07Hi Congress, 2d Session Senate Document No. 97-25

VETO—S. 1503

MESSAGE

FROM

THE PRESIDENT OF THE UNITED STATES

RETURNING

WITHOUT MY APPROVAL S. 1503, A BILL REQUIRING PROMULGATION OF STANDBY PETROLEUM ALLOCATION AND PRICE

CONTROLS, INCLUDING SHARING OF CRUDE OIL AMONG

REFINERS AT CONTROLLED PRICES

Ma r c h 22, 1982.—Ordered to be printed

U.S. GOVERNMENT PRINTING OFFICE

89-011 O WASHINGTON : 19S2
To the Senate of the United States:

Although I appreciate the good faitli efforts of the sponsors of this 

legislation, I am returning without my approval S. 1503, the “Standby 

Petroleum Allocation Act of 1982.”

While I am sympathetic to the assertion that this bill responds to an 

understandable concern that our nation must prepare against the 

possible disruption of energy supplies, this legislation grew from an 

assumption, which has been demonstrated to be invalid, that giving 

the Federal Government the power to allocate and set prices will 

result in an equitable and orderly response to a supply interruption. 

We can all still recall that sincere efforts to allow bureaucratic allocation of fuel supplies actually banned our citizens and economy, adding 

to inequity and turmoil. Further, the threat of such controls will discourage the very steps that are needed to provide real protection 

against such emergencies.

The Act would require the promulgation of standby petroleum allocation and price controls, including a specific program for the sharing 

of crude oil among refiners at controlled prices. Those controls could 

ho imposed in the event of future petroleum supply shortages, subject 

to Congressional approval. The Act would also require the Federal 

Government to continue extensive and burdensome data collection even 

when the regulations were not in effect.

Today I have ample powers to take the steps necessary to protect 

national security, meet our treaty obligations and assure essential 

public health and safety functions. The supplies in the Strategic Petroleum Reserve and significant production in the National Petroleum 

Reserve also ensure that petroleum for truly essential needs will be 

available. What I do not have, do not want and do not need is general 

power to reimpose on all Americans another web of price controls and 

mandatory allocations.

We must recognize that an interruption of a significant portion of 

foreign energy supplies, whether because of armed strife, human 

choice or natural disaster, will involve real costs to the United States 

and the world. Proper preparation beforehand, and free trade among 

our citizens afterward, can mitigate these costs, but no magic federal 

plan can simply make them go away. Controls can only shift losses 

from one set of Americans to others, with vast dislocation and loss 

of efficiency along the way. This was very amply demonstrated during the supply interruptions of 1973-74 and 1978-79. Those interruptions precipitated much higher oil prices, but they did not cause gas 

1 ines and shortages. It took government to do that.

The bill could be counterproductive to our preparedness efforts. In 

the event of a supply interruption, the best protection will be stockpiling and plans for switching to less costly ways to achieve our goals. 

This bill would discourage self-protective measures, because it tells 

the public that those measures will be nullified by government allo­

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cations and controls or that such measures are unnecessary because 

the government will guarantee them low-priced energy in the event 

of any disruption.

The current world oil situation, with declining prices and ample 

supplies, provides the best opportunity for future preparedness. This 

is why the Administration continues to add to the Strategic Petroleum 

Reserve as fast as permanent storage becomes available. By the end of 

this year we will have nearly tripled the size of the Reserve in two 

years. All citizens who are concerned about the possibility of shortages 

and higher prices in the future should use the current opportunity to 

prepare in ways that are appropriate to their situation.

This legislation does contain one important feature, which should be 

adopted immediately as a separate Act. Since 1974 the United States 

has participated with other countries in the International Energy 

Agency, in an effort to improve our effectiveness in combatting international energy problems. A coordinated response to any international 

oil supply disruption through the IE A requires cooperation by private American oil companies in ways that are not possible absent statutory authorization. This authorization, contained in Section 252 of 

the Energy Policy and Conservation Act, has been extended routinely 

since its enactment in 1975. The most recent extension expires on April 

1st of this year. This authority should again be extended, and H.R. 

5789 and S. 1937 are now pending in Congress for this purpose.

Ronald Reagan.

T he W hite H ouse, March 20, 1982.