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    "ocrText": "The original documents are located in Box 13, folder \"Energy - Congressional Program\" of\nthe John Marsh Files 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 Gerald R. Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain.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.\nDigitized from Box 13 of the John Marsh Files at the Gerald R. Ford Presidential Library\nThe\nCongressional Program\nOf\nECONOMIC RECOVERY\n&\nENERGY SUFFICIENCY\nFebruary\n1975\nIt has been only in times of war and during periods of great economic\ndepression that American citizens have confronted national problems as\nurgent and critical as those presented by today's rapidly deteriorating\neconomy and the potential threat to the Nation's supply of energy.\nIn recognition of the immense importance of these issues and realiz-\ning their interrelationship, the Democratic Policy and Steering Com-\nmittee of the House of Representatives and the Democratic Policy\nCommittee of the U.S. Senate were directed by the Congressional Ma-\njority Leadership to prepare for recommendation a comprehensive pro-\nposal designed both to insure rapid and continued economic recovery and\ngrowth while providing national energy sufficiency.\nThe Senate Committee chaired by Senator John O. Pastore working\njointly with the Task Force of the House Committee under the leadership\nof Congressman Jim Wright have submitted recommendations for leg-\nislative consideration designed to meet the Nation's economic and energy\nneeds. We commend Senator Pastore and Congressman Wright. We\ncommend their respective Committees for their diligent and productive\nendeavors.\nThe 94th Congress will enact a program of action which will serve\nthe Nation well both now and in the years to come.\nMIKE MANSFIELD,\nCARL ALBERT,\nMajority Leader of the Senate.\nSpeaker of the House.\nTHE ECONOMY AND ENERGY\nA CONGRESSIONAL PROGRAM OF ACTION\nThe comprehensive Congressional program on the economy and\nenergy has the following objectives:\nFirst:\nTo restore in the shortest period of time a healthy economy\nwith full employment, reduced inflation and increased out-\nput and productivity.\nSecond: To prevent steep increases in the price of all energy and\nthe pervasive economic adversities which such increases\nsurely would entail.\nThird: To manage energy supply in the near term so as to reduce\nimport dependence steadily and surely consistent with\nrapid economic recovery, providing standby protections\nagainst sudden supply curtailments.\nFourth: To expedite and mandate programs to conserve energy and\nexpand domestic supply in order to improve our balance\nof payments and achieve national energy sufficiency in a\ntimely and reliable way.\nThe nation faces two very basic problems-the rapidly declining\neconomy, and the predictability of future energy shortages. They are\ndistinct but inextricably interrelated. The first is an immediate problem\nof crisis dimensions and must be treated as such. The second is of necessity\na long-range problem which will yield only to effective long-range solu-\ntions. Both must be solved, and it is our purpose to set forth on behalf of\nthe Congressional majority a definitive program of action to address both\nproblems.\nThe most urgent national need is to revive the nation's economy and\nput Americans back to work. On January 14, the Democratic Steering and\nPolicy Committee of the House announced a 14-point program of action.\nOn February 18, the Democratic Policy Committee of the Senate and the\nChairmen of the Standing Legislative Committees of the Senate endorsed\na comprehensive economic/energy program formulated by an Ad Hoc\nCommittee of the Democratic Policy Committee. Many of the economic\ninitiatives recommended in these programs already are in the process of\nlegislative implementation. Fully embracing the thrust of those programs,\n1\nwe reject President Ford's 5 percent ceiling on social security and call for\nwe believe it is practical, equitable and economically responsible to\nthe accelerated payment of benefits by the full 8.7 percent effective Janu-\nachieve most of our immediate reduction in petroleum consumption in\nary 1, 1975. We recommend several additional economic initiatives as well\nthe other 58%, but recognize that savings can be achieved in all cate-\nas a carefully coordinated program of action for energy sufficiency.\ngories of usage. We propose accomplishing this by:\nFaced with the worst economic recession and the highest unemploy-\n(1) A combination of graduating excise taxes and rebates on new\nment levels since the great depression, we believe that a panic energy pro-\ncar sales, specifically geared to the fuel efficiency of the model\ngram which interfered with the priority task of economic recovery would\npurchased.\nbe a severe public disservice. The plan recommended by the President\n(2) Mandatory mileage performance standards for new automo-\nwould needlessly and massively depress the economy further, add to the\nbiles.\ncost of living for all Americans and place highly inequitable cost burdens\nIf these and other conservation initiatives included in this program do\nupon such basic necessities as home heating, food production and clothing.\nnot achieve diminution in imports, standby authority should be invoked\nWe reject the fundamental premise of the President's program that\nto:\nthe only way to achieve energy conservation is deliberately to raise the\n(3) Require Sunday closings, allocations down to the service\nprice of all petroleum products to all American consumers by heavy indis-\nstation level, and controls on the use of credit cards to buy\ncriminate additions in taxation. The $3 per barrel tariff on oil imports will\ngasoline.\nnot reduce imports; it simply will make them more costly to American\n(4) Impose import quotas.\nconsumers. It would add some $7.6 billion a year to the cost of living.\n(Note: a mere five percent reduction in the total number of miles driven would\nAdding at least $30 billion in taxes and costs on domestic oil & gas con-\nsave almost 350,000 bbls of oil per day; a 10 percent reduction would save nearly\n700,000 bbls.\nsumption proposed by the Administration would further burden the econ-\n(Encouraging only one-fourth of America's drivers into cars that get just two\nomy with such weighty impediments that any effort at economic recovery\nmiles per gallon better mileage would save an additional 230,000 bbls per day.\nWhen one-third of the driving population can be accommodated in vehicles that\nwould be hopelessly foredoomed.\nyield better efficiency by just 3 miles per gallon, the additional saving will be 470,000\nThe President's budget acknowledges the probable results of the\nbbls per day.)\nAdministration program: yet another year of raging double-digit in-\nOur program will achieve energy conservation not only in the\nflation, another year of declining economic output, and at least another\ntransportation sector, but also in the residential, industrial and com-\nfull year of unemployment in the range of 8 percent. This is a pros-\nmercial sectors where longer-range savings are both achievable and\npect which America's families should not be asked to accept. We be-\nquantifiable. We prescribe realistic standards in each sector. Funda-\nlieve the country can do much better than this, and we are determined\nmentally, we seek to reduce consumption by the elimination of waste-\nthat it shall.\nnot by the elevation of price.\nThe Congressional economic program recommends fiscal and\nSavings in energy of almost 500,000 bbls of oil or its equivalent per\nmonetary actions at the Federal level that will create over 1½ million\nday will result by 1980 from our recommendations to assist families and\nmore jobs by the end of 1976 than the President's program, while\nbusinesses in insulating homes and other buildings and making other\nreducing the inflation rate by over 2%.\nenergy-related improvements.\nThe comprehensive energy conservation and development pro-\nOne key feature provides incentives to expedite conversion of\ngram which we recommend for immediate adoption will be demon-\nelectric power generating and other industrial plants from petroleum\nstrably less inflationary, stimulative to the economy, more selective in\nand natural gas to coal. This is the second largest area of wasteful\nthe areas of use to which we must look for major conservation, and\npetroleum usage, and while it is more difficult to hypothecate a precise\nmore quantifiable in its results than the plan set forth by the President.\nsaving without knowing how rapidly such plants can be induced to\nIt is fairer and more equitable to the American consumer. And it\nmake the conversions, we believe it is not unrealistic to anticipate\ncreates a specific mechanism to help finance an earlier realization of\nadditional savings from this source after the second year in the\nreliable alternate energy sources for the future.\nvicinity of 400,000 bbls daily in BTU equivalent.\nMotor fuel accounts for about 40% of the nation's present petro-\nA saving of 160,000 bbls a day can result from strict local\nleum usage. Since only 42% of this amount is directly work-related,\nenforcement of the 55-mile-per-hour speed limit. Other conservation\ninitiatives contained in this program will produce additional savings.\n2\nBERALO 3 FORD LIBRARY\n47-351 75 2\nThe Congressional program also creates a strategic oil reserve and\nsets up a National Energy Production Board with authority to recom-\nmend import quotas, allocations and even rationing in event of\nemergency.\nIn all, we believe that our program will reduce domestic con-\nsumption of imported petroleum, at a very conservative estimate, by\nTHE ECONOMY\nthe equivalent of 500,000 bbls of oil per day in the first year, by 1.6\nmillion bbls per day in the second year, and by more than 5 million\nbbls per day by 1980. Considerably more dramatic savings can be\nTARGET:\nachieved in years to come.\nWe have seen no reliable data whatever to support a conclusion\nTHE FIRST PRIORITY MUST BE A RETURN TO FULL\nthat the Administration's draconian tax increases actually would result\nEMPLOYMENT AS SOON AS POSSIBLE. THIS CAN BE\nin one huge round-figure savings he claims for them. Nor have we\nACHIEVED THROUGH FISCAL AND MONETARY ACTIONS\nheard any impelling reason why the national reduction must of ne-\nDESIGNED TO PROMOTE ECONOMIC RECOVERY WITH A\ncessity reach one mllion bbls daily in the very first year. In any event,\nSUBSTANTIALLY REDUCED INFLATION RATE.\nwe believe it better to promise relatively less and achieve more than\nto promise grandly and achieve less than pledged.\nRECOMMENDATIONS:\nWe believe that the American people, as well as our friends in\n-Accept and expand the President's anti-recession tax rebate/tax\nthe international community, both the suppliers and the users of\ncut concept.\npetroleum, will be more impressed by candor and performance than\n-Achieve the maximum reduction of imported oil during 1975 con-\nby roseate promises unfulfilled. We believe they will be more impressed\nsistent with the economic upturn and a reduced unemployment\nby our frank determination to maintain a strong American economy.\nrate.\nAnd we believe they will readily discern the superiority of a steadily\nincreasing long-term commitment to long-term objectives over a single\n-Reject massive energy price increases caused by import tariff,\nexcise tax and sudden, total decontrol.\nsudden surge upward in consumer prices.\n-Add further stimulus to consumer spending and prevent the\nBeyond conserving scarce fuels, we recommend a number of\nunwarranted reduction in funds to the poor and elderly.\nspecific measures to encourage exploration for oil and natural gas and\n-Increase the money supply and stimulate housing.\ngreater recovery from existing wells and fields. We recommend creation\n-Release impoundments to provide immediate employment in the\nof an Energy Trust Fund financed by a 5 cent per gallon retail tax on\ngasoline and by yields from excess profits taxes. The fund is to be used\npublic works and heavy construction fields.\nto assist in the more rapid development of coal gasification, liquifaction\n-Assure adequate private and public employment in light of\nand other synthetic fuel plants and to achieve scientific and technological\nnational needs.\nprogress in oil shale, geothermal, solar, nuclear fusion and other energy\nThe cost of energy under the Administration's program would rise\nfields.\nby over $40 billion during the first twelve months (closer to $50 billion by\nFaithful implementation of the various facets of this program will\nsome analyses), an amount equal to the price increases caused during\nclose the growing gap between domestic energy consumption and produc-\nthe Arab embargo. The Administration's program would add this new\ntion of all types and forms by the energy equivalent of some 11 million\nburden to an economy already well into the deepest recession since the\nbbls of oil per day by 1985, and will reduce our energy imports by that\n1930's, with inflation continuing at an unacceptably high level, and with\nyear to 10% of our total consumption.\nunemployment over 8%. (Fig. 1) Low- and middle-income households\nThe Nation's impelling need is for a consistent and coordinated long-\nwill be required by the President's program to spend an even greater\nterm plan. The Congress provides it.\nportion of their limited income to purchase energy.\n5\n4\nAs its goal the Administration seeks a reduction of energy consump-\ntion by one million barrels per day in 1975. To achieve it, energy prices\nFIGURE 1\nwould be greatly increased, first by taxing all crude oil and natural gas\nThe Current Recession Compared to 1958*\nand then by removing the present controls on the market price of oil\n3 month Change\nThree Month Increases in Unemployment\nand gas.\nin Number\nNumbers and Rates\nUnemployed\nThe price of energy is not determined by free forces of supply and\n3\ndemand but rather by the governments of the nations that produce\nenergy. The policy question is whether the U.S. or the OPEC govern-\nments will set energy prices in this country. The Administration wishes\nto decontrol old oil and new natural gas, giving the control of price to\nOPEC and letting U.S. energy prices follow the prices established by it.\n2\n(Fig. 1A)\nAs Figure 1A illustrates, if the price of all energy is decontrolled, it\n(millions)\nwill move toward the price set by OPEC. The fact that new domestic\nAN INCREASE\noil-now decontrolled-is selling at the OPEC-determined price illus-\nOF 2.0 MILLION\nPEOPLE\ntrates this point. If control is maintained and extended the price of\n1\n(Oct. 74 to\ndomestic energy will be separated from the OPEC price. The Con-\nAN INCREASE\nJan. 75)\nOF 1.1 MILLION\ngressional program calls for the rejection of the Administration's plan to\nPEOPLE\ndecontrol energy prices entirely; it seeks to have the price of U.S. domes-\n(Jan. '58 to\ntic energy set by the U.S., not the OPEC nations. Prices should be high\nApril '58)\nenough to encourage maximum production and discourage wasteful con-\n0\nsumption. However, the Congressional program calls for a combination\n3 month Change in\nof price controls that are needed to insure an equitable sharing of the\nUnemployment Rate\nburden and to shield American consumers and businessmen from the\n3\nimpact of OPEC-inflated prices.\nOver the long run the Administration hopes that the higher prices\ncould be absorbed in normal economic growth; but in the short run as\nwell as the long run, consumers would be required to adjust imme-\n2\ndiately by not being able to afford energy or by being more efficient in\ntheir use of energy. The Administration's proposals attempt to achieve\n(percentage points)\nAN INCREASE\nlong-term energy goals in the short run (one million barrels per day this\nOF 2.2\nyear, two million by 1977). In SO doing, they threaten the Nation's\nAN INCREASE\nPERCENTAGE\neconomy by aggravating inflation, inducing a deeper recession and more\nOF 1.6\nPOINTS\n1\nunemployment.\nPERCENTAGE\n(Oct. '74 to\nPOINTS\nJan. '75)+\nNo aspect of the President's program could be cited as addressing\n(Jan. '58 to\ndirectly the question of national economic recovery. The tax-cut proposal\nApril '58)*\nis designed mostly to offset increased energy costs. The President's pro-\ngram would cut taxes and create a large deficit. We agree that tax cuts\n0\nare justified but we believe these cuts should be designed for stimulus and\n*Second largest\nLargest 3-month\nto help those who have been hurt most by inflation, and the size of these\n3-month increase\nincrease since '48\nsince '48\ncuts should be determined by what is needed to provide economic recovery\nand full employment as quickly as possible.\n7\n6\nThe President's proposal can be thought of in three parts: (a) a\nFIGURE 1A\n$16 billion one time tax rebate to stimulate the economy; (b) a budget\nThe Price Effect of Energy Decontrol\nmoratorium of new spending programs; and (c) a $40 billion-plus cost\n$\nincrease for energy in all forms, offset in part with $27 billion in cash\n14\nrebates to households, business and state and local government.\n$13.00\nTaken by itself, the President's $16 billion one time tax rebate\n13\nwould have a very minor impact on our $1,500 billion economy. Its\nreal growth impact is about one percentage point in 1975 and 1976;\nits unemployment impact is a reduction by about one-quarter percentage\n12\npoint in each of these same years. In other words, the President's $16\n$2.00 Tariff/Excise Tax\nbillion tax stimulus might reduce a projected 8.4 percent unemploy-\n11\nment rate to 8.1 percent. The impact of the tax rebate on inflation is\ninsignificant.\nIf one adds the President's energy tax package which costs the\n10\nconsumer about $40 billion, and takes approximately $10-$13 billion\nout of the economy, thus adding to the recession, it is likely that unem-\n9\nployment would get even higher and that inflation would be dramatically\nincreased by about three percent. The President has estimated that his\nenergy package will make 1975 another full year of double-digit inflation.\nPrice in Barrel of Oil Equivalents\n8\n$7.60\nIn sum, the Administration package is both inadequate and con-\ntradictory: inadequate because it does not reduce the rate of unemploy-\n$7.25\n7\nment below what would happen with no policy changes, and contradic-\ntory because it accelerates the inflation rate three percent beyond what\nit would be with no policy changes.\n6\n5\n$4.50\n$4.50\n4\n3\n2\n1\n0\nCoal\nInterstate Intrastate\nOld\nNew Imports\nNatural\nNatural\nDomestic Domestic\nGas\nGas\nOil\nOil\n9\n8\nBERALD FORD LIBRARY\nTHE RECOMMENDATIONS OF THE CONGRESSIONAL\nPROGRAM TO ACHIEVE ECONOMIC RECOVERY\nFIGURE 2\nRecognizing the interrelated nature of Energy and the Economy,\nCongressional Program vs. Administration Target\nthe Congressional program, while designed to reduce national depend-\nAdded Economic Output\nence on imported oil, would halt the recessionary slide, begin economic\n$ Billions\n(GNP in 1974 Dollars)\nrecovery and provide millions of additional jobs without adding to\n(1974 Dollars)\ninflation.\n100\nTo achieve economic recovery numerous suggestions were considered\nthat relate to fiscal and monetary policy and program actions. Recom-\nTOTAL DIFFERENCE\n$89 B\nmended in addition to the tax rebate/tax cut concept is a combination of\n$335 BILLION\nactions which include a rejection of the Administration's energy price\nincreases, the release of impounded funds to create immediate employ-\nment, an increase of the money supply, stimulus for jobs in housing and\n80\nelsewhere and an adequate public employment program with relief to\n$76 B\nstates and locales especially burdened.\nIf quickly implemented these recommendations will insure an end\nto the economic downturn and the beginning of a vigorous recovery\nduring the year. Comparing this program to the President's program,\n$64 B\nour economy will be producing $42 billion more goods and services in\n1976, $76 billion more in 1978, and a total of $335 billion more over\n60\nthe 1975 to 1980 period. (Fig. 2)\nThis increase in goods and services will generate jobs, reducing the\n$53 B\nunemployment rate substantially from the Administration's projections.\nBy comparison with the President's economic goals, the proposed Con-\ngressional program will produce at least 1.4 million more jobs by the\nend of 1976 and well over three million more by the end of 1977. In\n$42 B\ntotal these recommendations, if implemented, will produce 8.3 million\n40\nmore job-years of employment between 1975 and 1980 than the Presi-\ndent's plan. (Fig. 3)\nUnder other circumstances the increase in economic activity might\nbe inflationary. However, with the economy operating so far under its\npotential, the stimulus will not contribute to inflation. In fact, the\nincrease in output is likely to increase productivity as firms spread their\nfixed overhead over an increased number of units.\n20\nA sensible policy of economic stimulus should provide the greatest\ngrowth in early months. In contrast, the Administration's approach has\n$11 B\nthe economy moving most rapidly years away as full capacity is ap-\nproached and the inflationary risks are greatest.\n0\n1975\n1976\n1977\n1978\n1979\n1980\n11\n10\nMore immediately, the Congressional program will avoid the infla-\ntionary effect of the Administration's energy taxes, tariffs and total\nFIGURE 3\ndecontrol, producing 2% less inflation this year and a total of 3% less\nCongressional Program vs. Administration Target\nThousands of\nby 1977. (Fig. 4)\nJobs\nAdded Employment\n3,500\nFIGURE 4\nCongressional Program vs. Administration Target\nReduced Inflation\n(Difference in the Consumer Price Index)\n3,000\n1975\n1976\n1977\nTOTAL DIFFERENCE\n0\n8.3 MILLION\nJOB-YEARS\n1/4%\n3/4%\n2,500\n1\n2,230,000\n%\n1,970,000\n2,000\n2\n2%\n1,750,000\n1,500\n3\n1,000,000\n920,000\nElements of the Recommendation in Summary\n1,000\nSocial Security and Supplementary Security Income. Reject President\nFord's 5% ceiling on social security; accelerate payment of benefits by the\nfull 8.7% effective January 1, 1975, and mail out retroactive benefits\nchecks in May or June.\n500\n420,000\nRetroactive Personal Tax Reduction. Accept the concept of the Admin-\nitsration's rebate of 1974 taxes. Redesign the program in accordance with\nobjectives recommended by the House Ways and Means Committee so\nthat low- and middle-income taxpayers receive a much larger share of the\nbenefits. Send out the payment in May or June in a single check that\nEnd of\nwould provide a large boost to sagging personal income. This tax rebate\n1975\n1976\n1977\n1978\n1979\n1980\nwould provide a one-shot stimulus to the economy.\n12\n13\nTemporary Personal Tax Reduction. Adopt a substantial additional tax\nchase homes at interest rates they can now afford to pay. Interest subsidies\ncut for 1975, consistent with House Ways and Means action. This reduc-\nwill be limited to low- and middle-income families with phase-out trig-\ntion would affect withholding schedules by July 1 of this year. This tax cut,\ngered to economic recovery. Reject rescissions and deferrals of appropria-\nalso targeted to low- and middle-income taxpayers, would provide con-\ntions for existing housing programs. Provide temporary aid to\ntinuing support to consumer purchasing power throughout 1975. The\nhomeowners to prevent mortgage foreclosures.\nCongress envisions that the stimulus would be continued into 1976 if\nMonetary Policy. Adopt a Congressional resolution calling upon the\nnecessary to continue the recovery.\nFederal Reserve to (1) substantially reduce the long term interest rates\nBusiness Tax Reduction. Accept the proposal to raise the investment tax\nduring 1975, (2) maintain a longrun growth in the money supply and\ncredit (ITC) to 10% retroactive to January 1, 1975. Reject the Admin-\nother monetary aggregates commensurate with the economy's economic\nistration's reduction of ITC to the 7% rate in 1976; keep the higher rate\ngrowth potential, and (3) consult with Congress at semi-annual intervals\nin effect until the economy reaches the full-employment zone so that busi-\non the Board's monetary growth targets for the next six months.\nnesses can make investment plans with certainty. Set ITC at higher levels\nfor long term capital investment in energy-efficient equipment and in\nSpending Reductions. The President's budget calls for an assortment of\nequipment needed to convert from oil and gas to coal.\nnon-essential expenditures which should be eliminated or cut in the\ninterest of sound economic policy. Reject the Administration's $7 billion\nTax Reform. Enact an initial tax reform package in 1975 to yield approxi-\nenergy equalization payment (as well as its companion energy taxes).\nmately $5 billion in added revenue. Such reform would include repeal of\nReduce other portions of the Administration budget-defense, foreign\nthe depletion allowance for big international oil companies, strengthen-\naid, and elsewhere-by $5 billion. From this $12 billion, restore social\ning the minimum income tax so that the rich pay their fair share, and\nsecurity levels, reject the food-stamp-cost reduction but undertake a\neliminating foreign tax subsidies so that American capital is not encour-\nreview of the food stamp program to assure that the benefits are received\naged to locate abroad.\nby those most in need. Total spending for all programs should not exceed\nEnergy Taxes, Tariffs, and Decontrol. Reject the Administration's pack-\n$355 billion in FY 1976 unless unemployment averages more than 8%\nage of excise taxes on oil and natural gas, tariffs on imported oil and\nduring that period. (Fig. 4A)\ndecontrol of old oil. Add 5¢ to the tax on gasoline as a source of revenue\nAdequate Public Service Employment in Light of National Need. An ex-\nfor an Energy Trust Fund.\npanded public service employment program could play a major role in\nPublic Works Employment. Assure that the Job Opportunities Program,\nbringing unemployment down. A public service employment program\nthe Economic Adjustment Assistance Program and the Public Works\nshould give priority to hiring the heads of families. It should avoid dis-\nImpact Program (Titles X, IX and I of the Public Works and Economic\nplacing existing employment, treat the special concerns of state and local\nDevelopment Act) are fully funded and implemented to meet their\ngovernments and create new jobs with increased emphasis on training\noriginal purpose of providing short-term employment opportunities while\nand equipment to satisfy important social needs.\nconstructing facilities of lasting value to the community. Reject rescissions\nThe House of Representatives has demonstrated strong initiative in\nor deferrals and otherwise provide increased funding for short-term con-\ngetting the economic recovery programs underway. The enactment of\nstruction programs meeting urgent national needs such as water pollution\nthese programs deserves the very highest national priority. On the other\ncontrol and transportation. This action would offer opportunities for\nhand an energy policy must be compatible with these objectives; it must\nincreased construction and related employment, activities which have\nnot inhibit their effectiveness. It is the development of an energy policy\nsuffered real decreases in spending as a result of inflation. Provide any\nthat aids national economic recovery that the Congress recommends in\nadditional Federal assistance which may be necessary to allow state and\nthis report.\nlocal governments to make full use of increases in funding for public works\nconstruction programs.\nHousing. Stimulate the homebuilding industry through a shallow interest\nrate subsidy program to enable low- and middle-income families to pur-\n14\n15\nFIGURE 4A\nBudget Effect of Congressional Alternative\nOUTLAYS\n360\n355.0\nENERGY\nADDED EXPENDITURES\n349.4*\n350\nFord\nTARGET:\nAlternative:\n$17.6B to Restore Part of\nthe $17B Ford Reductions,\n$7B as\nand add Public Service Jobs,\nEnergy\nConservation Programs\nOffsets\nIMPLEMENT A COMPREHENSIVE CONSERVATION PRO-\n$5B Con-\n340\n337.4\ngressional\nGRAM THAT REDUCES SUBSTANTIALLY FOREIGN\n$ Billions\n330\n$3B for Social Security and Other Cash Grants\nCuts in\nDefense\nIMPORT DEPENDENCE WITHOUT AGGRAVATING THE\nForeign\nAid,\nNATION'S CURRENT ECONOMIC CRISIS. EXPAND DOMES-\nElsewhere\nTIC SUPPLY BY DIVERSIFYING ENERGY SOURCES. ESTAB-\nLISH MANAGEMENT PROCEDURES IN THE EVENT OF\nDRASTIC ENERGY SHORTAGES.\n320\nRECOMMENDATIONS:\nAlternative:\n316.4\n-Avoid sudden massive energy price increases.\n313.4*\nFord\n-Institute a combination of excise taxes and rebates on new auto-\n310\nmobile sales, deliberately geared to favor energy-efficient vehicles.\n1975\n1976\n-Institute a 5¢ tax on gasoline as the financial base for an Energy\nTrust Fund.\nRECEIPTS\n-Institute urgent program of energy conservation.\n310\n-Create a National Energy Production Board.\nLess Revenue\n-Improve management of current energy supply and protect\nFord\n$6B Net of\nindependent segment of the industry by extending allocation\n300\nEnergy,\n297.5*\nPermanent\nauthority.\nand Retro-\nactive Tax\nAlternative:\nReductions\n-Achieve the maximum reduction of imported oil consistent with\n$21B net of Permanent\n293.0\nand reform Tax Changes\nan economic upturn and a reduced unemployment rate and em-\n$ Billions\n$12B Retroactive Tax Change\n(Including Gasoline Tax)\n290\n\"Extra\"\npower the Energy Production Board to limit imports to meet\nRevenues\nfrom Economic\ntargets.\nRecovery\n-Enact emergency powers to limit imports and include standby ra-\nFord:\nAlternative:\n$5B\ntioning authority in the event of drastic reduction of energy supply\n280\n278.8*\nfrom abroad.\n271.8\n270\n1975\n1976\n*Source\n1976 Budget\n16\n17\nENERGY\nThis Nation has previously assumed an unlimited and relatively\ninexpensive energy supply; these assumptions no longer apply. The Con-\ngressional program sets forth a comprehensive energy policy and identifies\na series of actions designed to conserve the use of energy and expand\nits available supply.\nFirst is recommended the rejection of the President's proposal for\nenergy price increases. The President's plan reflects a serious lack of\nperception of the integrated nature of our economy. The added hard-\nships imposed by steep price increases must be avoided in favor of cutting\ndown on waste and expanding and developing our energy production\ncapacity. No justification can be found for impairing economic recovery\nby inducing immediately a steep increase in the price of imported oil.\nRecommended instead are a series of actions which, if implemented, will\nproduce both national energy sufficiency and a substantial reduction\nin dependence upon foreign energy sources. A tax of 5¢ on gaso-\nline at the pump would provide funds for energy production and con-\nservation programs.\n19\nThe goal of the Congressional energy program is self-sufficiency.\nAt present the Nation imports 20% of its energy sources from abroad.\nFIGURE 5A\nThe Congressional program will reduce our reliance by 1985 on imported\nChange in U.S. Energy Supply\nenergy supplies to less than 10% of the United States total energy con-\n1960-1985\nsumption (and to less than 20% of our total oil use). (Fig. 5) In addition,\n50\nour country will have in place a strategic reserve of oil that will provide\n1985\nthree million barrels per day for a full year.\nConsumption:\n45 MMBDE\nUnder present policies the United States' energy consumption in\n1975 could be equivalent to 38 million barrels of oil per day, with oil\nGrowth in\n1985\nimports approaching 6.5 million barrels per day (Tables I & II). At\nconsumption of\nProduction:\n8 million barrels\npresent rates of growth by 1985 as a Nation we could be consuming an\nper day oil-\n40.5 MMBDE\nequivalent\nestimated 56 million barrels of oil or its equivalent (Table I).\nGrowth in\n40\nDomestic\nIf implemented the Congressional program will reduce this growth\nProduction\nOIL IMPORTS\nof 10.5\nrate in energy consumption and by 1985, the Nation will be consuming\nMillion\n45 million barrels per day. To achieve this goal, therefore, this program\nBarrel Per\nDay Oil\nwill conserve eleven million barrels per day by 1985 (Table III) (Fig.\nEquivalent\n5A). To provide that saving, a series of conservation efforts must be under-\nNeeded by\n1985\ntaken immediately (Table IV).\nMillion Barrels Per Day Oil Equivalent (MMBDE)\n30 MMBDE\n30\nCurrent\nProduction\nFIGURE 5\nDOMESTIC OIL\nEnergy Consumption and Domestic Production\n50\n20\nTOTAL ENERGY CONSUMPTION\nINCREASES 2% ANNUALLY\nMillion Barrals Per Day Oil Equivalent\n45\nENERGY\nIMPORTS\n= 10% OF\nNATURAL GAS\nPRESIDENT'S SHORT\nCONSUMPTION\n40\nTERM TAX/TARIFF\n40.5\nPROGRAM\nENERGY IMPORTS\n10\n37\nDOMESTIC\nENERGY\nPRODUCTION\nINCREASES 2.8%\nCOAL\nANNUALLY\nENERGY IMPORTS\n= 20% OF CONSUMPTION\n30\n1975\n1980\n1985\nHYDRO\nNUCLEAR\nSOLAR, SOLID\nWASTES, ETC.\n1960\n1965\n1970\n1975\n1980\n1985\nHistorical Source: FEA\n20\nGERALD 21 LIBERAT\nConservation\nfor automobile manufacturers to build and market them. In order to in-\nsure that the American consumer derives the benefits of the incentive pro-\nTransportation. The transportation segment has been identified for prime\ngram, a manufacturer would have to establish that any price increase on\nattention because it accounts for about one-fourth of total energy use and\nthe more fuel-efficient cars was justified on the basis of cost increases.\nmore than one-half of petroleum use. Automobiles are the leading energy\nThe Congressional Energy Program also calls for an intensive re-\nuser, accounting for more than 50% of the total energy consumed in the\nsearch and development effort designed to develop within four years a\ntransportation sector. Thus an urgent conservation effort in the trans-\nproduction prototype of a low-polluting, energy-efficient automobile that\nportation sector alone will reduce substantially the Nation's total energy\nmeets required safety and emission standards.\nbudget and significantly reduce the Nation's dependence upon imported\nAs well as improving the efficiency of transportation vehicles them-\noil.\nselves, the Congressional Energy Program proposes certain measures\nIn the President's proposed Energy Independence Act of 1975, the\nwhich would encourage the use of more energy- efficient means of trans-\nonly proposal for conserving energy use in the transportation sector is\nportation, including added funding of public transportation and rail re-\na requirement for motor vehicle labeling which would give consumers\nhabilitation, upgrading of road and track, electrification, modernization\ninformation permitting comparison of the energy consumption of differ-\nand expansion of roadways and terminals.\nent automobiles. The President has also proposed that the automobile\nUnfortunately the Administration program failed to advocate any\nindustry meet a voluntary target of 40% improvement in fuel efficiency\nmandatory energy conservation measures in the transportation sector. As\nof new cars by 1980 and has asked the automobile industry to pledge in\na result, an optimistic, long-range projection for energy savings in trans-\nwriting to try to meet the 40% improvement objective. The Adminis-\nportation under the Administration program would be less than adequate\ntration has specifically rejected a program of mandatory fuel efficiency\nto meet energy-sufficiency by 1985.\nstandards to accomplish the objective.\nIn contrast, the comprehensive energy conservation program in the\nBy contrast, Congress recommends a mandatory fuel efficiency pro-\ntransportation sector proposed in the Congressional Energy Program\ngram that will dramatically improve new car fuel efficiency-50% by\nwould achieve substantial savings in the next 10 years, well over half of\n1980 and 100% by 1985 (over the base year of 1974). The mandatory\nthe fuel consumed today by the automobile and twice the savings sought\nprogram would be based upon a sales weighted fuel efficiency average of\nby the President's program. (See Table IV.) The Congressional Energy\nall new cars sold in a particular model year. The Secretary of Transporta-\nProgram offers certainty that this significant savings would be achieved\ntion would be authorized to establish in each model year average fuel\nbecause of the program to stimulate the shift to fuel-efficient vehicles and\neconomy standards which each manufacturer would have to meet or ex-\nbecause of the mandatory fuel-efficiency standards which would be estab-\nceed. At the same time, it is recommended that Congress undertake a\nlished by the Department of Transportation, not to mention the added\nthorough review of all environmental standards in the light of developing\nemphasis given public transportation.\nan effective energy policy consistent with economic recovery and including\nTransportation, though important, is but one sector of the economy\nthe relation of emission standards to better mileage.\ncited by Congress for mandatory conservation.\nIn order to meet the goals of the mandatory fuel economy stand-\nards, the manufacturers would have to make substantial improvements\nResidential, Industrial and Commercial Use. It is the goal of the Con-\nin automobile technology and the sales mix of large cars and small cars\ngressional program to conserve a significant quantity of oil equivalent in\nwould have to be altered considerably.\nresidential, industrial and commercial use by 1985. In these uses, the\nAn additional feature of this program would provide incentives for\nmost important saving would come from changing the present insulation\nthe purchase of fuel-efficient vehicles and the payment of a penalty or\nrequirements for future construction and making it economical for the\nexcise tax on the purchase of less fuel-efficient vehicles. The amount of\npresent owner to install insulation and other energy-saving devices on\nrebate would increase as the mileage exceeded the annual standard; the\nexisting structures.\nexcise tax would also increase for fuel-poor cars, with a substantial built-in\nA major Federal loan guarantee, grant and/or tax credit program\nprice spread between the two extremes. It is suggested that the break-even\nis recommended for residential and commercial consumers for insulation\nstandard might increase by one mile per gallon annually as a continuing\nand other energy-saving modifications. A principal objective of the pro-\nincentive not only for customers to shop for energy-efficient vehicles but\ngram would be to upgrade over 10 years some 40 million existing homes\n23\n22\npresently in need of thermal protection improvements, such as ceiling\nIn addition financial aid would be provided to improve electrical\ninsulation, storm windows and doors, caulking and weatherstripping.\ntransmission lines and to make better use of existing generating capacity.\n(See Table IV.) Financial incentives should also be explored to en-\nFinancial aid would be afforded as well to the utilities in order to facilitate\ncourage the installation of solar heating and cooling facilities.\nconstruction of transmission lines that could take advantage of diversity\nWith specific regard to the Industrial use of energy, including electric\nin demand and thus enlarge the capacity available for each utility to meet\nutilities these recommendations are made:\npeak loads without building as many new powerplants. In return, utilities\n-Special investment incentives exclusively for conservation (in addi-\nshould be encouraged to redesign rate structures SO as to encourage en-\ntion to those required for economic recovery) applicable to any\nergy conservation by all consumers.\ncapital investment in the next two years for retrofitting investments\nAt the governmental level, all Federal agencies would be required\nmade exclusively to save energy or to switch from oil and gas to coal\nto give energy conservation the highest priority in all purchases, plan-\n(with appropriate ceilings).\nning. policies and regulatory actions; specifically mandate the ICC, CAB\nand Maritime Administration that energy wastage be cut out in railroad,\n-Discouragements against use of natural gas in new electric power\nairline, truck and marine transportation; work with state regulatory\ngenerating plants.\nagencies to establish standards for utility rate design in the pricing of\n-A federal requirement for an energy conservation program\nelectricitv and natural gas to encourage energy conservation.\n(efficiency standards) in each industry designed to economically\nStates would be enouraged and even required to develop mandatory\nfeasible conservation targets.\nconservation measures and affirmative action plans for conservation, par-\n-A research and development program for new energy saving indus-\nticularly with regard to the elimination of nonessential driving. Effective\ntrial processes designed to save 40 percent in key industries over the\nenforcement of the 55 miles-per-hour law together with a host of remedies\nnext decade.\nat the state level should result in substantial fuel savings. Federal funding\nTo facilitate conversion of electric power generating and other in-\nof any such conservation program should be conditional upon effective\ndustrial plants from petroleum and natural gas to coal-consistent with\nsavings. (See Table IV.)\npublic health, technological and economic considerations-we suggest\nOverall, under these conservation efforts-many of which are man-\nthe appropriate committees consider guaranteeing that any new plant\ndatory--a savings of over 11 million barrels of oil or its equivalent per\nfor future conversion which faithfully meets current EPA emission stand-\nday could be achieved by 1985 over what otherwise would have been\nards at the time the facility is built will enjoy a sufficient period of grace\nconsumed.\nagainst imposition of more costly standards so as to permit amortization\nof the required investment on an accelerated depreciation schedule. (See\nExpanded Domestic Energy Supply\nTable IV.)\nAs they begin to take effect and reduce the growth of energy con-\nThe Congressional program recommends action to facilitate and\nsumption, the conservation programs will permit the orderly but acceler-\nprovide the necessary funding to revise building codes at Federal, state\nated development of greater and more diversified domestic sources of\nand local levels to improve energy efficiency, a Truth-in-Energy law to\nsupply. The increased supply and diversification aspect of the program\nrequire labeling of energy content and cost of all appliances, homes, auto-\nis equally essential, therefore, to meet the Nation's long range objective\nmobiles, etc., and performance standards for major appliances to con-\nof reducing imports to 10% of domestic energy consumption and will\nserve energy. (See Table IV.)\nrequire a substantial increase in the use of coal and other more exotic\nenergy sources. (Fig. 6) (See Tables & VI.)\n24\n25\nThe overall objective of national energy sufficiency recognizes the\nFIGURE 6\nenormous undertaking involved in terms of capital investment and incen-\nU.S. Energy Supplies 1975 and 1985\ntives, in terms of environmental protection and national security. Switch-\ning from oil and gas to coal and other sources is just one aspect of the\nprogram-although a most critical one-and it alone will require a sub-\nImports\nHydro & Geo\nstantial commitment of national resources. A national program of this\nOil and Gas\nmagnitude requires the establishment of an instrumentality at the highest\nNuclear\nDomestic Production\nlevel of government to make certain that the program is successful.\nTherefore at the core of the recommendations is the creation of a\nCoal\nNew Sources\nNational Energy Production Board as an independent agency of the\ngovernment. It would mobilize unutilized and under-utilized private and\npublic resources to increase domestic energy production on an urgent\nbasis. The National Energy Production Board would be patterned after\nthe War Production Board of World War II and, subject to Congressional\n50\nreview, would have authority and funding to break energy bottlenecks,\nand to take all actions necessary to accelerate the production of and con-\n45\nversion to domestic energy sources. Much of the cost would be funded\n10%\nof Consumption\nout of an Energy Trust.\nAt the same time. the NEPB would oversee establishment of a\n40\n40.5\nnational system of oil strategic reserves and storage. The program would\n37\ncreate a stockpile that could supply three million barrels per day for six\nMillion Barrel Per Day Oil Equivalents\nmonths by 1980 and for a full year by 1985. (See Table V.) Part of\n(20% of\nConsumption)\nthe oil stored would be purchased on the world market under secret bid\nSources Subject\n30\n30\n57%\nto Near Term\n(40.5 million)\nto encourage competition. The remainder could come from Naval Petro-\nDepletion\nleum Reserves, the Outer Continental Shelf and the marketplace. While\nthe establishment of the oil bank is an essential component of energy self-\nsufficiency in the long term, it will be NEPB's prime responsibility to get\nthe augmented supplies and diversification underway on an urgent basis.\nSources Subject\n20\n73%\nto Near Term\n(30 Million)\nLeading the specific recommendations proposed by the Congressional\nDepletion\nprogram is coal production and conversion.\nCoal conversion incentives of major proportion are recommended\nthat are designed to implement a national policy requiring new base-\nload fossil fuel fired electrical plants and heavy industrial boilers to burn\ncoal rather than oil or natural gas, and the conversion of existing plants\n10\n43%\nover the next 10 years where feasible. (See Table V.) In this regard the\nCongress supports expeditious implementation of the Energy Supply\n27%\nand Environmental Coordination Act of 1974 (referred to as the Coal\nConversion Act).\nCapital equipment incentives, manpower development and engineer-\n1975\n1985\ning technology should be encouraged. The transportation network must\nbe greatly improved and coal should be mined and burned in com-\npliance with environmental standards and in compliance with the Fed-\n26\n27\neral Coal Mine Health and Safety Act. Strong measures are needed to\nprogram should be modified also to create sufficient incentives to produce\nencourage the conversion to environmentally sound coal use, e.g. tax\nall oil that can be recovered economically through secondary and tertiary\ncredits, loan programs, or fuel taxes to finance the cost of conversion.\nrecovery, substantially increasing the amount of oil ultimately produced\nAt the same time a commercial demonstration of new synthetic\nfrom the average field. Perhaps the most effective plan would be to in-\nfuels from coal should be undertaken with an ultimate production goal\nclude some decontrol treatment for secondary and tertiary recovery as\nreaching the equivalent of 500,000 barrels of oil per day. (See Table V.)\n\"new\" oil.\nThese technologies, together with oil shale, geothermal, MHD, solar\nExploiting fully natural gas potential is equally critical and the Fed-\nand others, would be developed on a contract or joint venture basis\neral Power Commission must be mandated to provide price certainty at\nwith industry. Sufficient Federal financial support is recommended to\nlevels high enough to reflect future costs and to eliminate regulatory\nproceed immediately. From this initial experience, a better assessment\ndelays, reducing any incentive to withhold gas because of the uncer-\ncould be made of environmental and social as well as economic costs.\ntainty over government pricing policy.\nIncentives should be provided to facilitate expansion of nuclear power.\nThe Congressional program therefore recommends measures to re-\nWe also recommend funding accelerated efforts to resolve the safety, safe-\nform and simplify natural gas regulation, but continue interstate price\nguard and waste disposal problems.\ncontrols on old natural gas, and establish a statutory formula ceiling that\nAs to new domestic oil and gas sources, the Outer Continental Shelf\nreflects cost of production. This should assure that the price is high\nAct should be revised to accelerate exploration consistent with the public\nenough to encourage maximum domestic production, but still below the\ninterest and in cooperation with states and public authority. This revision\nOPEC cartel level.\nwill assure coastal states of environmental protection, establish a public\nFinally, procedures to shorten needless regulatory delay in energy\nknowledge bank on available resources, permitting production under\nproduction should be adopted. This should include expedited considera-\nleases so that available resources will not be kept from the Nation's sup-\ntion of a natural gas delivery system from Alaska and cover speed-up of\nply by private speculation and require disclosure of geological and engi-\ncertification and regulatory procedures by FPC and State Utility Com-\nneering data that pertain to these national resources.\nmissions with regard to both electricity and natural gas.\nTo encourage increased domestic exploration for oil and gas, we\nWe reject an automatic pass-through to consumers of a fuel ad-\nrecommend:\njustment cost without scrutiny and justification by state and local\n(1) Completely eliminating the depletion allowance on all' foreign\nregulatory authorities.\ndrilling;\nTo be sure, there are issues related to the matter of increasing pro-\n(2) An excess profits tax on all big oil companies, avoidable only\nduction and achieving a greater diversity in the sources of energy supply.\nby plowing profits back into domestic exploration, and depositing\nParamount among these are the environmental questions involved. Con-\nproceeds from tax into Trust Fund; and\ngress has played a chief role in developing long-range policies to protect\n(3) Retaining depletion allowance only for small independent\npublic health and the environment and the actions recommended to in-\ndomestic explorers who do not operate retail outlets.\ncrease and diversify energy supply must be designed to maximize the\nFor the near term the Congressional supply program recommends\ndevelopment of the more environmentally sound sources of energy in\nthat the Naval Petroleum Reserves be rapidly developed and necessary\npreference to the more environmentally controversial sources.\ntransportation facilities created to make the estimated 10-40 billion bar-\nTo underscore the concern of Congress for an energy production\nrels available as needed for storage or commercial use.\npolicy fully compatible with environmental concerns, this program rec-\nAnd for immediate results, current production should be maximized\nommends the adoption of three precise legislative objectives:\nalong with ultimate recovery from existing oil and gas reserves; and to\nfacilitate secondary and tertiary recovery, tax incentives should be pro-\n-Enact the Surface Mining Control Act.\nvided along with Federal authority for mandatory unitization of fields\n-Enact legislation which recognizes the interests of states in the siting\n(harmonizing the production of wells into a common field) and produc-\nof power plants, refineries, etc.; provides planning mechanisms for\ntion at maximum efficient rates with authority exercised by states where\nregional planning in which states participate and decisions can be\nstate laws and regulations meet Federal standards. The oil price control\nmade in a timely fashion SO that necessary facilities can be built.\n28\n29\n-Establish machinery to recognize and resolve concerns of Coastal,\nimport dependence in the short term by managing and controlling any\nRocky Mountain States and others concerned with damage to the\nexcessive rate of energy consumption. Allocation management procedures\nquality of life from potential exploitation of their regions and to pro-\nwould be called upon immediately in the event that enacted policies did\nvide adequate funding to minimize detrimental secondary effects.\nnot lead to the previously stated goals. But full-scale rationing could be\nWhile environmental preservation is a paramount concern of this\nemployed only in the event of a drastic reduction in energy supplies by\nprogram, it is just as important that increased production and expanded\nan embargo of oil imports.\nsupply be undertaken by a strong and vigorous industry.\nThe standby import quota authority vested directly in the NEPB\nIt is therefore recommended that the anti-trust laws be strengthened\ntogether with a centralized purchasing mechanism for imports recognizes\nto promote free enterprise and to encourage competition. It is recom-\nthat as a consuming Nation today we may need to become more deeply\nmended also that the bidding system for Federal leases be changed to\ninvolved in oil negotiation while we endeavor to attain an energy-suffi-\npermit greater participation by smaller companies\ncient status. Provision for the standby authorities reflects also that in the\nTogether these are the components of a policy designed to expand\nnear and mid term, energy is too important to America to be left in the\nthe domestic production of energy. With a reduced rate of growth, they\nhands of a cartel of foreign nations. The Congress recommends therefore\nchart a deliberate path to national energy sufficiency within the next ten\nthat the independent NEPB itself be empowered to create an oil import\nyears, eliminating this Nation's dependence on insecure sources of supply\nadministration which could require that exporters to the United States\nas rapidly as possible without causing economic adversity along the way.\nbid competitively for access to the U.S. market. In addition, the Board\nNational energy sufficiency is attainable under this Congressional\nwould be empowered to set quotas to limit imports.\nprogram; the path is straight and deliberate, joining supply and conserva-\nOther elements of the standby authorities should include the fol-\ntion programs into an integrated rational policy.\nlowing:\nWhat the energy conservation and expanded supply programs in-\n-Assure that any allocation/rationing program affords equitable\ndicate, also, is substantial bipartisan agreement on the primary goals of\ntreatment of regions, industries, classes of consumers and independ-\nU.S. energy policy-eliminating U.S. dependence on insecure sources\nent producers during an embargo or energy curtailment from other\nof supply as rapidly as possible. In advocating creation of the NEPB, the\ncauses.\nCongressional program has chosen a separate independent instrumen-\n-Authorize the States to invoke more stringent mandatory conserva-\ntality fully equipped to get the job done.\nvation measures in any future curtailment.\n-Direct the Executive immediately to submit its recommendations\nAdministrative Mechanism\nfor a system to ration gasoline and other forms of energy; the system\nThe NEPB and other involved agencies must be equipped equally\nto be activated on notice, subject to expedited Congressional review.\nwell to meet each and every contingency that might occur between now\nA final component of the comprehensive Congressional program\nand the time a national energy sufficient status has been achieved. To\nrecommends creation of the National Energy Trust which would include\nthe dedication of funds needed to realize national energy goals.\nmeet such contingencies a host of standby authorities are recommended\nAs the financial base for this trust, a 5¢ tax on gasoline at the pump\nby the Congressional program. They range from import quotas to cen-\ntralized purchasing powers, allocations, and as the President has recom-\nwould be imposed 30 days after enactment. This revenue would begin to\nmended, even to rationing.\npay for the urgent program of conservation and production.\nAdditional revenues for the Trust would be derived from energy\nWhat these standby powers reflect is that Congress recognizes the vul-\ntaxes on inefficient uses of energy and by dedication of part of the funds\nnerability of the Nation to energy shortages. To weather any such poten-\npaid for leases covering the Outer Continental Shelf.\ntial adversity, pending a status of energy sufficiency with reduced for-\neign dependency and the emplacement of an oil reserve, the Congress\nConclusion\naccepts the President's judgment that enactment of standby rationing\nIf much of this Congressional program is in accord with the long\nlegislation is needed. Also it recommends the extension of the mandatory\nrange objective of the Administration, then our disagreement is over\nallocation program which could accommodate a gradual shift to reduced\ntactics and the coordination of energy policy with economic policy.\n30\n31\nThe Administration wants to tax energy at the source; the Con-\nTABLE I.-EFFECT OF CONGRESSIONAL PROGRAM ON ENERGY\ngress recommends taxing gasoline at the pump. The Administration\nSUPPLIES\nwants to put the entire tax on at once; Congress recommends a 5 cent tax\nMillion barrels of oil equivalent per day\ncoupled with urgent and mandatory conservation and production pro-\n1973\n1975\n1980\n1985\ngrams. The Administration seeks to achieve mileage standards; Con-\ngress agrees, but would make them mandatory and supplement the\nEnergy demand:\nConsumption if no new actions (historical)\n36.6\n38.0\n47.0\n56.1\nstandards with a large excise tax on poor mileage autos and an offsetting\nEnergy conservation reductions (congressional\nsubsidy for efficient cars. Most importantly, the Administration relies on\nprogram)\n1.3\n6.0\n11. 1\nmassive price increases to accomplish its goals while Congress would back\nAdjusted consumption to reflect energy con-\nservation\n36. 7\n41. 0\n45.0\nup its recommendations with authority to manage supply and allocate-\nor even to impose quotas if necessary-to meet the goals.\nDomestic energy supplies:\nPetroleum\n10.\n10. 5\n12.\n13.4\nIn sum, the President's program would trade the jobs and economic\nNatural gas\n11. 2\n10. 5\n10. 1\n10. 3\nwell-being of Americans to achieve a short-term result of dubious merit.\nCoal\n6.9\n7.5\n10. 1\n15. 0\nOther\n1.5\n2.5\n3.4\n5.2\nThe Congress will not tolerate such further economic sacrifice and its\ncomprehensive energy policy reflects a judgment that economic restora-\nTotal domestic supplies\n30. 5\n31.0\n35.6\n43.9\nImports\n6.1\n5.7\n4.4\n1.1\ntion is the Nation's foremost priority today.\nTotal supplies\n36.6\n36.7\n41. 0\n45.0\nTABLE II.-EFFECTS ON OIL IMPORTS\nMillion barrels of oil equivalent per day\n1975\n1977\n1980\n1985\nPetroleum supply-Demand balance:\nConsumption if no new actions\n18.00\n118.30\n20.3\n123.90\nImports if no new actions\n16.50\n18.00\n29.5\n112.70\nSavings achieved by following actions:\nVoluntary conservation\n78\n90\n1.12\n1.40\nMandatory conservation (difference between\ncongressional and administration conserva-\ntion programs)\n3 (0.28)\n2.25\n2.20\n5.76\nAccelerate oil supply strategy\n10\n10\n.65\n2.00\nSubstitution of coal for oil and natural gas\n17\n.40\n.98\n1.40\nPromotion of coal for use by new facilities that\notherwise would use oil or natural gas\n0\n0\n18\n1.06\nTotal savings\n77\n1.60\n5.13\n11.62\nNecessary imports:\nCongressional program\n5.73\n6.40\n4.39\n1.08\nAdministration program\n5.30\n5.80\n5.38\n4.70\nStrategic reserve strategy\n20\n30\n1.00\n3.00\nNew import vulnerability (requiring standby emer-\ngency authority):\nCongressional program\n5.53\n6.10\n3.39\n(4)\nAdministration program\n5.30\n5.80\n4.38\n1.7\n1 The President's 1975 state of the Union message including economy and energy, Jan. 15,\n1975.\n2 Estimates.\n3 Due principally to administration's price disincentives.\n4 Surplus.\n32\n33\nIII.-CONSERVATION STRATEGY-SUMMARY 1\nTABLE IV.-CONSERVATION STRATEGY-\nMillion barrels of oil\nequivalent per day\n1975\n1980\n1985\nTransportation-Continued\nAutomobile-Continued\n4. Price disincentives:\nprogram (mandatory)\n0.33\n2.23\n3.81\na 45\n1.38\n1.95\nCongressional program (gasoline tax)\nstration program (voluntary)\nAdministration program (excise tax)\n5. Research on urban car\nprogram\n13\n42\n58\nstration\nprogram\n(2)\n(2)\n(2)\nSubtotal:\nprogram (mandatory)\n17\n1. 47\n3.65\nCongressional program\nprogram (voluntary)\n42\n83\n1. 27\nAdministration program\nnercial\nsector:\n42\n1.36\n2.08\nPublic transportation: Upgrade mass transit systems fol-\nprogram (mandatory)\nprogram (voluntary)\n57\n1.35\n1.92\nlowed by government programs to discourage inefficient\nuse of automobiles: 2\nprogram (mandatory)\n25\n50\n1.00\nCongressional program\n14\n22\n22\nAdministration program\nprogram (voluntary)\nSubtotal:\nressional program\n1.30\n5.98\n11.12\nCongressional program\ninistration program\n1.58\n3.78\n5.36\nAdministration program\nDifference\n(.28)\n2.20\n5.76\nTotal, transportation sector:\nCongressional program\nAdministration program\nprogram see table IV.\nprogram.\nIndustrial sector:\n1. Encourage voluntary conservation and energy audits:\nTABLE IV.-CONSERVATION STRATEGY\nCongressional program\nAdministration program\n2. Investment incentives:\nMillion barrels of oil\nequivalent per day\nCongressional program\nAdministration program\n1975\n1980\n1985\n3. Mandatory energy conservation programs, including\nefficiency standards:\n⑆\nCongressional program (adjusted to reflect item 2)\n+\nAdministration program\n4. Price disincentives (fuel and excise taxes):\nconservation: Car pooling and proper\nintenance\n10.05\n20.32\nCongressional program\n20.35\nAdministration program\n55 m/hr speed limit\n1.05\n1 16\n1.16\nfor purchase of new automobiles with\nTotal, industrial sector:\nproved efficiency and fuel economy standards:\nCongressional program\nCongressional program (mandatory)\n10\n1.50\n$ 3.00\nAdministration program\nAdministration program (voluntary)\n4 05\n5.48\n$ 1.00\nResidental-commercial sector:\n1. Encourage voluntary energy conservation:\nResidential\nCommercial\nSubtotal\n2. Insulation tax credit:\nCongressional program (commercial)\nAdministration program\nTABLE V.-OIL STRATEGIES\nTABLE IV.-CONSERVATION STRATEGY-Continued\nMillion barrels of oil equivalent per day\nMillion barrels of oil\nequivalent per day\n1975\n1977\n1980\n1985\n1975\n1980\n1985\nEnergy supply strategy-oil:\nResidental-commercial-Continued\n1. Accelerate Outer Continental Shelf devel-\nopment\n10.500\n1.500\n3. Promote 10-year program to upgrade 40 mi'lion\nresidences:\n2. Assure maximum efficient rate of produc-\nCongressional program\n0.08\n0.38\n20.57\ntion from existing wells and promote\nAdministration program\n(7)\n(7)\n(7)\nsecondary and tertiary recovery\n0. 100\n0. 100\n.050\n0\n4. Building code revisions\n4.17\n5.30\n3. Promote commercial production of syn-\nthetic fuels\n0\n0\n100\n500\n5. Appliance efficiency standards and labeling:\nCongressional program (mandatory)\n0\n2.09\n2 22\nAdministration program (voluntary)\n0\n4 04\n5.10\nTotal\n100\n100\n650\n2.000\n6. Price disincentives:\nCongressional program\n(7)\n(7)\n(7)\nStrategic reserve strategy-Oil:\nAdministration program 5\n23\n.32\n.33\n1. Production of Elk Hills\n2 200\n300\n2. Development of Naval Petroleum Reserve\n0\n2.000\nTotal, commercial-residential sector:\nNo. 4\n0\n0\nCongressional program\n.42\n1.36\n2.08\n3. Emergency storage\n0\n0\n1 1.000\n3.000\nAdministration program\n.57\n1.35\n1.92\nTotal\n200\n300\n1.000\n3.000\nUtility sector:\n1. Utility rate redesign:\n1 Estimate.\nCongressional program 2\n$.25\n50\n1.00\n2 The President's 1975 state of the Union message including economy and energy, Jan. 15,\nAdministration program 5\n4.02\n4.05\n.05\n1975.\n2. Investment tax credit\n(9)\n(9)\n(9)\n3 Assume that production from NPR-4 (item 2) is used to build up emergency storage.\n3. Price disincentives:\nCongressional program\n(7)\n(7)\n(7)\nAdministration program 5\n.12\n17\n.17\nTotal, utility sector:\nCongressional program\n25\n.50\n1.00\nAdministration program\n.14\n.22\n.22\n1\nComprehensive energy plan, Federal Energy Administration, December 1975.\n2\nProject independence report, Federal Energy Administration, November 1975.\n8 Department of Transportation.\n4 Estimated.\n5\nThe President's 1975 state of the Union message including economy and energy, Jan. 15, 1975.\n6 No immediate benefit.\n7 No comparable proposal.\n8 See item 3.\n9 No direct conservation.\n36\n37\nTABLE VI.COAL STRATEGIES\nMillion barrels of oil equivalent per day\n1975\n1977\n1980\n1985\nEnergy supply strategy-Coal:\n1. Promote the development of new coal\nsupplies:\nProduction goals\n7.50\n10.08\n15.00\n(Million tons per day)\n(1.9)\n(2.52)\n(3.81)\n(Million tons per year)\n(685)\n(920)\n(1, 370)\nCurrent projections 1\n8.52\n9.80\n12.04\n(Million tons pe day)\n(2.13)\n(2.45)\n(3.00)\n(Million tons per year)\n(755)\n(895)\n(1, 100)\nIncreases over current projections\n28\n2.96\n(Million tons per day)\n(.07)\n(.80)\n(Million tons per year)\n(25)\n(270)\n2. Promote substitution of coal for oil and\nnatural gas:\nConversion of utilities with capability\nto use coal 2\n. 100\n.300\n.400\n. 400\nConversion of existing utilities without\ncapability to use coal and new utili-\nties now in planning stage or under\nconstruction which plan to use\nnatural gas or oil\n0\n0\n3 280\n500\nConversion of industrial facilities\n1.075\n. 100\n3 300\n1 500\nTotal\n. 175\n. 400\n.980\n1.400\n1 Project Independence Report, Federal Energy Administration, November 1975.\n2 The President's 1975 state of the Union message including economy and energy, Jan. 15, 1975.\n8 Estimate.\n4 Comprehensive Energy Plan, Federal Energy Administration, December 1975.\n38"
}