our success and that we can do the
ecological side of this problem plus the development side.
You come to industry itself and energy. I don't know.
There are close to 18 States that are going to be in a serious
condition -- industries in 18 States -- if they don't get gas
this winter. But here is how complicated this gets. If we have
a cold winter, even if the interstate pipelines are allowed
to be used, there is going to still be a shortage because there
isn't enough gas being produced to sell.
That means that industry which depends on gas and gas is
a small percentage, whether it is textiles in South Carolina or
glass in Pennsylvania or what not,, they all need it, but it is
a small percentage of their cost.
So they would then go in and probably buy up propane
because they could come in and buy propane. But propane gas
is what the farmers depend on to dry their crops and to heat their
homes and they are small buyers. They are not big buyers. So
the next thing you would have to have would be control of propane
and it is just going to take this government one by one further
and further into controls and the more government gets into
controls in my opinion the more they distort the economy and
make it difficult for us to get back on a sound basis.
Therefore, in conclusion, it seems to me that this idea
of the government acting as a catalyst to get or to help get us off
dead center in becoming self-sufficient as a nation across the boardooR
in all of these fields on a self-liquidating basis, that this is
&
essential for our national security, to our industrial growth, to
GERALD
LIBRARY
employment. That is a pretty good combination of the three.
If we don't do it, in my opinion, there are elements
in this country and some of them in the Congress who would like
to see industry fail and not be able to meet the needs of the
country and then say, fine, we told you the system was no good;
that capitalism doesn't work; that private enterprise doesn't work.
Therefore, we have got to take it over. Then we will move as the
British moved taking over one industry after another and of course
the problems that grow out of that; then they start subsidizing;
then unions demand far higher wages because they say the government
has unlimited capacity to pay and, therefore, you get into the
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most difficult situation and the most dangerous situation where
you have neither a capitalist system nor a socialist system and
you have the worst of both and nobody can make an investment
because they don't know what the conditions are going to be,
what the regulations are going to be, what the resources are
going to be. Therefore, you have a plurality and we have higher
unemployment and demand for more expenditures by the Federal
Government which the President has had the courage to resist
to a degree that is perfectly extraordinary and if he didn't,
we would have more inflation.
This is then also I would say to you, those who study
this question, that Fabian socialists like inflation because
that is the quickest way to equalize capital that you can do
in any country. You don't have to expropriate anything. Just
people's values are gone because inflation just wipes them out
and the Germans went through that and we know what happened from
that.
So I would just like to say that while this has been
opposed and we all know that because you all read it in the papers;
because of allocation of capital it has been opposed because
it says it would be a first step towards government takeover.
The President has already said we have to have an
allocation of capital. He has asked private enterprise to do it.
So it isn't a question of taking the capital from housing
and all of these other areas that people talk about. There is
plenty of money right now in the savings and loan associations.
People haven't got enough confidence to invest in housing.
So it isn't that.
Secondly, as far as a step towards socialism, I
think it is exactly the opposite. I think it is government's
showing their concern for the present system, free enterprise
and capital and that they are trying to help stimulate and bridge
over this period.
There is one other thing I forgot to say and then I
will stop; that is, that this corporation -- it's an authority --
would have the responsibility of acting as the clearing house
for all of the ecological and regulatory functions that
government has at State and Federal levels, State, Federal and
local levels.
So all of them would be cleared through this. They would
then make recommendations to simplify these structures based on
their experience. Any private operation which was investing in
capital to achieve energy self-sufficiency could also use
this corporation as the clearing house for all of its contacts
with government.
So that they could get a system which would accelerate
and maybe cut down on the time because with a loss of time due to
the delays and the suits that take place. This is a very, very
serious thing in terms of cost and expense.
I would also say the way the legislation is being
drafted it would give the board the discretion, a five-man
board the discretion so that there wouldn't be a basis for
suits. In other words, you couldn't sue the corporation for a
decision because all of the key decisions are left to the
judgment of the board. Therefore, there aren't criteria and
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therefore hopefully we can keep this from getting another --
I hope too many of you aren't lawyers because I don't want to cut
down on the business -- but hopefully we can get this thing
so that we can get it rolling and get action fast and decisions
made the way they are done in private enterprise as distinct
from the way they are done too often in government.
That I think is the summary. Any questions we can get
into would develop details of the situation, but that in essence
is the summary.
I should say perhaps what makes me think it will go
through Congress. This is something that labor wants very badly.
It is jobs through industry and not jobs through dole.
Therefore, I am pretty sure labor is going to give it
very strong support. If industry at the same time feels it is
desirable and worthwhile and gives it support, then I think its
passage has got very great potential.
If industry is opposed to it, that will nullify
labor support and probably nothing would happen. But I think it
is a turning point for this country and if we don't have
energy we are not going to have growing industry; if we don't
have a growing industry, we are not going to have jobs and
we are going to have a lot of problems. We have got them, but
they will be worse.
Thank you.
Are there any questions?
QUESTION: Mr. Vice President, could you relate this
program to the $6 billion synthetic fuel program that we read
about recently? Is it part of it?
THE VICE PRESIDENT: The $6 billion synthetic fuel
program is one that Senator Jackson has proposed. It hasn't
passed yet. So what we did in the thinking on this was to just
make a provision that they would be complimentary if that passes.
In other words, of course, that is an outright expenditure.
In other words, that is government putting the money in the budget
expenditure. This other one is a loan or an investment or a
guarantee of a loan and on a self-liquidating basis. So that
is the difference. But if that one passes, fine. Whatever
they do that wouldn't have to be done here.
So that they will be totally complimentary.
QUESTION: Mr. Vice President, you know there is a
process of drafting in Washington whereby you can direct a piece
of proposed legilsation that will go to a standing committee.
THE VICE PRESIDENT: Yes, sir.
QUESTION: My question is addressed to where would the
thrust of this legislation lie so that we could determine what the
standing committee would be or is it a multiple reference to the
standing committees?
THE VICE PRESIDENT: You are obviously very well aware
with the whole committee structure and the sensitivity of this
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and of course there are the jealousies as to who gets what. So
that is being analyzed very carefully by experts.
I don't personally know enough about the committees
to know where this would be most effectively dealt with.
It could be considered as a financial question. It could be
considered as an energy question. There are two or three
different ways it could go. I think the effort will be to find
out where it could be most expeditiously dealt with. But if you
had a suggestion, I would be very grateful.
QUESTION: Mine is a negative suggestion, Mr. Vice
President. Don't make it so that it is a multiple reference.
THE VICE PRESIDENT: Absolutely; that we are all in
agreement. If you want to tell me confidentially afterwards
which one of the group, I would appreciate it.
Sir?
QUESTION: Mr. Vice President, you mentioned many of
the traditional sources of energy but you hardly touched on solar
energy. I wonder. Here is one that has few ecological
problems and would it be participating in this program and how?
THE VICE PRESIDENT: Again, solar energy and thermal
energy are very important parts. They are large scale producers
of energy immediately, but they are very important parts of the
program. Any group who has something, who wants to produce any
new process or develop equipment or whatever it may be for
solar energy would, if they can't get the funds themselves,
be eligible for assistance in the way of a loan, a loan guarantee
from this authority.
I should mention also that conservation is included
in here. In other words, support for the conservation of energy
if that can't get its own financing because you can save a lot of
energy which would reduce the need to produce it; and that that
is part of this, too. Pipelines are included in this as eligible
if they can't get the financing.
Alaska could produce an awful lot more oil if they
opened up more lands; five, six, seven million barrels a day. That
would take four or five pipelines. So you are talking a lot of
money and that has to be balanced out.
Sir:
QUESTION: Mr. Vice President, you had mentioned
the government-owned, contract-type of plant such as the rubber
plants in World War II. Is there any way you are going to insure
that this legislation is so worded that someone of a different
philosophical outlook cannot turn this energy independence agency
into a Federal oil and gas corporation running the same way as TVA?
THE VICE PRESIDENT: It requires that everything be
sold and that it be self-liquidating and it be done through
private enterprise and with private enterprise participation.
I think the private enterprise participation is one of the most
important. For instance, if you build a power plant, atomic power
plant under lease purchase contract with a contract with the
Public Service Commission, you actually then have a contractual
relationship so that the ownership, unless somebody abrogates
the contract, is in the hands or will be in the hands of the
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private enterprise. Nothing will be done where the government
sets up some new form of TVA.
It happens that the Governor of Pennsylvania who is a
declared candidate for the Presidency, Governor Schapp, has got a
program he has been trying to get -- I don't know whether it has
surfaced yet -- other Governors in the Eastern Seaboard to join
in sponsoring which involves a TVA at the mine heads to produce
electricty at the mine heads which would be owned by the
government, mined and then distributed from there.
So that I think that we are on the verge. I flew
to the coast Thursday night with a Senator who has introduced
a bill to break up the oil business and have just producers,
distributors, marketers, each one would be in a separate company.
I only mention that. This is a Republican and it shows that
people are looking in Congress for ways -- or political in political
life -- of being responsive to the public but not, in my opinion,
too clear as to what the impact would be on our system.
Sir:
QUESTION: Mr. Vice President, you indicated that this
authority would be able to produce hopefully about 14 percent,
I believe you said, of the energy needed?
THE VICE PRESIDENT: Capital.
QUESTION: Of the capital.
THE VICE PRESIDENT: Of the capital needed to meet the
self-sufficiency.
QUESTION: Is there some way this could be helpful
if private industry does not come forth with the other 86?
Do you think there is any problem in that other 86 being
raised during that period of time?
THE VICE PRESIDENT: Let's take a case in point. Let's
say they invested $200 million in either an In-Situ gasification
of coal or In-Situ gasification of oil project and it proved
to be within let's say lower cost of present imported oil prices.
I don't think you would have to worry about it because the government
would not continue. They would sell, either sell the process or
make it available, whatever the procedure would be, whatever
they did in the rubber research type of thing. I think you
would find then a tremendous amount of capital. Capital goes
where it can get earnings. If capital can find attractive earnings
in producing energy in this country for self-sufficiency, they
will invest in it. If they can't, they will invest in the
McDonald Hamburger stands, not that I am against them. I am for
them. (Laughter) But they are not going to solve our energy
problem. We have a free capital market. They go where the returns
are. The question is can the government help point the way to good
returns?
QUESTION: Sir, you mentioned in connection with the
nuclear power plants a contract between the Federal Government
and the State Public Service Commission. I don't think you will
get many States that will willingly enter into such contracts,
but if you do you could do that right now without having to have
the lease-back arrangement and the Federal Government build the
plants.
THE VICE PRESIDENT: Great. Then we wouldn't have to put
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any Federal money in.
QUESTION: I would think that would be the place to
look; is the Federal Government using its influence with the
State commissions to get the rates up? That will bring the capital
in and you won't have to build the plants through the government.
THE VICE PRESIDENT: There is only one flaw in your
argument, if you will forgive me -- at least a political flaw;
and, that is, as one who only two years ago left Governorship
and who saw the beginning of the pressures due to, first, ecology
on using non-sulphur fuels and the increased cost in getting
the non-sulphur coal, non-sulphur oil; then the embargo and then
the world price increase of 500 percent. These poor public
service commissioners have had to take double and triple the
cost of electricity to consumers, if not more.
Their problem is right now that they have gone through
so many increases -- this is true because I was very close to the
commission there and when I got a new commissioner, Chairman of
the Commission, who had been a strong consumer advocate, I said,
"Look, in your advocacy of the protection of the consumer
do you include -- this is before I offered him the job -- the
protection of the consumers'need for additional power in the future?
If so, do you visualize that that is going to take higher rates
and more money in order to get the capital in?" He said, "I read
you. I agree with you and you have no problem." I took him on.
He did a superb job. He was pilloried by the public.
He was sued by my own attorney general (Laughter) It was purely
political. I love him, too, and he was sued by the city. In
other words, these people have been in the most difficult political
situations because every consumer of electricity -- I can only
speak for New York, but I suppose it is very similar in other
parts -- has just gone through the most unbelievable increase
in cost.
So my reason for thinking what I say is they would be
so glad to see something built that will protect the needs of the
community but doesn't have to raise the rates until further down
the road when they may not even be on the commission. (Laughter)
They would be very happy, in my opinion -- this is a political
judgment -- to sign a contract for the future whereas they
could not go through another major increase now particularly
as the people aren't going to get the benefit for 11 years. The
alternative to this is, what is happening again in New York State
where we had an authority which was created to develop hydro-electric
power on the St. Lawrence with Canada. Each of us has a power
authority. We run it jointly.
This power authority now being the only one that could
raise the money has already built one atomic power plant. It is
now going into a second atomic power plant. It has built the grid
to connect it and the first thing you know you are going to see
this same thing happen that government is going to come in to
meet the demands. I just think if you believe in private enter-
prise, if you believe in the capitalist system, you have to stand
up and see what does it take to help that system work? You have
got the very simple and right answer. If government would just
get off their backs, then we wouldn't have any problem. But this
is a democracy. Government is the creation of the people and it has
got politicians like myself in it and they may not be always as
totally objective in their views of what is needed because of
these political pressures. Therefore, I think here is a possibility
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If we can do what you say, perfect. They will try.
But we talked about shortcutting some of the environmental
requirements. If you did that, the legislation would be
killed. So we have got to live within this, but let's have a
central point where we can clear all of this stuff and where you
develop perhaps standard forms and so forth and to the degree
we can get what you suggest, wonderful. Then no money would be
needed.
Thank you.
Sir; way in the back?
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Page 15
QUESTION: Mr. Vice President, I am wondering about the
effect of this plan on competition within the LNG industry. For
example, if one small project were to be given substantial
Federal help or one Alaska pipeline, what would the effect be
on other applicants who didn't get help?
THE VICE PRESIDENT: There is a very interesting
thought here and that is I think --- don't hold me on this one --
but I think it will be in the legislation that no loan would be
made below the rates of what a prime producer of energy can get
in the open market.
In other words, the government won't come in and take
a weak company -- this is not a bailout. This is not going to
be for the bailing out of a defunct company. This will only be
to produce energy to achieve these goals. But the rate of the
loan would not be lower than what the prime rate would be for
a successful company.
Most companies will not want to borrow from the
government, I imagine, if they can get it from private.
Sir?
QUESTION: What provision is made, Mr. Vice President,
in the event that loan is in default?
THE VICE PRESIDENT: I think the plant, the operation,
whatever it is, would be completed and the property sold. They
take a loss. If you are in this business of trying to produce
risk or go into risk areas, you are going to have some major
successes and some failures. I think that is why 25 percent of
the capital or 25 percent of the $100 billion will be equity and
75 percent loans.
I hope that they will make enough successes which they
can sell at a profit to overcome the losses which would be at a
loss, you know, where there would be a default. But then they
have just got to sell it. This is specifically stated not to
become a government operation.
Sir?
QUESTION: Mr.Vice President, please detail a little more
of this clearing house concept. What authority would that have?
Is it advisory primarily? Is it in the ecology field only? Or
could it spread to other areas of agencies?
THE VICE PRESIDENT: Any clearances that would be a
division of this authority which would specialize in government
clearances, of all types, and so if there is a project which
contributes towards energy self-sufficiency, financed or not
financed, partially or not by the government, they would be
eligible to have all of their clearances done through this
division.
This could very well lead to recommendations -- I think
it will be so stated in the legislation -- as to simplification of
clearances. To me the most interesting case, a friend of mine
who is a lawyer in New York tried to set up a corporation for
the seven utility companies in New York State last year, which
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would be a financing construction company. The credits weren't
strong enough to do it themselves so they wanted to set up a
joint company.
He said there were, I have forgotten, 14, 17 different
regulatory bodies, State and national, which were involved.
He could not devise a corporation which could meet all of those,
including Antitrust, and so forth and so forth. So they finally
had to give it up.
If there is a central group and you get some very
able people who understand the law, the ecology, production,
and so forth, I think this unit could become an extremely
efficient unit.
I am not sure why in many cases these things can't
be standardized. Why do you have to spend a great deal of money
each time you file an impact statement, starting from scratch?
The impacts can't be that different. There are certain criteria
that go into them. I have a feeling, I don't know, I have a
feeling this could be a very interesting and useful step.
Thank you very much. I apologize for having to go,
but I go to open the Senate and I am not allowed to speak there.
That is why perhaps I talk so long here. I can't speak up
there without unanimous consent, which I don't get very often.
I would love to follow up. If any of you have
questions as time goes by on this, of course, you get the
legislation shortly, but I would be delighted to see them
because to me this has got to be the heart of our future
strength and vitality as a nation; our ability to meet our
people's needs; to provide employment; to be secure and to
meet our responsibilities around the world.
I think we have got to get rolling as far as this
economy is concerned if we are going to stay the leader of
the free world or if the free world is going to have a leader.
Let me put it that way.
Thank you very much, indeed.
END
(AT 11:35 A.M. EDT)
4
4
is
OFFICE OF THE VICE PRESIDENT
WASHINGTON
EIA
October 13, 1975
MEMORANDUM FOR THE VICE PRESIDENT
FROM:
JACK VENEMAN
The attached letter was routed through me because
Claude Hobbs is a friend and wants to help promote the Energy
Independence Authority. He makes three primary suggestions:
1.
The President take the initiative and make a direct,
straightforward message to the people.
2.
He calls for the mobilization of the chief executives
of major corporations throughout the United States.
3.
He suggests that a special Select Committee in the
House and Senate be established to consider the EIA
porposal. The Select Committee would include the
Chairmen and ranking Minority members of the
@@@a if LIBRARY GERALD
Committees that would have jurisdiction over various
parts of the legislation.
This is a strong endorsement of EIA and it might be
productive if Westinghouse could take the lead in mobilizing
the business community.
W
Westinghouse Electric Corporation
CE Hobbs
1801 K Street NW
Vice President
Washington DC 20006
Government Relations
October 8, 1975
The Vice President
Washington, D. C.
FORD & LIBRARY GERALD
Dear Mr. Vice President:
At the Briefing Session in the Executive Office Building
October 6 you invited suggestions to facilitate enactment of
legislation to create the proposed Energy Independence Authority.
Westinghouse is vitally interested in the Energy Indepen-
dence Authority and wants to contribute as fully as possible to
its realization.
I am convinced that a majority of the American public lacks
understanding of the energy shortage we confront. During the
past year or so I have heard many people, including taxi drivers
and others in service jobs say there is no fuel shortage; that
gasoline is readily available, and that any seeming shortages
are the result of oil company conspiracy to hold back supplies
and jack up prices. Householders complain about the increasing
costs of heating oil and electricity, seeming blithely to think
fuel and electricity should be readily available at historic low
prices. They display unawareness or disbelief of the inevitable
shortages to come and of the impact of OPEC.
Your reference to Democratic politicians, especially aspir-
ants to the Presidency, demagoging this issue and confusing the
public about the difficult conditions we will experience in a
few years is most relevant to the national problem.
Congress can hardly be expected to take effective action in
the face of such public confusion and ignorance.
Therefore, I believe there must be a loud, clear unambiguous
voice of leadership to the whole American public, candidly stating
the facts about energy, its price, and what must be done now to
- 2 -
ensure adequate supplies of it in the United States in the
future. To overcome the misinformation and lack of compre-
hension on the part of the public I think we need a new, direct,
straightforward message from the President to all the people.
The message must be specific, simple, thorough, and in con-
clusory terms. It must be presented in a nonpartisan spirit
and asserted to be nonpolitical. Obviously, these assertions
will not stop the opposition's efforts to confuse the issue
further and to attack oil companies and big business; but we
need one clear authoritative voice telling it like it is.
Frankly, I see no other way to get the national dialogue back
on the track.
On Monday you indicated the difficulty of selling this
proposal to Congress, and stated the need for strong business
support. Business support should be mobilized by unequivocal
communication to the chief executives of major and other cor-
porations of the United States, calling on them to support this
proposal, and not to indulge in divisive assertions of each
company's view of self interest.
In addition to business support, I believe a new, imagina-
tive approach to Congress will be required to save this proposal
from the same fate which has ensnared other White House energy
proposals.
One of the questions on Monday related to committee juris-
diction. Referral of legislative proposals to congressional
committees is prescribed by the rules and precedents of the
House and the Senate, and it is difficult to deviate from the
routine.
While it will not be easy to achieve, I suggest that an
effort be made to have this legislation referred to a Select
Committee of the House especially constituted for considering
this legislative proposal. This would have to be undertaken
with Speaker Albert, Tip O'Neill and Phil Burton, with the con-
currence of John Rhodes and Bob Michel. A similar approach
would need to be made separately to the Senate--to Senators
Mansfield and Scott and other key Senators. The Select Com-
mittees should probably include the chairmen and ranking minority
members of the committees which would have jurisdiction over the
FORD LIBRARY &
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various portions of the legislation. In the House this would
probably include the Ways and Means, Commerce, Banking and
perhaps other Committees, and, in the Senate, counterpart
Committees. Such an appeal to the House and Senate leadership
should be undertaken privately, with a plea for nonpolitics.
The effort should be to enlist congressional cooperation on
the basis of "Let's unite, at least on this issue, to get this
important job done, putting partisanship and politics aside." "
Such careful advocacy, subordinating all self-interest on
the part of the President and the Congress, ought to have a
sobering effect on the minds of the voters. Articulation by
the President of the critical nature of our national energy
dilemma to enhance public awareness, accompanied by sponsor-
ship of a new bold remedy would be a demonstration of effective
leadership.
Sincerely yours,
Claud Hobs
Claude E. Hobbs
FORD i LIBRARY GERALD