94th Congress, lot Session Senate Document No. 94-102

VETO OF EMERGENCY PETROLEUM ALLOCATION

EXTENSION ACT, 1975

MESSAGE

FROM

THE PRESIDENT OF THE UNITED STATES VETOING

S. 1849

AN ACT TO EXTEND THE EMERGENCY PETROLEUM ALLOCATION ACT, WHICH WOULD EXTEND PRICE CONTROLS

ON DOMESTIC OIL ANOTHER SIX MONTHS

SEPTEMBER 9, 1975.-Read and ordered to be printed

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON - 1975 57-011

94th Congress, 1st Session Senate Document No. 94-102
To the Senate of the United States:

I am today vetoing S. 1849, which would extend price controls on domestic oil another six months. I am taking this action because:

1. An extension of price controls would increase our dangerous and

growing dependence on imported oil.

2. It would increase the export of jobs and dollars from our economy.

3. It would jeopardize our future economic stability and national

security.

4. It would retard conservation of energy.

5. It would postpone the badly needed development and production of new domestic energy.

6. It would negate the possibility of long-range compromise on this

problem because of expected Congressional reluctance to tackle the

issue of higher oil prices in an election year.

Since 1971, America's bill for imported oil has climbed from just over $3 billion annually to $25 billion today-a 700 percent increase.

This $25 billion could provide more than one million jobs for Ameri- cans here at home. We cannot delay longer.

Last January in my State of the Union Message, I proposed to the

Congress a comprehensive energy program to make the United States

independent of foreign oil by 1985.

The need for such a program grows with each passing day. Right

now, the United States is dependent on foreign oil for almost 40 percent of its current needs. If we do not act quickly to reverse this trend,

within 10 years, we will import more than half of the oil we need at

whatever price is demanded by foreign producers who can cut off our supply any time they want to.

The more foreign oil we import, the more dollars and the more jobs we lose from our economy. And as American jobs and dollars flow

out of the country, so does our economic and national security.

The 1973 embargo cost us more than $15 billion in Gross National

Product and threw hundreds of thousands of persons out of work. It

dramatically showed our vulnerability. Another disruption would be even more costly in dollars and jobs-and could throw us into a new recession.

The detailed legislative program I sent to the Congress last winter

involved tough measures to put us immediately on the road to energy independence. It would have conserved the energy we now have and

accelerated development and production of more energy here at home.

Because this program would have increased energy prices somewhat

until new domestic supplies were developed, I also proposed tax legislation to prevent undue profit-taking by oil companies and to return

energy tax dollars to American consumers to offset the slightly higher

prices they would pay.

Since I could not gamble with our Nation's security while waiting

for the Congress to act on my comprehensive program, I raised the im-
port fees on each barrel of foreign crude oil in February as an interim

measure to reduce imports.

The Congress still has not acted. Throughout these months, I have

compromised again and again and again to accommodate Congressional requests.

I delayed putting the second dollar fee on imported oil for 90 days,

finally imposing it June 1. I delayed the third dollar indefinitely. Still,

the country has seen no Congressional action.

In my State of the Union Message last January, I announced a

decision to remove the ceiling on price-controlled domestic oil April 1,

permitting it to rise from $5.25 per barrel to the free market price.

This action would have immediately stimulated production and development of needed additional energy supplies and also encouraged

conservation. At the request of Congressional leaders, I postponed

such action to give them time to work out a different solution.

After nearly six months without Congressional passage of a decontrol bill or any other positive legislation, I proposed in early July

a compromise 30-month phased oil decontrol plan. This program represented an effort to meet the concerns raised by many members of

Congress and showed the Administration's willingness to compromise.

The House of Representatives rejected this plan.

I made another effort to reach a solution before the August Congressional recess by submitting another decontrol plan, which would

have gradually phased out price controls over a 39-month period and

put a price ceiling on all domestic oil.

I believe this decontrol plan went more than halfway to meet concerns raised by the Congress. Although it would achieve energy objectives more slowly than warranted, I offered it in the spirit of compromise, because action was desperately needed.

Instead, the House also rejected this compromise attempt and Congress passed this bill which would simply extend the pricing and allocation authorities for another six months. This proposed action would

only ensure the continued growth of our dependence on foreign oil.

I cannot approve six more months of delay-delay which would cost

needed jobs and dollars and compound our energy and economic

problems.

From my experience in the Congress, I am well aware that it will be

easier to pass the tough legislation needed to begin solving the energy

problem this year rather than during the 1976 election year. The sixmonth price controls extension contained in the bill I am vetoing would

postpone possible action until at least the Spring of 1976 and in all likelihood would mean an indefinite delay in our efforts to begin solving

this problem.

Despite last minute attempts made in good faith by the Democratic

and Republican leadership, their effort to achieve a compromise in the

Congress has failed. It is clear that too many Members of the Congress

have not come to grips with the decontrol issue-much less the overall

energy problem.

We must have a national energy program before we have a national

energy emergency. Our time to act instead of react grows shorter with

each day and with each delay.

Without price controls on domestic oil, we can reduce dependence

upon imported oil by reducing domestic consumption by more than
700,000 barrels per day within two years. We can reduce dependence

in the long run by increasing domestic production by nearly one and

one-half million barrels per day by 1985. By continuing controls, imports will increase because of a lack of incentives to spur domestic production and the energy problem will get worse and worse. If my veto is sustained, I still will accept a 45-day extension of price

controls to provide time to work with the Congressional leaders who

have assured me that they will seek an acceptable compromise during

this period. If this further compromise fails, however, I will take the

following actions to ensure an orderly transition from government controls to the free market:

I will remove the previously imposed $2 per barrel import fees

on crude oil and a 60 cents fee on petroleum products.

I will again press the Congress to enact a windfall profits tax

with plow back provisions and to return the money collected to

the American consumer. I will propose legislation to provide a gradual transition from

price controls for small and independent refiners.

I will propose legislation to provide authority to allocate liquifled petroleum gases, such as propane, to supply these important

fuels at reasonable prices to farmers, rural households and curtailed natural gas users. I will seek authority to provide retail service station dealers

legal remedies to protect their interests against unwarranted ac- tions by the major oil companies.

Since January. I have gone more than halfway in order to reach a

responsible compromise. Obviously, we have talked and delayed long

enough. We must act now to protect not only ourselves, but future generations of Americans. I urge Members of the Senate and the House

to sustain my veto and get on with the job of meeting this problem

head-on.

The continued failure of Members of the Congress to enact a National Energy Program puts us increasingly at the mercy of foreign

oil producers and will certainly result in Americans paying substantially higher prices for their fuel.

GERALO R. FOr. THn WHoTm HoUsE, Sqeptember 9, 1975.