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Press Conference of Frank Zarb, Administrator of the Federal Energy Administration, and Clarence J. Brown (R), Representative from the State of Ohio
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Press Conference of Frank Zarb, Administrator of the Federal Energy Administration, and Clarence J. Brown (R), Representative from the State of Ohio
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Digitized from Box 20 of the White House Press Releases at the Gerald R. Ford Presidential Library
FOR IMMEDIATE RELEASE
FEBRUARY 2, 1976
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
PRESS CONFERENCE
OF
FRANK ZARB
ADMINISTRATOR OF THE
FEDERAL ENERGY ADMINISTRATION
AND
CLARENCE J. BROWN
REPRESENTATIVE FROM THE STATE OF OHIO
THE BRIEFING ROOM
6:55 P.M. EST
MR. NESSEN: The President has had the meeting
with Republican Congressional leaders to discuss the
status of the legislation to increase the supply of natural
gas.
I think it would be fair to let Frank tell you
exactly what he told the President and the Members as to
his feelings toward this legislation, and then we have
Congressman Clarence Brown of Ohio, who will be the Repub-
lican floor manager for the legislation, and he can tell
you exactly what he told the meeting in terms of the
outlook.
Frank?
MR. ZARB: Let me cover some very general points
that I covered at the meeting, and then we might get to
your questions.
I pointed out the issue here is, simply stated,
our gas or their oil. It is either going to be our
American natural gas or replace it with imported oil.
The decontrol provisions that have been, one, passed by
the Senate and, the other, being considered by the House,
are both gradual decontrol of natural gas.
They have different characteristics, and
one treats old gas different than the other, but both
have gradual aspects to them and neither decontrol all
gas or all oil at one time.
MORE
- 2 -
In our calculations, by 1985 -- with continued
controls -- we will be importing two million barrels a
day of oil more than with deregulation.
Q
Two million barrels?
MR. ZARB: Two million barrels of oil per day
by 1985 more with continued controls as compared to
deregulation at the wellhead.
It is important also, I think, to touch on the
question of cost to the consumer. While deregulation over
the near-term, over the first five-to ten-year period, has
a modest increase in consumer cost as compared to continued
controls, the highest it gets is about 50 cents per week,
and then the lines cross and actually it is more expensive
to have continued controls than deregulated at this point
because the phenomenon that takes place is with continued
controls our production continues to decline, and as it
declines, we continue to bring substitute fuels, which are
very expensive.
Some parts of the country are talking about
importing LNG from some of the OPEC nations that already
have very, very high costs and where other conversions can
take place, the conversé takes place with imported oil.
So, in terms of self-sufficiency and two million
barrels a day, in terms of cost to consumers, in terms of
keeping our own people at work in developing American
energy, all the factors point toward deregulation as the
right conclusion.
There is, in our view, no other approach to this
particular problem that can work in the best interests of
our energy problem in a long-term cost to the American
people.
Believe me, over the last year we have been
through all the possible scenarios.
Bud, do you want to add something to that?
CONGRESSMAN BROWN: First off, the first significant
vote will be on the rule. Every effort has been made to
keep us from having this legislation up for a vote in the
House this year. The basic legislation was drafted in
such a way that long-range deregulation would not be
germane.
MORE
- 3 -
We got a rule from the Rules Committee which
would make it possible for the House to vote on this.
The House, in any event, is going to have to go to
conference with the Senate because the Senate has already
passed a long-range deregulation plan.
After that -- and I think we can hold the rule,
but it will be a very close vote -- we will go to three
hours of general debate, divided between one hour for the
minority, one hour for the majority and one hour for Mr.
Krueger, who has the substitute which is like the Pearson-
Bentsen bill which passed the Senate -- but slightly modified
from that.
If that passes, there is a possibility we will
get the legislation to conference very quickly. My
guess is, however, that we will get every dilatory effort
to slow up consideration of the legislation because the
momentum of concern in the country seems to be expressing
itself to those of us in the Congress in favor of deregu-
lation.
MR. ZARB: Why don't we get your questions.
Q
What was the 50 cent figure that you used?
Fifty cents a week?
MR. ZARB: That is at its peak by 1985, when you
look at the cost of deregulation as compared to continued
regulation. The increase can be as much as 50 cents per
week per household. It is a highly theoretical number but,
nevertheless, it is a conservative number that says we
are producing American gas to satisfy our needs in paying
50 cents per week per household using gas at that particular
moment.
Beyond that, the lines turn the other way. A
continuation of control starting now and going past 1985
actually has the effect of costing the consumer more
because the replacement value becomes more considerable,
either for imported LNG or imported foreign oil as a
replacement.
That two million barrels a day begins to have
its effect on the economy.
CONGRESSMAN BROWN: Or the use of propane
where it is $2 and up currently. The important thing to
remember here is if we are deregulating natural gas, we
are affecting only 20 percent of the gas bill because 80
percent of the gas bill of the average consumer doesn't
have anything to do with the gas cost at the wellhead.
MORE
- 4 -
It has to do with the transportation of the
gas and the other overhead costs that are being carried.
Right now, those pipelines carrying natural gas from the
Southwest up to the industrial heartlands of the country
are running below capacity so the cost per unit of gas is
excessively high.
If you fill those pipelines up 100 percent full,
then the cost per unit of natural gas would be reduced
of transporting the natural gas so, in effect, you have two
balancing factors here.
Q
Congressman, if this is such a great thing
for the country, why is there so much opposition?
CONGRESSMAN BROWN: I think there is philosophical
opposition to letting markets operate and sort of the
advantage of control because that puts power in Washington
and makes all of us in the Congress and everyplace else very
important.
The fact of the matter is the arguments run the
other way for the benefit of the average consumer. The
argument, I guess, is a political one that says homeowner,
I am holding down your prices. We have frozen the price of
natural gas against profiteering or increases by the gas
companies.
But, the fact of the matter is what you are
really saying is I am making it very difficult for you to
get natural gas for the industry where your husband works,
and in some parts of the country that has begun to bite
pretty hard. In my own part of the country last year the
locker rooms and some of the plants had the heat turned off,
and there were no hot showers at the factory and so forth
before you went home.
In other parts of the country, production is
actually being curtailed of the products made in those
plants. Toledo, Ohio has to use natural gas to make glass,
and if you don't make glass in Toledo, Ohio you have a lot
of people out of work.
Q Mr. Brown, some of your friends across the
aisle say your own Commerce Committee should be allowed to
liberate maturely and send a natural gas bill to the floor,
and you could then offer any kind of amendments then and
the House would have a more reasonable bill to work with
and that would be the usual and appropriate procedure.
What do you say to this?
MORE
- 5 -
CONGRESSMAN BROWN: We have had a year of
hearings on the deregulation of natural gas and oil.
We have had over 1000 pages in those hearing books of the
discussion on the supply, the price, the prospects of
deregulation of natural gas.
We could go on thinking about the issue for
some time, but unfortunately there will be another winter
and the trend line of the production of natural gas under
control has been down continually for the last 15 years
and our reserves began running out in 1967.
So, if we continue to think ábout it, we may
think about it until we have 50 percent, 100 percent
curtailments of natural gas in industries around the
country.
We are not likely to deal with this issue next
fall because it is an election year and we will quit
early. We need to deal with it now and need to deal with
it on a long-term basis to try to reverse that trend of
declining natural supplies that have been declining because
of the frozen price.
MORE
- 6 -
Q
Could I follow that? The question, however,
was on the wisdom of circumventing the House committee,
though.
CONGRESSMAN BROWN: We haven't circumvented the
House committee. We have brought the issue to the House
Floor for a vote and it would have been prevented had the
Rules Committee not allowed us to make in order consideration
in the Full House of what the Senate has already acted on.
Now there was that effort. The Chairman of my
committee made every effort to craft the legislation so
you couldn't consider long range controls. As a matter of
fact, his original bill was designed to allow purchases at
market price until the 15th of April. Let's see, that is
another two months off. I doubt we would have gotten anything
in law in time to deal with the problem between now and the
15th of April and we still wouldn't have acted into the
future.
Q
This is a pretty unusual procedure, isn't it?
CONGRESSMAN BROWN: No, it is not unusual. It
was done, for instance, when you had the depletion allowance
passed by the House of Representatives. The Green Amendment,
which made that possible, was made in order as a part of
that bill. It was not germane to the tax law at that time
but the Rules Committee made it in order just as they made
the Krueger Amendment in order, and the Chairman of the
committee, Mr. Ullman, opposed making it in order and they
gave a chance for the House to have a vote on it anyhow.
We are following exactly the same procedure that
was the case then. It has been done on several occasions
where the Chairman has tried to prevent the House from
working its will on a controversial issue.
Q
Suppose Staggers tells the Democratic caucus
tomorrow that the Commerce Committee will deliver a bill
by April 1 or April 15. What would you say then?
CONGRESSMAN BROWN: He has refused to say that up
to this point and, in fact, has said quite the opposite,
that he doesn't know when a bill like that will come up
and that he personally is opposed to long range decontrol.
So we are going to go ahead and vote on it. I don't think
you have to have more hearings. You have had hearings in
the Government Operations Committee. You have had hearings
in two subcommittees of the Commerce Committee. You have
had hearings and debate on the issue in the Senate and we will
have full-scale debate on it in the House.
The issue is not an unknown issue. It is an
issue that has been kicking around this Congress for a year
actively.
MORE
- 7 -
Q
Has the Full Committee marked up basic
amendments, permanent amendments to the Natural Gas Act?
CONGRESSMAN BROWN: I am sorry --
Q
Has the Full Committee had a markup?
CONGRESSMAN BROWN: We have a bill before us
which the Full Committee marked up but not long range
amendments because it was crafted in such a way that we
couldn't do that, but we had a 19-19 vote in the Full
Committee on long range decontrol, a tie vote on which the
issue lost. This is one of the reasons the Rules Committee
saw fit to allow the House to speak to the issue because,
in any event, the House will have to go to conference with
the Senate on the issue and the House deserves the right
to express itself on this issue.
The fact is the Chairman has made an effort to
prohibit the House from expressing itself one way or the
other.
MR. ZARB: I want to add one point -- two points.
First, the President proposed deregulation of natural gas
a year ago last January as part of a comprehensive energy
program and to the extent we have to continue to suffer
procedural delays, which are just tactics, without coming
to grips with some of these questions, we are going to
delay completion of our total energy program.
I want to go back to Phil Jones' question earlier
as to why this is controversial. There are a couple of
misconceptions that appear not to be accurate. In the
first instance, it said this will have an abrupt and
considerable increase in prices at the consumer level.
That is not true and by no means accurate. They neglect
to point out that, if we don't take this step, in the
long term Americans will be paying a lot more for imported
oil than domestic gas.
The second point that is often made is that some
evil spirit is hoarding excess amounts of gas and as soon
as we can exorcize that evil spirit, our energy problem will
be solved.
To base the solution of our energy problem on
that kind of an argument is simply too thin. I am not
here to say there are not one or two creative entrepreneurs
somewhere who might have a well that is not being completely
produced, but I am here to say we are not going to satisfy
our natural gas shortages by finding some hidden supply
somewhere that simply does not exist.
MORE
- 8 -
CONGRESSMAN BROWN: Let me say the pipelines have
the right to sue any supplier that is not living up to its
contract; also the people who have the land on which the
mineral rights or if somebody is not removing those
minerals at a rate they think is appropriate to their
opportunity to make money, they can also sue to force them
to go ahead and live up to their contract. The fact of
the matter is that just hasn't been done and the withholding
thing is largely a canard.
Q
Congressman Brown, do you think you would have
been able to by-pass the committee if indeed --
CONGRESSMAN BROWN: We haven't by-passed the
committee. We are dealing with a piece of legislation that
came out of that committee but where the committee refused
to consider long-range decontrol by parliamentary maneuver by
its leadership.
Now what is your question?
Q
Would you have gotten your rule if the
Speaker of the House were not from Oklahoma?
CONGRESSMAN BROWN: The Speaker doesn't serve on
the Rules Committee and it came out of the Rules Committee
on a 12 to 4 vote. You don't have that many people from oil
or gas producing States on the Rules Committee. I think
there are a lot of people who are concerned about the
impact on jobs of a 60 percent curtailment of natural gas.
I have no producers of oil, gas, or any other
kind of energy in my district but I do have people that
were threatened with being out of work because there were
insufficient amounts of natural gas to fuel those places
of employment.
MR. ZARB: I want to add to that. Don't forget
we had a room full of Governors in the Cabinet Room some
months ago, most from consuming States, who later reported
that they had 31 Governors, mostly from consuming States,
supporting a deregulation provision. They were talking
about a similar kind of program to Krueger but with a five-
year time fuse, but nevertheless they were endorsing that
kind of an approach and they didn't all come from Oklahoma.
Q
Can you explain, Frank, why we don't have
the crunch this year that had been anticipated?
MR. ZARB: Sure, there are two reasons: One,
we had a November and December that was somewhat milder.
We had a fall that was not super wet where the farmers
didn't have to go out and dry crops. We have had emergency
purchases of some substantial amount.
MORE
- 9 -
Bob Michel told me tonight, from Illinois, of the
emergency purchases they have had up in that area. I was in
Mississippi today talking to some textile people and cotton
people and they have had to arrange for some emergency
purchases.
So the combination of having the authority to go
into the intrastate market and buy a quantity in one chunk
and at the same time the dry fall and warmer early winter
have combined to make it less difficult than we anticipated.
But we are going to have less gas consumed this winter than
we had last winter.
CONGRESSMAN BROWN: There is one other thing that
ought to be said; that is, when the economy has been down
you also have less consumption of natural gas. The fall
in Washington was the warmest you have had in something
like 20 years. The last 5 years have been warm. In Ohio
natural gas is stored in underground caverns in anticipation
of the winter. We have not had to dip into much of that so
far. They are probably beginning to dip into it now. But
you got enough through the pipeline to meet the situation
early in the fall.
MORE
- 10 -
0
Since we have not had a crunch, is that
going to make it more difficult for you to get the votes
you need in the House?
CONGRESSMAN BROWN: Yes, I think it will because
there are a lot of Members in Congress who, like the grass-
hopper and the ant, think we may now be through the winter
so why worry about it for the next year. But, unfortunately,
that is pretty bad planning.
MR. ZARB: I can assure you if next fall we have
a wet fall and go immediately into a very cold winter, we
will have substantial interruptions in the gas-using
communities. We have had a lot of curtailments. We have
had a lot of industry put on standby for a cut-off and a
number of industries that have converted in anticipation.
When they do that and have to use oil, which
is typically a higher priced product, somebody pays the bill,
and it is the American consumer. Those that think or claim
they are holding down prices for the American consumer
by keeping controls on and neglect to tell them they are
paying higher prices for some of their prdocuts that used
to use gas but are now using higher priced oil or imported
LNG are really not telling the story.
CONGRESSMAN BROWN: Don't overlook one other thing.
There has been a great deal of conservation by industry
and by individual citizens this winter. I have one manu-
facturing plant in my district that I have been through
where the reduction in use this winter- this year, really,
because they started this process at the end of last winter--
has been about 40 percent just by changing all their
processes and trying, for instance, to use all of their
waste product as part of their heating fuel. In certain
areas, you know, not use gas, but use burned wood, for
instance, from the packing crates that they used to put
aside.
0
Frank, do you have any figures on how
many workers have been laid off this winter as a result
of industrial shutdowns?
MR. ZARB: No, to be honest with you, we took a
shot at that and, because of the recession, it was impossible
to really separate it and give you a creditable number. We
did publish the numbers of employees by State that worked
in industries that were primarily dependent upon natural
gas as either a feed stock or as a power stock.
MORE
- 11 -
That was the extent to which we could go. We
get reports from Governors from time to time as to this
plant or that plant or an accumulation of numbers, but
we can't sort it out for you and tell you that is an
accurate number because of the high unemployment we had
last May.
Q
What was the figure you got, those that
depend on natural gas?
MR. ZARB: We have a chart there.
Ron, you may have it in your book there.
Q
Do you have a mess chart?
MR. ZARB: No. This is a chart that is going
to be a mess if we don't do something about it. We have
a schedule by State which you are welcome to have, and
we will get it for you.
Q
Do you know whether any workers have been
laid off in a situation directly related to the regulatory
situation?
MR. ZARB: There is no question in our mind that
natural gas has created some people not being employed
who would be employed otherwise. The question is, when
you start to determine numbers, how many are there.
MR. JOHN HILL (Deputy Administrator, Federal
Energy Administration): We know of individual instances.
People have called us unable to arrange substitute fuels
and have actually shut their bakery down or shut their
school down for a few days because their gas supply was
shut off.
We haven't had anybody shut off for all winter,
but there have been people losing days from work because
there was no gas.
CONGRESSMAN BROWN: We have public schools in
Ohio that last year, when the weather got below 20 degrees,
closed school for the day.
Q
Congressman Brown, besides yourself, who
were the other members at the meeting with the President?
CONGRESSMAN BROWN: There ought to be a list. I
would be glad to try to recite them, but I am sure I would
miss somebody.
MORE
- 12 -
0
Is it safe to assume the President is in
favor of Mr. Krueger's plan?
CONGRESSMAN BROWN: Yes, it is safe to assume
it. He said it very emphatically and said he thought this
was extremely important.
MR. ZARB: I really believe, and he does, too,
that this is one of the most important energy votes we
will have in the 1975-1976.
Q
If a rule is defeated tomorrow, do you think
that means that natural gas deregulation is through for
1976?
CONGRESSMAN BROWN: And the 1977 winter because
we won't get through it before we adjourn the Congress
this year. So, you will not only go through this winter,
but you will have the problem next winter, and then you
will have a new Congress convening. When will you get to
it again?
Q
Did I understand you to say earlier you
thought it would be close, but you would win on the rule?
CONGRESSMAN BROWN: I think it will be very
close on the rule.
Q
But you think you will win on the rule?
CONGRESSMAN BROWN: I am always optimistic.
MORE
- 13 -
Q
You have gone over this but tomorrow what
happens? I don't have it clear.
CONGRESSMAN BROWN: We have an hour of general
debate on the rule and then we have a vote on the rule. The
effort will be to defeat the previous question -- in other
words, the previous question being shall we vote on the rule
-- and, in effect, if we win the previous question then we
have adopted the rule. Then we will have three hours of
debate on the legislation, one hour to be controlled by
whoever the Speaker recognizes under the rule to handle the
legislation for the majority -- in all likelihood Congressman
Dingell, who opposes the Krueger Amendment. There will be
one hour for the minority, which is traditional -- that is
the split of those two times -- and then one hour for the
substitute proposed by Mr. Krueger, which is the usual
procedure, too.
If somebody has a major substitute, or a piece
of legislation which in effect changes the thrust of the
legislation, he gets time to present his argument. After
that, we go into the amendment procedure.
Q
Congressman, were any other topics taken up
at this meeting?
CONGRESSMAN BROWN: No.
Q
Say you win the vote on the rule. Do you
think it is likely you will get to a vote on the actual
amendment?
CONGRESSMAN BROWN: No, I think tomorrow there will
be every effort, as I indicated, by those who oppose us
doing anything on the natural gas situation of a long-range
nature to try to delay consideration of this legislation
or of any legislation that would address itself to long-
range decontrol. So I think there will be an effort to try
to stretch this out and you will see some dilatory tactics
in the House tomorrow, I think.
Q
Mr. Brown, do you see a resolution this week?
CONGRESSMAN BROWN: If we are lucky. It depends
on how the Speaker wants to schedule it after a couple of
days. It is on the schedule for Tuesday and Wednesday and
we ordinarily work on Thursday and it might even be nice
if we worked on Friday.
Q
Isn't it true that labor opposes this?
CONGRESSMAN BROWN: In some communities labor,
I think, favors the legislation. If you are talking about
the labor lobbyists here in Washington, I think some of them
probably oppose it.
MORE
- 14 -
Q
Are you getting much heat on that? I guess
you are a lost cause.
CONGRESSMAN BROWN: I guess I really hadn't
noticed.
Q
Are people back in your district really
interested one way or the other?
CONGRESSMAN BROWN: We had 63,000 people sign
petitions for the Congress and the President to come to
some resolution on the energy problem. They are concerned.
We have had people in our area say, "We will give up the
gas that we heat our automobile showroom with in order to
keep the factories operating in our area because, if the
factories are operating somebody might come in and buy a car."
We have also had people write in to the newspaper
and say, "Hey, we will be glad to cut our heat back in our
house so that my husband can go to work. How can you
arrange that so that our gas is cut down so that the
factories can continue to operate?" The answer is yes.
Q 63,000?
CONGRESSMAN BROWN: 63,000 in one community, one
county --
MR. ZARB: These are all Congressman Brown's
constituents. I met with them and they were rather rigorous.
CONGRESSMAN BROWN: They met with the President
and with the Vice President and, as a matter of fact, that
is one of the reasons I was anxious to support the oil policy
bill.
THE PRESS: Thank you.
END (AT 7:20 P.M. EST)