Date: 1981-09-11
Speaker: ROBERT C. BYRD (democrat)
Chamber: S

Mr. President. the major energy story of the day would appear to be news of an oil glut. This summer there has been a plentiful supply of gasoline and the price has even slipped several cents a gallon. Foreign oil imports In the first 8 months of this year have declined by 20 percent. to an average of 5.9 million barrels a day. For the first time since the Arab oil embargo of 1973. domestic oil production actually Increased slightly during the monkths of June and July. Prodded by higher prices resulting from decontrol. drilling activity has reached an alltime high. So with all of this encouraging news. where are we going wrong? First. It appears that the Reagan administration has determined that no energy policy Is the best energy policy. This goes beyond the decontrol of domestic crude oil prices and the accompanying curtailment of a complex regulatory scheme. Unlike Presidents Nixon. Ford. and Carter. the Reagan admninistration apparently does not see energy as an urgent problem requiring Federal action. Rather. market forces are now deemed to be the panacea for our energy ills. Despite wvarnings by the most Informed experts that the current oil surplus Is only temporary. there has been no effort to devise a workable response to a cutoff of Persian Gulf Imports. In conltrast to the optinistic statistics. the United States continues to Import approximlately 12 percent of its total oil supplies from Arab OPEC nations. There seems to be little recognition of the economic aild foreign policy consequences of this continued energy vulnerability. The shortsightedness of this nonpolicy has been noted by Daniel Yergin. the kellknown Harvard professor. In. a recent New York Times book review. Yergin wrote that the Reagan administration "seems to have made a sharp and potentially dangerous distinction between energy policy. which It more or less seems to want to forget. and foreign and security policies. about wvhich It is quite concerned." Given the high probability of further disruptions In oil ATE 89481 supplies before the decade is out. the tendency to separate security and energy policies may prove most unwise. Citing our enormous expenditures on military equipment. Yergin notes that the probability of Soviet tanks rolling acrons the North German plain Is much lower than the likelihood of an Interruption of oil supplies stemming from various coilfilcts In the Middle East. But we arc far less prepared for a severe energy emlergency than a military attack. At the end of this month. the Einergency Petroleum Allocation Act will expire. This legislation empowers the Federal Government to impose oil price and fullocatio n controls in the event of a severe supply shortfall. A variety of alternlatives have been proposed. including an emergency energy tax to Insure that the drastically higher prices that Wyould result from a shortage do not unduly benefit OPEC or the oil companies. There must also be some mechanism to assure that essential defense. police. medical. and agricultural activities are adequately supplied. The need for emergency safeguards to ease the economic dislocation of a severe oil supply disruption has been recognized on both sides of the aisle. But so far. the administration has failed to submit Its recommendations on what new authority the Government should have. Ever since President Nixon launched Project Independence In response to the 1973 Arab oil embargo. successive administrations and Congress have repeatedly supported efforts to reduce oil IlPorts through the development of alternate energy technologies. However. the Reagan administration now contends that continlued dependence on oil Imports may be acceptable In lieu of the development of more expensive energy sources. The National Energy Policy Plan. submitted by the Department of Energy to Congress in July. actually states: A low level of U.S. oil imports at any cost Is not a proper criterion for the nations energy security and economic health... The Nation would he remiss If It did not press the search for less expensive domestic alternatives. Yet Its vision would be equally narrow If market forces were distorted through Indiscriminate subsidies for alternatives that cost more than imported oil now.. This philosophly has translated into lukewarm support by the Reagan administration for the Federal synthetic fuels program and the repudiation of policies to nmandate or encourage energy conservationpolicies enacted with overwhelming bipartisan support during the 96th Congress. Promising energy research and development programs. such as coal liquefaction. advanced solar technologies and cogeneration. have suffered drastic budget cuts. The adnnstration has terminated fotw synfuel demonstration projects. Including SRC0 11. and funding for the remaining SRC I project Is at a minimal level. The Synthetic Fuels Corporation Is not even operational because all of the six members of the board of directors have not been appointed. As a result. decisions on funding for most synfuels projects have been Inordinately delayed. .S9482 Ccx The oil glut psychology may afford the Nation the temporary luxury of imiaginIng that It is possible to return to the good old days when oil was cheap and abundant. but the statistics belie this hope. Production of oil In the United States Is still declining. albeit. for the moment. at a slowver rate. Many experts predict that the current frantic drilling pace will not be sustained In the long run. as promising fields are played out. Virtually every respectable energy forecast predicts that the level of U.S. oil production has begun an Irreversible decline. This Is In contrast to the unsubstantiated claims of Secretary Edwards that "somewhere along the way. were going to find some big. big fields." Even with the current market surplus. the oil companies are now saying that declining profits may demand Increases in the price of gasoline of as much as N6 cents per gallon. The onset of the winter heating season. combined with announced cutbacks in OPEC production. may soon spell the end of the oil price respite that Americans have enjoyed for the last several months. Oil price hikes will almost certainly add heat to the inflation fires. causing the Consumer Price Index to soar once again. The wrenching experiences of tlic past decade. with two recessions and unprecedented inflation resulting from oil shortages. should have caused us to recognize that oil supply interruptions are probable. If not inevitable. The shortterm price stability we are now experiencing does not reflect a corresponding political stability In the evervolatile Persian Gulf region. Surely the economic and political dislocations which would result from a severe oil shock mandate the development of reasoned and responsible energy Policies. rather than strict adherence to an economic philosophy of unproven reliability. Some tough decisions lie ahead. will nuclear power be Pronmoted at the expense of the increased use of coal and the development of new energy technologies? How quickly should Federal lands be developed and is the energy to be found worth the attendant environmental ricks? How do we provide for our Industrialized allies. who will remain dependent on OPEC oil? And finally. how will we adjust for the transfer of wealth which Is taking place within the economy and among regions of the country between Producers and consumers of energy? These are difficult questions for which no easy answers are forthcoming. It is easy to be distracted by small savings in price or production that can create a glut or a shortfall In world oil markets almost overnight. The Nations economic and national security demand a balanced energy Policy based on fact rather than unlfounded speculation. We need an energy Policy geared to Improving the Nations longterm security while preparing for sudden crises. Continued dependence on OPEC oil. at a cost of $65 billion. a $70 billion or more a year. will not provide thle basis for economic recovery and sustained growth. Moreover. our national defense will be undermined. Mr. President. I yield the floor.