Ask the Scholar

{
    "localId": "16987811",
    "label": "Energy (8)",
    "core": "doc",
    "dtoType": "document",
    "citationUrl": "https://catalog.archives.gov/id/16987811"
}

{
    "id": "16987811",
    "sourceUrl": "https://catalog.archives.gov/id/16987811",
    "contentType": "document",
    "title": "Energy (8)",
    "citationUrl": "https://catalog.archives.gov/id/16987811",
    "collections": [
        "James M. Cannon Files (Ford Administration)",
        "James Cannon's Issues Files"
    ],
    "subjects": [
        "U.S. Congress. (1789 - )",
        "Federal Energy Administration. (06/27/1974 - 10/01/1977)",
        "Energy Research and Development Administration. (01/19/1975 - 10/01/1977)",
        "Presidential messages",
        "Nuclear energy",
        "Energy policy",
        "Synthetic fuels"
    ],
    "iiifBase": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0039/635863/16987811.pdf",
    "thumbnailUrl": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0039/635863/16987811.pdf",
    "largeImageUrl": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0039/635863/16987811.pdf",
    "imageCount": 1,
    "hasImages": true,
    "source": "import",
    "hasTranscription": false
}

{
    "url": "https://catalog.archives.gov/id/16987811",
    "naId": 16987811,
    "coverageEndDate": {
        "logicalDate": "1977-01-01",
        "month": 1,
        "year": 1977
    },
    "coverageStartDate": {
        "logicalDate": "1976-08-01",
        "month": 8,
        "year": 1976
    },
    "levelOfDescription": "fileUnit",
    "recordType": "description",
    "ocrSource": "nara-archive"
}

{
    "seq": 1,
    "pageIndex": 0,
    "type": "document",
    "url": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0039/635863/16987811.pdf",
    "mediaId": "a9ded9774172386b",
    "ocrText": "The original documents are located in Box 13, folder \"Energy (8)\" of the James M. Cannon\nFiles at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nenergy\nTHE WHITE HOUSE\nWASHINGTON\nACTION\nDecember 13, 1976\nFile\nMEMORANDUM FOR:\nJIM CANNON\nFROM:\nGLERN Glann SCHLEEDE\nEvery\nSUBJECT:\nENERGY WHITE PAPER, TESTIMONY, AND\nMESSAGE\nThis memorandum is to review the matter of Administration\npublic statements on energy, in light of the plans which\nSecretary Richardson and Frank Zarb described to us last\nThursday. Briefly, in light of their plans, you may want\nto:\n- Review the situation with Jim Lynn.\n-- Inform the President in an information memo.\n-- Re-think the desirability and/or content of a Presidential\nenergy statement.\nZARB/RICHARDSON PLANS\n-- At the meeting on Thursday, Jim Mitchell and I were\ninformed that:\nRichardson and Zarb are scheduled to testify before\nJohn Dingell on an overview of energy policy.\nZarb intends to have ready to release to the committee\nand the public, a lengthy \"White Paper\" on energy.\nRichardson and Zarb plan on having a press conference\non the White Paper.\n--- We were given an early draft of Richardson's and Zarb's\ntestimony and the White Paper.\nFORD LIBRARY & 93RA70\nDigitized from Box 13 of the James M. Cannon Files at the Gerald R. Ford Presidential Library\n-2-\nCOMMENTS\n----- Copies of the testimony are attached at TAB A and TAB B.\nBriefly, the two statements give a cursory summary of\nthe energy situation and suggest some new areas for\naction.\n- Taken together, the two statements contain all the\npoints that Frank Zarb had identified for a\nPresidential statement when we met in your office on\nDecember 3.\n-- The draft White Paper needs a lot of work to make it\naccurate. It is well over 100 pages in length, single-\nspaced. It is clearly a view of the energy world\nfrom the FEA vantage point.\n-- We first received the conclusions that FEA plans to\ninclude in the White Paper late Saturday. (Copy\nattached at TAB C.) These include a number of\nstatements that are not now a part of Administration\npolicy.\n-- FEA wants comments on the whole package by 3:00 PM\ntoday. I will talk with Jim Mitchell before responding.\nALTERNATIVES\nAlt. #1. Continue work on an energy statement. Largely\nignore the Richardson/Zarb exercise except where\nthere are major errors or it is clearly at\nvariance with Administration policy (e.g.,\ngasoline tax). Keep as much distance as\npossible between their statements and those\nof the President.\nAlt. #2. Continue working on the energy message and try\nto turn the White Paper and the testimony into\nAdministration documents. This will require\nconsiderable work that may not be possible in the\nshort time that Frank Zarb has allowed. If this\nis attempted, others in the Administration\n(e.g., Alan Greenspan) should be thoroughly\ninvolved. Time that OMB staff and I spend on\nthe White Paper will mean less time available\nto work on a Presidential message.\nGERALD R. LIBRAST FORD\n-3-\nAlt. #3. Drop the idea of an energy message except for\nthe transmittal of the reorganization\nrecommendations. Work to clean up the\nWhite Paper and the testimony.\nNOTE:\nI just received a call from FEA indicating\nthat they plan to begin final typing on the\nWhite Paper this afternoon.\nAttachments\nFORD LIBRARY &\nTAB A\nDRAFT\nRICHARDSON TESTIMONY\nMr. Chairman, Members of the Subcommittee:\nIt is a pleasure to be here today to discuss with\nyou one of the most critical issues facing the\nNation today --- our energy situation and the choices\navailable to us for improving it.\nThree years ago, at this time, the United States\nwas in the midst of coping with a major national\ncrisis -- the Arab oil embargo. This six month\ninterruption of our oil imports cost the U. S.\neconomy $10 to $20 billion dollars in lost GNP and\nhelped trigger a recession that we have only recently\nbegun to turn around. As a result of quick and\ndecisive measures taken by the government, private\nindustry, and the general public, we were able to\nweather the direct effects of the embargo, but not\nwithout major inconveniences and adverse impacts on\nemployment. The indirect effects of that event three\nyears ago are still very much with us today in the\nform of higher costs of fuel, and related goods\nand services.\nFORD LIBRARY & CERALO\nBut however unpleasant it may be to recall these\nfacts of the recent past, we must not forget the\nlessons we learned and must address the possibility\nof a future embargo. I am afraid that as a society,\nwe have not yet addressed adequately the basic underlying\nissues which have created our energy problem. It\nis clear to me that we must, as a Nation, resolve\nthese critical issues if we hope to stem our dependence\non insecure sources of fuel.\nI was not directly involved in the early stages of\nenergy policy planning which began as a response to\nthe embargo. I do not presume to be as knowledgeable\nabout the details of the problem as perhaps many of you\nare. But through my long and varied experience in the\nFederal service, I have come to realize the enormous\ninfluence energy has on our economy, on our industrial\ncapability and on our individual lifestyles -- it\nis clearly the life-blood of this Nation.\nIncreasingly, this Nation and the community of\ndeveloping world nations depend upon energy, particularly\ncrude oil and the vast range of products refined and\n-3-\nmanufactured from it, for the basic functioning\nand growth of our economies. Energy brings the\nworld closer together through advanced transportation\nand communication networks; it builds our homes,\nschools and factories; it can improve the\nhealth and nutrition of people the world over;\nit commands our defense systems; and most importantly,\nit brings the prospect of a higher standard of\nliving to all of us. Petroleum and its by-products\nhave changed forever the products we utilize and\nconsume in every facet of our lives. It is not idle\nchatter or narrow concerns that has raised the level\nof the energy debate - we must ensure that this Nation\nhas adequate, secure and reasonably priced energy supplies\navailable, not just within the next ten years, but as\na long-term commitment to enhance the prospect for\ncontinued peace and worldwide economic and social development.\nWe have made a start toward this goal -- a good start.\nIt is unfortunate that it took an embargo to make\nus realize the seriousness of the energy situation.\nNevertheless, the embargo taught us a lesson. As a\nresult, we have taken great strides forward in defining\nthe problem more accurately, in analyzing the prospects\nfor and the roadblocks to solving it, in establishing\na framework for debate, in assessing our choices rationally,\nand most importantly, in taking the first set of actions\n-4-\nto solve this dilemma.\nI believe the Administration and the Congress are to\nbe commended on the high degree of emphasis which\nhas been afforded energy over the past two years.\nAt times, the debate became loud and forceful; and\nat times, the direction we were moving in was unclear.\nBut, on reflection, the debate has been beneficial.\nWe have enacted several key pieces of legislation that\nwill have major impacts on conservation and preparing\nus for the effects of another embargo. Less progress\nhas been made, however, in stimulating domestic resource\ndevelopment and resolving key environmental issues.\nFrank Zarb will discuss in more detail the progress\nwe've made and the specific issues left unresolved\nto date.\nI believe it is paramount for the government to agree\nupon a set of clear objectives and principles from\nwhich we can fashion and implement a comprehensive\ndomestic energy program. While I believe the current\nAdministration has tried to do this, I am concerned\nthat the Congress, as a body, has yet to endorse\nan energy goal and to enact the legislation necessary\nto achieve this goal in a coordinated, comprehensive\nfashion.\n-5-\nIt is imperative to remain aware of the fact that\nthe United States cannot and should not attempt\nto achieve \"energy independence\" in an international\n?\nvacuum or attempt to reach a goal of zero imports.\nThis is an interdependent world. We will need some\nenergy imports in the years ahead. Just as the\nexport of food and capital goods is a necessity\nto our balance of trade, importing goods, including\npetroleum, from other nations \"is good for business. \"\nWhat is not good for business, nor for national security,\nhowever, is an over-reliance on a few countries for\na product that literally fuels our economy.\nThe linking of economies throughout the world through\ntrade has reinforced this mutual interdependence.\nThus, the impact of petroleum supplies and prices\non international economic stability within the next\nfew years is of the greatest concern to industrialized\nand developing nations alike.\nFORD LIBRARY &\n-6-\nWith this in mind, we have successfully established\nthe International Energy Agency (IEA), providing\na welcome and effective vehicle for energy cooperation\namong its nineteen member countries.\nWe have negotiated and placed in operational\nreadiness an integrated emergency program in the\nIEA to enhance our ability to withstand the economic\nimpact of a future embargo on consuming nations and\nwe have successfully tested a program for managing\nthe international allocation of oil during supply\nemergencies.\nWe have fostered a new cooperative dialogue between\noil producers and consumers. It is through dialogues\nof this nature that we will form the basis for a\nlong term solution of our respective problems. We\nmust not take a \"head in the sand\" approach or\ndismiss any reasonable avenues for cooperation in\nthis area.\nOver time, consumer nation cooperation in con-\njunction with a strong U. S. energy program can\neliminate our vulnerability to and dependence upon\nOPEC oil.\nWe cannot relax and pat ourselves on the back for\nthe progress we've made domestically and internationally\nin addressing our energy situation, however, because\nwe still have a long way to go. All of the programs\nenacted into law to date, when fully operational\nand without any other adverse developments, will only\nserve to keep oil imports relatively constant\nthrough 1985. That means that while we will have\nreduced our rate of energy growth, we will have\ndone little to spur increased domestic resource\ndevelopment. Basic commitments and painful decisions\nin this area must be made by the 95th Congress.\nOur situation today is, frankly, worse than it was\nthree years ago. The share of U. S. oil imports\nfrom Arab countries is still increasing; from about\n20 percent before the embargo to about 40 percent\ntoday. And the Organization of Petroleum Exporting\nCountries now provides 82 percent of our oil import\nneeds -- compared with 70 percent just prior to the\nembargo. This trend will continue so long as these\nnations have the capacity to meet growing world\npetroleum demand.\n-8-\nThis year's oil import levels are double those of\n1970. This represents 43 percent of our daily\npetroleum consumption -- at an annual cost of\nalmost 35 billion dollars.\nWe must not, therefore, be lulled into complacency.\nThe programs enacted into law to date are a start,\nbut tangible results will await effective implementation.\nLegislation to increase the production and utilization\nof our own resources, even if enacted today, necessitates\neven longer lead times for implementation than our\nconservation and emergency measures. For example,\nthe new facility lead time for nuclear electric plants\nis 8 to 9 years; coal and oil-fired electric plants,\n5 to 7 years; and even production from new onshore oil\nfields takes from 1 to 3 years. Consequently, even\nif the new Congress takes the strong actions necessary\nto legislate policies and programs to increase domestic\nenergy supply, the Nation will not see results for\nseveral years.\nEven more disturbing is the fact that our ability\nto sustain an energy independence posture in the\npost-1985 decade may be doubtful. Current projections\nshow the U. S. oil and gas reserve base declining\nin this period, and a transition will be needed to\na greater reliance on coal, nuclear power and\nNot\nanlynl\nrenewable resources, such as solar energy.\nThe issues I have raised today are vital to our\nfuture. Some have argued that reducing imports\nis a desirable goal; others contend that it may\nnot be worth the costs and sacrifices it imposes.\nThe energy goals cannot be set independently of\neconomic and environmental goals. I believe it\nis time for a re-assessment in all these areas and\nI suggest that consideration be given to national or\nregional energy forums to discuss and debate the\nissues. I also urge the Congress to demonstrate its\ncommitment to the goal, perhaps by enacting a Joint\nResolution on the energy objectives for this country.\nTo assure that we can meet the threat of another\nsupply interruption, I believe that a government-wide\nembargo management strategy should be prepared. Such\na strategy would fully integrate energy management\noptions with monetary, fiscal and other policies\nthat would be affected by a supply interruption\n-10-\nor steep price increase.\nIn addition, among the most effective measures to\nreduce demand during a supply interruption would be\nthe imposition of emergency taxes or fees on\npetroleum products. Such authority is not vested\nwith the President now. I recommend that the\nCongress consider an amendment to the Energy\nConservation and Production Act allowing for a less\ncomplex emergency system by removing prohibitions\non taxes, fees, tariffs, and other price-related\nmechanisms for emergency use.\nI have discussed so far, and Frank Zarb will do so\nin greater detail, the many actions that must be\ntaken by the government to provide the guidance\nand leadership necessary to reduce our vulnerability.\nThese, in themselves, represent an aggressive, committed\nand far-reaching endeavor. The final ingredient,\nhowever, is the process for establishing and implementing\na national energy program.\nIn my position as Chairman of the President's Energy\nResources Council, I have witnessed both organized\nand imaginative management of energy policy and\nprograms, as well as inefficiencies and overlapping\n-11-\nresponsibilities in the handling of energy issues\nby the Executive and Legislative Branches of the\ngovernment.\nI have been very pleased with the effectiveness\nof the ERC in coordinating energy policy and programs\nfor President Ford, but the ERC cannot counterbalance\nthe inefficiencies inherent in the present Federal\nenergy organizational structure. As you know, the\nPresident, early this year, directed the ERC to\nundertake a thorough and comprehensive review of\nthe Federal energy organizational structure and report\nto him on proposed changes. This review is about to\nbe completed.\nThere are a. wide variety of alternative approaches\nthat can be considered including a Department of\nEnergy and Natural Resources, a Department of\nEnergy, a smaller Energy Agency composed solely\nof FEA and ERDA, and retaining the present system.\nEach of these, of course, approaches the organization,\ndirection, and span of control differently. I urge\nboth the new Administration and the Congress to review\nthis plan and the President's recommendations very\ncarefully and to take appropriate action.\n-12-\nUnfortunately, the Congress has also suffered\nfrom a similar dispersion of authorities in attempting\nto address the Nation's energy problems. There\nare over 100 Committees and Subcommittees of the\nCongress involved in energy-related activities.\nI would urge that while you consider reorganization\nof the Executive Branch, you also consider the\nCongressional structure and assess alternatives\nseriously in this area.\nI would like now to turn the program over to\nFrank Zarb for a more detailed assessment of\nenergy policy issues. Their importance cannot\nbe diminished, their timely resolution cannot be\noverstressed. As you yourself have stated, Mr. Chairman:\nThe way in which these issues are\nresolved directly or by default, will\nhave powerful and permanent effects on\nnational priorities and social goals,\nand upon the choices which we leave to\nour descendants. \"\nI hope our legacy will be that we made a good start\nand built the foundation for a permanent and\ncomprehensive national energy policy.\nTAB B\nDRAFT\nZARB TESTIMONY\nChairman Dingell and Members of this Sub-Committee:\nI am particularly pleased to appear here today to discuss\nthe state of our nation's energy policy.\nAs I reflect upon the past few years, I am proud of what\nhas been achieved, although weary from the effort and\ndisappointed in some areas. I welcome this opportunity\nto summarize my views on the big issues that remain.\nMany people would find it hard to understand my statement\nthat I am proud of our achievements. They hear talk\nof higher prices, higher imports, and no energy policy.\nYet, while it is true that our dependence is\nworse today than before the embargo, we have enacted\nsignificant legislation that will be the foundation\nof an energy policy in years to come.\nCurrent Energy Situation\nLet me briefly summarize the current situation:\n- Oil production continues to decline, but at\na slower rate than previously and there are\npositive signs. Drilling activity is at a 14-\nyear high and Alaskan production should begin\nto flow within a year.\n-2-\n- While the production trends are encouraging,\ndemand has increased this year along with the\neconomic recovery. Thus, petroleum imports\nwill be higher than ever before averaging\nabout seven million barrels per day this year.\nWe will spend about $34 billion for foreign oil\nin 1976.\n- Natural gas production is also declining and\nshortages are growing in certain parts of the\ncountry. If the cold weather we are experiencing\nnow continues throughout the winter, there could\nbe adverse economic impacts in some areas.\n- Coal production is increasing and will approach\n670 million tons in 1976--a record year.\n- Nuclear power expansion has slowed as a result\nof public concerns and private sector\ndifficulties in building new plants, but we\nnow have over 60 plants operational.\n- There are encouraging signs for solar energy\nand some emerging technologies, but there is\na long way to go before these sources\ncontribute significantly to our energy supply.\n-3-\nEnergy Outlook\nIt is clear that the United States has the capability\nto make itself \"embargo-proof\" in the future. To keep\nour dependence upon foreign oil manageable, we will\nneed an aggressive program to increase domestic supply,\nreduce the rate of growth of demand, provide standby\nauthorities for use in the event of another embargo,\nand develop new technologies. In particular, we will\nhave to:\nIncrease coal production from current\nlevels of about 670 million tons annually\nto over one billion tons per year by the\nmid-1980's.\nExpand oil production in frontier areas of\nAlaska and the Outer Continental Shelf (OCS),\nas well as encourage enhanced recovery from\nexisting fields to replace declining supply.\nIncrease the share of nuclear energy in the\ngeneration of electric power from about 9\npercent to over 20 percent in the next ten\nyears.\nDevelop supplemental sources of oil and gas\nsuch as coal gasification and liquefaction\nand shale oil to meet shortages of liquid and\ngaseious fuels.\n-4-\nExpand dramatically the use of renewable\nresources, such as solar energy.\nBuild a strategic petroleum reserve of at least\n500 million barrels.\nReduce the rate of growth of energy demand to\nabout 2.5 percent annually.\nLegislative Scorecard\nThis is a tall order and as Secretary Richardson has pointed\nout, we have made substantial progress in conservation\nand standby measures, but much less in providing for new\nsupply. There are many reasons why our progress has come\nin these areas and not in supply incentives:\n- Conservation has been a popular issue, because it\nis generally cost-effective, saves money, is relatively\neasy to effectuate, and protects the environment.\n- Standby measures make common sense if the nation\nis to prepare itself for another cutoff of supply.\n- Most resource development issues involve large-\nscale change for local communities, often with\nenvironmental effects, and public distrust of\nthe energy industry and government is high.\n- Among the key measures to incentivize new\nproduction are those which involve raising\nthe price of oil or natural gas. These price\nquestions arose at a bad time--during a recession\nand soon after large increases in the world price\nhad occurred--and, as a result, were not received\nfavorably.\n-5-\nAs I indicated earlier, I do believe that progress has\nbeen made. Seven of the thirteen original titles of\nthe President's Energy Independence Act are now law\nin largely the same form as originally proposed. The\nfollowing major bills have been enacted:\n- Energy Reorganization Act\n- Energy Policy and Conservation Act (EPCA)\n- Naval Petroleum Reserves Production Act\n- Energy Conservation and Production Act (ECPA)\n- Alaskan Natural Gas Transportation Act\nAs a result of these laws, the Federal Government now\nhas the authority and has begun to:\nIn Domestic Supply\n- Exempt the first sale of domestic stripper well\ncrude oil from price controls.\n- Implement the 40 month crude oil decontrol plan,\nunder which domestic crude prices are allowed to\nescalate by no more than 10 percent annually to\nprovide production incentives.\n- Provide added pricing flexibility to tertiary\nFORD LIBRARY &\nrecovery and California heavy gravity crude.\n- Develop at the maximum efficient rate the three\nNaval Petroleum Reserves in the Lower-48 States;\ncontinue exploration of NPR-4 in Alaska, leading\nto its eventual development.\n-6-\n- Implement an expedited selection process\nfor a transportation route to deliver Alaskan\nnatural gas to the lower-48 States.\n- Dismantle as much of the current crude product\nregulatory system as feasible.\nIn Conservation\n- Direct a $2 billion obligation guarantee\nprogram for conservation investments by\nindustry, small business, and non-profit\ninstitutions.\n- Provide conservation grants to States to\nassist in the development and implementation\nof energy conservation programs.\n- Implement appliance energy efficiency labeling.\n- Set mandatory automobile efficiency standards\nfor 1980 and 1985.\n- Establish industrial energy conservation\ntargets for the ten leading energy consuming\nindustries, and mandating reporting of progress.\n- Develop thermal efficiency standards for\nall new residential and commercial buildings,\nsubject to Congressional approval of\nsanctions.\n- Implement a three year, $200 million\nweatherization grant program for the\n-7-\ninsulation of homes of low-income,\nelderly, and handicapped persons.\n- Establish a demonstration program to test\nvarious mechanisms for encouraging energy\nconservation improvements or use of renewable\nresources, such as solar heating or cooling,\nin existing residential buildings.\n- Provide grants to States for testing\ninnovative utility rate structure designs\nto achieve a higher degree of conservation.\nStandby\n- Build a strategic petroleum reserve\nof at least 150 million barrels of\npetroleum by 1978 and up to a billion\nbarrels by 1982.\n- Establish standby measures to deal\nwith severe energy emergencies that\nmay arise in the future.\n- Develop cooperative contingency and\nplanning programs with the International\nEnergy Agency (IEA) .\nThis list is long, because the accomplishments are varied.\nYet we should not be lulled into complacency. Much more\n-8-\nremains to be done if we hope to maintain our international\nleadership role and domestic security. I believe the new\nAdministration and Congress must address the issues squarely\nand move forward quickly.\nI have today submitted to the Sub-Committee a detailed\npaper describing the major energy achievements, failures,\nand issues facing this country. I recommend that you\nreview its contents thoroughly, for it is an attempt to\npresent the issues clearly and objectively.\nIn the remaining time today, I would like to address\nsome of the key areas where progress is possible.\nNatural Gas\nFederal regulatory policy towards natural gas is one\nof the most crucial issues facing the nation today. Natural\ngas is consumed by over 40 million residences, over 3 million\ncommercial establishments, and almost 200,000 industrial\nusers. If new natural gas prices remain regulated, market\ndistortions will persist and shortages in the interstate\nmarket will continue to grow. Federal price regulation\nhas not been in the best interest of the nation and I urge\nthe Congress to deregulate new. gas prices.\n-9-\nWith curtailments still on the rise, I also suggest en-\nactment of the emergency legislation proposed twice by\nthe Administration to alleviate short-term problems.\nOnce the pricing and emergency legislation are enacted,\nthe Congress should address the entire regulatory structure\nof the Federal Power Commission and its enabling legislation.\nCrude Oil Regulation\nThe crude oil pricing debate occupied much of our time\nduring 1975 and again this year. The composite price\nformula in the EPCA has proven difficult to administer\nand changes should be considered. The new Administration\nand the Congress should take a careful look at phasing\nout price controls gradually but without use of composite\nprices.\nIt is also important to remove any Federal regulations\nthat prove unnecessary. FEA and the Congress have re-\ncognized that product decontrol is sensible with respect\nto residual fuel oil, middle distillates, and other fuels;\nregulations on gasoline and other remaining controlled\nproducts should be reviewed carefully and similarly re-\nmoved if criteria in the law are satisfied.\n-10-\nEnergy Taxes\nThe debate over energy taxes last year attracted considerable\nattention. The Administration proposed an excise tax on\ndomestic petroleum along with increased import fees, while\nCongress considered a gasoline tax and other measures.\nAfter starting with gasoline tax proposals of over 30\ncents per gallong, the House failed to pass even a 3 cent\ngasoline tax. This experience with energy taxes points\nout the difficulty in raising energy prices to effect\ndemand reductions, but I believe that the desirability of\nsuch taxes (either in the form of Btu taxes or on specific\nfuels, such as gasoline or natural gas) should be explored\nagain by the Congress.\nConservation\nThe achievements in energy conservation have resulted in\na number of exciting new programs that must now be im-\nplemented. The funding, staffing, design, and operation\nof these programs will be critical to our future. Most\nof the tough regulatory approaches to conservation have\nbeen enacted or were rejected for good reasons. Nevertheless,\nour work is not completed and there are still some measures\nto be considered.\nOnce, again, I urge the Congress to enact a tax credit\nfor residential insulation. This bill, which can save\nover 100,000 barrels per day, has twice been deleted in\nConference Committees. I also remain convinced that the\nthermal efficiency standards proposed by the Administration\n-11-\nshould have been passed with tougher sanctions than agreed\nto by the Congress. The buildings sector provides great\nopportunities for savings, which should not be lost because\nof interest group pressure.\nFurther I recommend that the ERC establish a task force on\nenergy conservation to deal with implementation of these\nexisting programs and preparation of a thorough analytical\nreport to Congress as required by the ECPA.\nWhile there are other conservation regulations in the buildings,\nindustry, and transportation sectors that should be considered,\nmost would have little effect. The key measure to induce\nconservation, especially in the near-term, would be the\npricing of energy at its market value. Only when artificial\ncontrols are removed from energy prices can the marketplace\nreceive the proper signals.\nEnergy Development\nIrrespective of the progress we make in reducing the rate\nof growth of energy demand, the Nation's use of energy\nwill continue to expand. We will need large-scale increases\nin coal production, nuclear power, and use of renewable\nresources, and will have to reverse the declines in domestic\noil and gas production. We have made mistakes, but hope-\nfully have learned from our errors.\nThe role of State and local governments and interest groups\ncannot be underestimated. The Federal government must work\nin harmony with these entities before, not after, final\nresource development decisions are made. National interests\n-12-\ndo not always coincide with local interests, but wide-\nspread Federal overrides are doomed to failure. I propose\nthat the new Administration assess more thoroughly ways to\ninvolve local interests in Federal decision-making.\nThe balance between energy, economic, and environmental\nobjectives is delicate, but must be maintained. Careful\nplanning can avoid most of the impacts of energy projects\nsometimes feared by local residents. The Congress should\nenact legislation to provide impact assistance funds for\ninland areas (such as potential coal producing states),\njust as it has done for coastal states.\nIn addition, the uncertainties facing investors must be\novercome. These include policy uncertainties with respect\nto environmental standards (such as Clean Air Act and surface\nmining) and price controls, as well as geologic uncertainties\n(such as frontier OCS reserves and leasing schedules). The\nCongress has an obligation to reduce these uncertainties\nand provide a stable investment climate.\nUtilities\nOne of the key resource development questions relates to\nthe building of new powerplants. In the last few years,\nutilities experienced a dramatic change in their profitability,\nfinancing capacilities, growth estimates, and public acceptance.\nThe United States needs new coal-fired and nuclear capacity\nif it is to avoid power shortages or greater reliance on\noil- or gas-fired power. Assistance to utilities, especially\nin the face of higher rates already in effect, has not been\n-13-\npopular, and most of the Administration's initiatives have\nnot been successful.\nI urge Congress to review the utility situation carefully\nand to consider legislation to improve the siting process\n(without encumbering it with added Federal bureaucracy);\nto consider new approaches (such as S. 1777) to the coal\nconversion process; but to weigh the results of FEA's\nutility rate structure studies before pressing ahead with\nnew legislation.\nNuclear Energy\nA key part of the utility problem is the growth of nuclear\nenergy. The United States will need to increase nuclear\npower's role in its economy or see oil imports grow even\nmore in the future. Many nuclear plants have been cancelled\nor delayed because of financing, siting, or load growth\ndifficulties. There has been greater public concern over\nthe safety of such plants, yet referenda in seven States\nthis year and a recent public opinion survey showed consider-\nable public support for nuclear power.\nThis Administration has proposed a comprehensive and innovative\nset of programs to expand nuclear-development with careful\nconsideration of safety. Bills to improve the licensing\nprocess, transfer enrichment facilities to the private\nsector, and others failed to receive positive Congressional\naction. The President increased safety and waste management\nbudgets dramatically, and proposed, in October, a detailed\npolicy on proliferation and safeguards. The measures he\n-14-\nannounced could go a long way to establishing a safe and\nreliable international nuclear program and should be acted\nupon favorably by the new Administration and Congress.\nFinancing\nWhile I would hope and expect that most new energy projects\ncould be developed and financed privately, there may be\na need for Federal financial assistance in some areas. The\nCongress has already enacted several programs to provide\nfinancial support for coal, geothermal power, conservation,\nand coastal zone development. Nevertheless, the establishment\nof a viable commercialization program for synthetic fuels,\nthe need for impact assistance to cope with inland resource\ndevelopment, and other financial assistance measures should\nbe re-assessed to assure that first and second generation\nplants are built. More Federal money should not be the\nanswer to all problems, but could be important in some\nselected cases.\nR&D Priorities\nGERALD FORD LIBRARY\nI am not an expert in research and development problems\nand thus cannot speak authoritatively on various technologies.\nI can, however, talk about priorities. It is my belief\nthat the R&D funds authorized readily today by government\nwill someday begin to wane. We should therefore set our\nenergy R&D priorities carefully. We must look first towards\nthose technologies with the greatest likelihood of being\nsignificant contributors and economic in this century. We\nmust also be prepared for failure and have contingency plans\n-15-\navailable in case some of our research efforts do not pay\noff.\nConclusion\nI would like to conclude by saying that I am optimistic\nabout America's future. I have lived with the difficulties\nof developing and implementing controversial policies, and\nhave seen how easily the process can be frustrated. Yet,\nthe political system can work and has shown its resiliency\nrepeatedly. This country has the know-how, and, if it has\nthe will, can free itself from the economic and political\nblackmail of a few countries. I intend to continue to be\na voice in seeing that we make that commitment.\nSecretary Richardson and I would be happy to answer your\nquestions at this time.\nTAB C\nGlen\nFirst diaft at\ncondutions sictions\nRawLith Paper\" replaces\nNatural Gas\nrecommend atumis).\nNeed comments by\n3AM Monday.\nCome\nConclusions\n- Natural gas pricing and regulation may be the most\ncrucial energy legislative issues facing the Congress.\nIf the decline in domestic gas production is not\nreversed, shortages will grow and there will be\nadverse economic and social impacts. To improve our\nnatural gas picture, several key actions are needed:\n-- Congress, as a high priority, should enact\nlegislation to deregulate the price of new\nnatural gas either immediately or phased-in\n/ change\nover a few years.\n-- Congress should adopt the emergency legislation\nproposed by this Administration to mitigate the\nshort-term curtailments problem.\n--- The new Administration and the Congress should\nreview the issues and possible initiatives\nassociated with \"conservation gas;\" pricing\nof supplemental gas; and siting of LNG import\nprojects.\n- The new Administration and the Congress should\nexpedite consideration of Alaskan natural gas\ntransportation systems.\nCrude Oil\nConclusions\n- There will continue to be serious issues associated\nwith the petroleum regulatory system. While resolution\nof most of these issues should await completion of\nthe appropriate regulatory proceedings, it is clear\nthat there is a need to remove any regulations that\nare not necessary (such as controls over gasoline).\nFurther, the composite pricing system for crude oil\nhas proved to be complex to administer; thus, it is\nrecommended that Congress adopt a simpler system that\nwould phase-out crude price controls gradually, but\nwithout use of composite prices.\nEnergy Taxes\ninst resnting\nConclusions\n- The debate over energy taxes should be reopened.\nTaxes can be an effective way to cut consumption\nor modify investment behavior. n Ideally, the best\nway to provide the correct market signals would be\nto remove artificial price controls. However, since\ncontrols are now in effect, the Congress should\nreview the need for broad (e.g., BTU) or specific\nchase\n(e.g., gasoline or natural gas) energy taxes. In\naddition, investment incentives for business\n(e.g., tax credit for purchase of coal-fired\nequipment) or homeowners (e.g., insulation tax\ncredit) should be adopted.\nFuels Policy\nConclusions\n- On the surface, it may seem attractive to manipulate\nthe use of various fuels in order to derive the\ngreatest end-use efficiencies and to minimize environ-\nmental impacts. Further, given the current regulatory\nenvironment, the appropriate market signals are not\nbeing communicated. The Federal Government should\ncontinue to pursue opportunities to reduce the use of\noil and gas in power plants and major industrial\n7\nfacilities in order to expand the use of coal. A\nconcept like that in S.1777 (with modifications)\nshould be adopted.\n-- However, the Federal Government must also be\ncareful to avoid massive intervention in the\nenergy marketplace. The regulatory structure\nthat would arise from a comprehensive fuels\nmanagement policy would be virtually unadminis-\nterable costly, and probably inequitable. Indeed,\na much more desirable approach would be to remove\nprice controls and allow the marketplace to\nallocate fuels.\nEnergy Conservation\n(a.g. individual Munket andical Individe synic; with inde becime\nConclusions\n- The United States' energy policy must include both\na strong conservation effort and an aggressive\nprogram to develop domestic supply. The legislative\nachievements in energy conservation over the past\ntwo years will result in significant reductions in\ndemand and improved efficiencies. Yet, with the\nexception of conservation induced by higher prices\nand some limited regulatory measures, there is\nlittle that can be done to reduce demand in the next\nfew years. The benefits of all conservation measures\nshould be weighed against the cost of implication.\nand regulatory burdens they impose. The following\nactions should occur:\n&\n-- Congress should enact the Administration's\nproposed tax credit for insulation.\n-- The Congress and Executive Branch should monitor\nclosely the implementation of existing programs,\nespecially the thermal efficiency standards for\nnew buildings. Tough sanctions are needed to\nmake the buildings program work.\n-- The ERC should form a task force on energy\nTell\nconservation to deal with implementation of\nexisting programs and to prepare a thorough\nanalytical report to Congress as required by\nthe ECPA.\nEnergy Development\nConclusions\n- The United States will have to continue expansion\nof domestic energy development in order to preserve\nits economic and national security. But such\ndevelopment will not take place unless the Federal\nGovernment takes the appropriate steps to ensure\nthat environmental standards are met, and that State\nbid?\nand local interest groups are involved in the\ndecision-making process. Further, the following\nactions are proposed:\n-- The Congress should enact legislation to provide\n/chr\nimpact assistance for inland Federal energy\nresource development.\n7\n-- The Congress should review the entire regulatory\nprocess involved in siting new energy facilities\nand propose methods to improve the process where\nfeasible.\n-- The Congress should attempt to reduce uncertainty\nconcerning the ground-rules for environmental\nstandards and development on Federal lands.\nElectric Utility Regulatory Reform\nnew new? greater appeal? whit?\nConclusions\n- Electricity consumption is expected to continue\nto grow at about twice the rate of energy demand.\nIf coal and nuclear electric generation capacity\nis not started now, it is possible that power\nshortages would result after 1980 and utilities\nwould turn to oil and gas as a source of power.\nTo reduce the possibility of such a result, the\nfollowing actions are needed:\nhow!\n--- The Congress should broaden, through amendment\nand extension, FEA's existing coal conversion\nauthorities.\nThe Congress should consider additional\ninvestment tax credits for utilities to encourage\ngreater use of coal and nuclear power in the\ngeneration of electricity.\nHowever\nany Congressional action on electric\nutility rate reform should await completion\nof the FEA report to Congress mandated under\nthe ECPA.\nNuclear Energy\n?\nConclusions\n- The use of nuclear power must continue to expand.\nNuclear energy has demonstrated that it is safe,\neconomic, and has little environmental impact.\nYet public concern over its safety and reliability\nexists and must be considered. Major decisions will\nhave to be made regarding the role of nuclear power\nand the extent and nature of reprocessing, enrichment,\nwaste disposal, proliferation, and funding of the\nbreeder reactor. In addition, the Federal agencies\nand the Congress should adopt the measures recommended\nby the President in October to evaluate reprocessing\nand reduce proliferation.\nEnergy Financing\nConclusions\n- The energy industry will have to make substantial\ncapital investments in the next 10-15 years.\nSome sectors, such as the oil industry, should\nhave sufficient capital as long as unfavorable\nregulatory actions are not taken. Other sectors,\nsuch as electric utilities and synthetic fuels,\nmay need some form of Federal financial assistance.\nAs a central element of our policy, maximum reliance\nshould be placed on private sector financing of energy\nprojects. Many of the barriers to private financing\nare a result of government regulation. However,\nFederal financial assistance may be needed for projects\nwhich will contribute significantly to energy\nindependence, but would not be undertaken in a timely\nfashion without such assistance.\n-- The new Administration and the Congress should\n7\nreview the entire financing issue, but should\nassure that those first generation plants that\nare needed, can be built.\nR&D Priorities\nConclusions\n- Since energy research and development funding cannot\ncontinue to expand at its current rate, it will be\nnecessary to make difficult choices about priorities.\nThe Federal Government should support most heavily\nthose technologies that have the greatest likelihood\nof being able to contribute significantly by the end of\n?\nthe century and of being economic.\nRemute\nEnergy Independence and Economic Interdependence\nConclusions\n- Energy will remain a critical factor in world\neconomic and political affairs. The issues of\nsupply security; oil prices; consumer nation\ncooperation; producer-consumer relations; long-run\ntransition from oil and gas to coal, nuclear,\nand renewable resources; and the value of and\n7\napproach to energy independence should be reassessed\ncontinually. The following are suggested courses\nD\nof action:\n-- Continue producer-consumer dialogue;\nSinglistic\n-- Involve Congress in setting reduced dependency\nobjectives, perhaps through a Joint Resolution;\n-- Encourage incremental oil and gas production\nthroughout the world and pursue creation of an\nInternational Energy Institute; and\n-- Initiate a national and regional debate on our\nenergy goals.\nMultinational Oil Companies\nConclusions\ngeither\nThe multinational oil companies will remain an\nimportant force in domestic and international\nenergy affairs. Rather than act hastily to break\nup these firms, the Congress should consider\ncarefully the impacts of both verticle and\nhorizontal divestiture. Neither form of divestiture\nshould be supported unless it would increase\ndomestic production, improve the reliability of\nsupply, and reduce prices. With the nation foeing\na crucial energy period, this is not the time to\ndisrupt the existing system so dramatically.\nHowever, there may be a need for some change in the\ngovernment/industry relationship and possible\nchanges should be explored.\nI?\nLight?\nStandby Measures\nConclusions\n- The United States must be prepared to deal with any\nfuture interruption of oil supply. We have already\nmade considerable progress in legislating and\nbeginning implementation of a strategic petroleum\nreserve. In addition to the SPR, we will need standby\nallocation, demand restraints, and rationing measures.\nIt would be desirable to simplify standby plans\nand Congress should consider amending the EPCA to\nallow imposition of fees, tariffs, taxes, etc\n,\nduring an emergency. Further, the Federal government\nshould prepare a government-wide embargo management\nstrategy, fully integrating energy management options\nwith monetary, fiscal, and other policies.\nFederal Energy Organization\nConclusions\n- There are very good reasons to consider reorganizing\nthe energy functions of the Federal government. In\nboth the Executive and Legislative Branches, there\nis a need for consolidation to eliminate fragmented\nresponsibilities. The basic issues that need to be\naddressed in an Executive Branch reorganization\ninclude the degree of separation of natural resources\nmanagement and economic regulation from broad energy\nconservation, research, development, and policy\nfunctions. However, reorganization only makes the\nprocess of government easier; it will not produce\nmore oil and should not be viewed as an answer to our\nenergy problem.\nFORD in LIBRARY 079839\nEnergy\nTHE WHITE HOUSE\nWASHINGTON\nDecember 17, 1976\nMEMORANDUM FOR:\nJIM CANNON\nFROM:\nGLENN SCHLEEDE\nSUBJECT:\nEnergy Organization\nI recommend that you sign the attached\nmemorandum to the President that comments\non the Richardson-Lyun energy organization\noptions paper.\nI believe the proposed memorandum from you\nto the President is consistent with our\nconversation earlier today.\nFORD LIBRARY & 07VH39\nTHE WHITE HOUSE\nWASHINGTON\nTHE\nWHI\nDecember 20 '76\nWASH\nDecemb\nTO:\nJIM CANNON\nFROM:\nRUSS ROURKE\nMEMORANDUM\nFOR\nJACK\nAfter checking with\nWalter Mote, I have JIM CAN\nlearned that what he\nactually meant was\nCall\ntn\nthe \"Solar Study\", which\nhad been hung up at\nERDA for awhile. the Domes\nheard\nof\nthe\n\"Silver\nHope this information\nhelps. Would you want to as\nfile handled verbally\nMote and get more de\nbe\n12/21 AM\nEnergy\nTHE WHITE HOUSE\nWASHINGTON\nDecember 17, 1976\n976 DEC 20 PM 4 22\nMEMORANDUM FOR JACK MARSH\nFROM:\nSUBJECT:\nCall from Walter Mote on \"Silver Study\"\nJIM CANNON Jm\nNo one on the Domestic Council or EPB has ever\nheard of the \"Silver Study\".\nWould you want to ask Russ Rourke to telephone\nMote and get more details. For a number of\nreasons it would be best if I did not telephone\nMote.\nFORD LIBRARY i DERAID\nR- cuel\nMote\nfor now into\nEnergy\nTHE WHITE HOUSE\nWASHINGTON\nDecember 29, 1976\nMEMORANDUM FOR:\nJACK MARSH\nFROM:\nART QUERN HrD Bern\nSUBJECT:\nNews Report Regarding ERDA Submission\nfor the State of the Union\nThis morning's Jack Anderson column reported on material\nsubmitted by Bob Seamans regarding ERDA's accomplishments\nfor possible inclusion in the State of the Union message.\nERDA's material was requested, along with material from\nall member agencies of the Domestic Council, as background\nfor developing a draft State of the Union to be conveyed\nto Bob Hartmann. ERDA, as with every agency, attempted\nto put the best possible light on its accomplishments\nover the last two years.\nWe reviewed ERDA's submission, and indeed every submission,\nmost carefully. The draft SOTU which was conveyed to Bob\nHartmann reflected in our judgment the best and most\nfactually accurate presentation of the various agency\naccomplishments.\nWith specific regard to ERDA's material, I believe that\nthe draft SOTU most effectively screens out any material\nwhich might have raised a question.\nFORD LIBRARY is GERALD\nTHE WHITE HOUSE\nWASHINGTON\nDecember 29\nChris:\nThis is the article.\nMr. Marsh would like to\ndex a report to Vail\nASAP.\nThanks.\nDonna\nWashington Post\nWednesday, December 29, 1976\nJack Anderson and Les Whitten\nFord Gets Misleading Energy Data\n---- - --\nSome items in this folder were not digitized because it contains copyrighted\nmaterials. Please contact the Gerald R. Ford Presidential Library for access to\nthese materials.\nACTION\nIMMEDIATE\nTHE WHITE HOUSE\nWASHINGTON\nJanuary 4, 1977\n(yes Thank\nMEMORANDUM TO:\nJIM CANNON\nFROM:\nGEORGE W. HUMPHREYS\nSUBJECT:\nRuss Train's Meeting With\nThe President\nThe attached briefing paper is for your signature.\nYou will note I included a talking point and Russ'\nletter on Oil Spill Task Force. You may want to\ndrop all that out.\nThe meeting is simply to say good-bye, I am told, and\nRuss says he is not looking for a substantive conversation.\nGERALO, FORD LIBRARY"
}