Date: 1981-03-10
Speaker: ROBERT C. BYRD (democrat)
Chamber: S

Mr. President. the Energy Policy and Conservation Act of 1975 established price and allocation controls on crude oil and refined petroleum products. The law provided these controls primarily as a response to large increases in oil prices caused by OPEC. The purpose of the controls was to cushion the inflationary impact that sudden. gigantic oil price increases would have on our economy. As the United States adjusted slowly to the quadrupling of oil prices. a decision was made by President Carter to phase out the controls. beginning on June 1. 1979. Under the Energy Policy and Conservation Act. all controls would expire on October 1. 1981. The effect of President Carters decision was to establish a gradual process of decontrol. which would allow the economy to adjust as smoothly as possible to significantly higher energy costs. Although phased decontrol avoided sharp economic dislocations. it was scrapped on January 28. 1981. by President Reagan. The result was a price increase in oil and gasoline already two to four times as large as the administration had predicted. It is with these events in mind that I have questioned the advisability of the accelerated decontrol ordered by the President. Therefore. I will support the amendment offered by the distinguished Senator from Ohio to reestablish the process of gradual decontrol. The timetable in effect on January 20. 1981. with regard to price and allocation controls would go back into effect. This does not mean that the controls would be placed on domestic oil Indefinitely. Not at all. The clock would continue to tick until October 1. 1981. when all remaining controls would expire. I have supported such a policy of gradual decontrol. with the understandQig that it remain a gradual process. and that a windfall profit tax be enacted to recapture a portion of the increased revenues flowing to oil producers as a result of decontrol. The price increases resulting from the sudden and complete decontrol have placed unnecessary costs on our economy. Consider the effect of this quick price jump on one department of the Federal Governmentthe Defense Department: According to the Office of the Assistant Secretary of Defense (Comptroller). the additional fuel costs incurred by the Defense Department as a direct result of the total decontrol ordered on January 28 are $246 million. That amount is likely to be included in a request for supplemental appropriations for fiscal year 1981 by the Defense Department. What could the Department of Defense do with that $246 million. if it did not have to use it to cover the cost of sudden decontrol? The Department could almost completely recommission the giant battleship New Jersey with that amount of money. I consider It remarkable that the $246 million will go solely to cover fuel costs increases resuling from rapid decontrol. when such a sum is badly needed elsewhere. I have not touched on how that amount could be spent for dombstic programs. The centers for disease control could fund their total preventive health services program and have money left over with that $246 million. These examples show that the costs of sudden decontrol appear to be far greater than the benefits. Drilling activity before the total decontrol order was issued was at recordbreaking levels. Phased decontrol provided a superb incentive for largescale oil exploration. And the windfall profit tax was not deterring people from hunting for oil. All of this suggests to me that sudden decontrol was not the most prudent course to take. The costswhether to the agencies of the U.S. Government. or to millions of our citizens who drive or use heating oilare immense. I hope that the Metzenbaum amendment will be adopted by the Senatealthough I am under no illusions as to the outcomeso that our constituents will know that we do not support this unjustified additional price shock.