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1534711
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1975/07/30 - Ross Gilpatric, et. al. from Eastern Airlines
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1534711
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document
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1975/07/30 - Ross Gilpatric, et. al. from Eastern Airlines
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James M. Cannon Files (Ford Administration)
James Cannon's Meetings Files
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Aeronautics, Commercial
Energy policy
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1534711
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1975-07-01
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7
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1975
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1975-07-01
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1975
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The original documents are located in Box 49, folder "1975/07/30 - Ross Gilpatric, et. al.
from Eastern Airlines" 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States of America his copyrights in all of his unpublished writings in National Archives collections.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 49 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
MEETING WITH ROSS GILPATRIC
FLOYD HALL AND FELIX ROHATYN
(Eastern Airlines)
Wednesday, July 30, 1975
12:00 p.m.
Mr. Cannon's Office
natural Hu
Intetter Cerum 1975 to
DOT
1. De-control crude over a period of no less than 48 months based on
current level of old crude.
Argument:
We have consistently argued the need for a gradual
return to the free market.
This period is within a reasonable proximity to the
President's proposal.
A return to the marketplace through gradual de-
control will decrease demand, encourage conserva-
tion and apply increasing price pressure upon the
OPEC cartel.
2.
Remove the effect of the February 1 import tariff of $1 per barrel as
well as the June 1 $1 per barrel tariff and any subsequent tariff im-
position on imported crude.
Argument:
The administration by limiting the price of new oil
to $11. 50 per barrel has eliminated the impact of
the import tariff.
3. Price increases for jet fuel and other industrial fuels would be limited
to raw material increases and the proportion of the refiners' production
of those fuels effective January 31, 1975.
Argument:
The pursuit of the "motor gasoline tilt" concept is
politically unacceptable and administratively virtually
impossible.
Acceptance of our proportional share has an intuitive
ring of fairness and one that is easily defended.
In today's world, the refiners are now finding it
difficult to pass on increased costs to the motor
gasoline pump as purchasers are able to shop.
Therefore, they have a strong incentive to pass on
these costs to captive customers such as the airlines.
This incentive will, of course, increase proportionately
to the speed of de-control.
is
FURD
ORDERO
-2-
Proportionate pass through is easily administered
by the refiners and subject to audit by the FEA.
Were it possible, a tilt to motor gasoline would
most likely be preferable, as the carriers would
be buying time. However, one might make a case
that a sudden return to the marketplace at the end
of the three-year de-control period might be more
painful than a gradual acceptance of de-control
moving in step with the general economy.
4. A fuel cost surcharge must be developed to pass through, up or down,
changes in fuel costs on a six month basis.
Argument:
Affects the industry universally.
An uncontrollable cost that cannot be forecasted
and whose end point is controlled by a foreign
entity, i.e., it's "unique."
Fuel costs are easily measurable.
The surcharge will reinforce the seriousness of
the energy crisis in the public's mind.
Airlines have no alternate fuel.
Utilities now enjoy flow-thru of fuel costs. This
industry competes with airlines for kerosene.
By using the surcharge approach, the escalator
will not be imbedded in the rate base.
Presented to DOT
July 28, 1975
1. De-control crude over a period of no less than 48 months based on
current level of old crude.
Argument:
We have consistently argued the need for a gradual
return to the free market.
This period is within a reasonable proximity to the
President's proposal.
A return to the marketplace through gradual de-
control will decrease demand, encourage conserva-
tion and apply increasing price pressure upon the
OPEC cartel.
2.
Remove the effect of the February 1 import tariff of $1 per barrel as
well as the June 1 $1 per barrel tariff and any subsequent tariff im-
position on imported crude.
Argument:
The administration by limiting the price of new oil
to $11. 50 per barrel has eliminated the impact of
the import tariff.
3.
Price increases for jet fuel and other industrial fuels would be limited
to raw material increases and the proportion of the refiners' production
of those fuels effective January 31, 1975.
Argument:
The pursuit of the "motor gasoline tilt" concept is
politically unacceptable and administratively virtually
impossible.
Acceptance of our proportional share has an intuitive
ring of fairness and one that is easily defended.
In today's world, the refiners are now finding it
difficult to pass on increased costs to the motor
gasoline pump as purchasers are able to shop.
Therefore, they have a strong incentive to pass on
these costs to captive customers such as the airlines.
This incentive will, of course, increase proportionately
to the speed of de-control.
-2-
Proportionate pass through is easily administered
by the refiners and subject to audit by the FEA.
Were it possible, a tilt to motor gasoline would
most likely be preferable, as the carriers would
be buying time. However, one might make a case
that a sudden return to the marketplace at the end
of the three-year de-control period might be more
painful than a gradual acceptance of de-control
moving in step with the general economy.
4. A fuel cost surcharge must be developed to pass through, up or down,
changes in fuel costs on a six month basis.
Argument:
Affects the industry universally.
An uncontrollable cost that cannot be forecasted
and whose end point is controlled by a foreign
entity, i.e., it's "unique."
Fuel costs are easily measurable.
The surcharge will reinforce the seriousness of
the energy crisis in the public's mind.
Airlines have no alternate fuel.
Utilities now enjoy flow-thru of fuel costs. This
industry competes with airlines for kerosene.
By using the surcharge approach, the escalator
will not be imbedded in the rate base,
FORD
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