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Energy Policy and Conservation Act (S. 622) [Fact Sheet]
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7342015
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document
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Energy Policy and Conservation Act (S. 622) [Fact Sheet]
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White House Press Releases (Ford Administration)
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U.S. Senate. (03/04/1789 - )
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1975-12-22
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1975
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Digitized from Box 19 of the White House Press Releases at the Gerald R. Ford Presidential Library
EMBARGOED FOR RELEASE
DECEMBER 22, 1975
UNTIL 12:00 NOON EST
Office of the White House Press Secretary
THE WHITE HOUSE
FACT SHEET
ENERGY POLICY AND CONSERVATION ACT (s. 622)
THE PRESIDENT TODAY:
Signed the Energy Policy and Conservation Act,
S. 622, which establishes a modified system of
crude oil price controls that would be phased
out in 40 months and provides four major elements
of the comprehensive energy legislation he requested
last January.
Announced that he was removing, effective today,
the $2 per barrel import fee on crude oil that
he previously imposed to reduce imports and
stimulate action on energy independence legislation.
Indicated he was urging Congress to move immediately
on other pending energy legislation after its
current recess.
Directed the Administrator of FEA to take the
necessary steps to remove allocation and price
controls (other than those on crude prices)
from a major segment of the petroleum industry
as soon as possible, in order to return much of
the industry to a free market.
BACKGROUND
In his State of the Union Message last January,
the President announced specific goals to achieve
energy independence.
Also in January, the President proposed compre-
hensive legislation to conserve energy, increase
domestic energy production, and provide strategic
reserves and standby authorities to cope with
any future embargo.
Beginning in February, the President imposed a
fee on imported oil to reduce imports and
stimulate Congressional action on national
energy policy legislation.
more
2
During the past year, the President frequently met
with Congressional leaders on his proposed energy
program. At the request of Congressional Leadership,
he delayed implementation of planned import fees and
approved temporary extensions in the existing
allocation and price control authority in order
to give Congress more time to develop acceptable
energy legislation.
In addition to the new legislation, progress toward
the President's energy independence goals include:
- oil imports are about one million barrels per
day less than estimated one year ago, due pri-
marily to conservation actions by consumers
and industry and better than expected weather
conditions.
- near final action in the Congress on other
Administration proposals, including
production from Naval Petroleum Reserves,
deregulation of new natural gas prices, estab-
lishing thermal efficiency standards for new
buildings, and weatherization assistance for
low-income persons.
PRINCIPAL PROVISIONS OF THE BILL
The principal provisions of the Energy Policy and Conservation
Act (S. 622) are:
Pricing Provisions (amends Emergency Petroleum Allocation
Act)
- Under the existing system of price controls, "old"
crude oil is subject to an average limit of $5.25
per barrel, and new oil is uncontrolled.
- Under the new system, the average price for all
domestic crude oil is subject to a composite
price limit of $7.66, which
can be adjusted
upward. Assuming old oil is controlled at $5.25,
new oil would be controlled initially at $11.28
per barrel.
- The $7.66 composite price can be increased monthly at
the President's discretion:
To adjust for inflation.
To provide a production incentive of not more
than three percent per year.
The two adjustments together may not exceed
10% per year.
- In addition, each 90 days following February 1,
1976, the Administration may take steps to adjust
upward the 3% production incentive and the 10%
overall adjustment limitation. This is subject
to disapproval by either House of Congress within
15 days.
more
3
- To continue any production incentive after
February 15, 1977, the Administration must
make a recommendation to Congress which is
also subject to disapproval by either House
within 15 days.
- After April, 1977, Alaskan oil can be excluded
from the composite price calculation upon a
recommendation from the Administration that is
not disapproved by either House within 15 days.
- The mandatory control program converts auto-
matically to a discretionary program at the
end of 40 months.
- The President is directed to review the current
regulatory system and to dismantle as much of
the current program (other than crude oil prices)
as possible. This includes the price and alloca-
tion controls on wholesalers and retailers, which
are the bulk of those currently controlled by
FEA. Each such deregulation action is permanent,
if not disapproved by either House of Congress
within 15 days.
Other Provisions
The other provisions of S. 622 contain several elements
of the President's comprehensive energy program.
These include:
- Strategic petroleum reserves similar to the
program proposed by the President. This program
will establish storage of at least 150 million
barrels of petroleum within three years and up
to 400 million barrels in seven years. Although
not tied directly to production from the Naval
Petroleum Reserve (NPR) #1 (Elk Hills, Calif.),
it is expected that NPR legislation now before
the Congress will make the important connection
between revenues from NPR-1 and the strategic
petroleum reserves.
- Standby energy emergency authorities that provide
most of the standby authorities requested by the
President to deal with severe energy emergencies
that may arise in the future. The President must
develop contingency plans in six months, which
will be reviewed by the Congress prior to implemen-
tation.
- International energy authorities which are necessary
to allow the United States to participate fully in
the International Energy Program.
- Coal conversion authorities to permit the conversion
of oil and gas fired utility and industrial boilers
to coal. An extension of this authority was
requested by the President in January.
more
4
- Appliance labelling provisions that will require
appliance manufacturers to provide energy ef-
ficiency information to consumers on major
appliances and set voluntary energy efficiency
targets for the industry.
- Automobile efficiency standards for 1980 agreed
to on a voluntary basis earlier this year are
made mandatory in this bill. In addition, the
bill sets mandatory standards for 1985. These
standards will have to be evaluated for tech-
nological and economic feasibility, and changes
will be submitted to the Congress, if appropriate.
The bill contains several other provisions including:
- General Accounting Office audits giving the
Comptroller General authority to audit the records
of persons and companies who are now required to
submit energy data to the Federal government.
- Industrial energy conservation targets are
established for the ten leading energy consuming
industries and are to be monitored by FEA.
- Coal loan guarantees providing financial assistance
to companies opening new coal mines that cannot
obtain credit from private markets.
- Conservation grants to the States to assist in
the development and implementation of energy
conservation programs.
- Export controls and material allocation authorities
to enhance the Federal government's ability to respond
to energy emergencies.
- Mandatory conservation standards for Federal agencies
to further improve the energy practices of the
Federal government.
IMPACTS OF THE BILL
The bill will initially reduce the average price of
domestic crude oil by about $1.00 per barrel. This
change could reduce retail prices by as much as approxi-
mately 1 cent per gallon from today's levels. By way of
contrast, immediate decontrol could have raised prices
at the retail level by about 5 - 6 cents per gallon.
Compared to imports projected under the current price
control program:
- imports probably will increase by approximately
150,000 barrels per day by the end of 1976, due
to lower initial prices.
- imports probably will be about 200,000 barrels
per day less after three years, due to future
price increases allowed by the bill.
Removal of price controls at the end of 40 months should
increase domestic production by more than one million
barrels per day by 1985 and reduce imports by about
three million barrels per day.
more
5
Other provisions of the bill will further reduce the
Nation's dependency on foreign oil. The automobile
efficiency standards, appliance labelling provisions,
and extension of the coal conversion authorities could
reduce imports by almost two million barrels per day by
1985. The strategic petroleum reserve and standby
authorities in the bill will enable the Nation to with-
stand a future embargo of about four million barrels
per day.
NEXT STEPS
Current oil price controls will remain in effect
until FEA promulgates a rule to implement the new
composite price control system. The new rule must
be effective no later than February 1, 1976.
FEA contemplates continuation of a basic two-tier
pricing system for domestic oil with new oil prices
high enough to insure adequate incentive for
exploration and development of new fields. The
final structure of domestic prices will be determined
through a rule-making procedure to allow all interested
parties an opportunity to express their views on the
best pricing program.
The price program that FEA envisions for the entire
40 month program, including the monthly application
of the price escalators allowed in the bill and the
distribution of these escalators among various
categories of oil, must be in place by March 1,
1976.
FEA will take steps to remove price and allocation
controls on those parts of the petroleum industry
that are downstream from the refinery, primarily
product wholesalers and retailers. The objective
of this effort will be to once again allow the
marketplace to operate $0 that consumers are not
penalized by an unnecessary regulatory program.
####