• U.S.

ENERGY: Making Everybody Unhappy

4 minute read

The energy bill signed into law by President Ford last week represented a full year’s effort on the part of Congress, but it pleased almost nobody. Liberals conceded that while it will avert a sudden sharp rise in heating-oil and gasoline prices, it also virtually guarantees that Americans will go on using energy profligately. As for conservatives, the Wall Street Journal summed up their feelings by branding the bill a “monument to the Orwellian leviathan”; nearly every section “involves an infringement of individual rights or property rights.” The controversial bill is politically palatable, but it will leave the nation far from the goal of energy self-sufficiency. Major provisions:

OIL PRICES. The average price of crude oil produced in the U.S. will be rolled back from the current $8.75 per bbl. to $7.66 per bbl. in February (imported oil costs roughly $13 per bbl.). The cutback will amount to about 1¢ per gal. for gasoline and home-heating oil, but Federal Energy Administrator Frank Zarb doubts the savings will be passed on to consumers. Reason: all of the rollback will be absorbed by the rising costs of suppliers’ operations. Increases in the price of domestic crude oil will be limited to 10% a year until May 31, 1979, when price controls will end unless extended by Congress. Producers maintain that lower prices will discourage them from pumping more domestic oil. But Zarb predicts that eliminating all price controls would increase domestic production by only 200,000 bbl. per day, equivalent to about 3% of the nation’s daily oil imports.

COAL. The Federal Energy Administration received a two-year extension (until June 30, 1977) of its authority to require power plants and other major fuel consumers to switch from scarce natural gas and oil to coal, which the country has in abundant supply. In addition, loan guarantees totaling $750 million were authorized for small coal operators to open new underground mines, which do less damage to the environment than surface mines; 80% of the loans will go to producers of less-polluting low-sulfur coal.

ENERGY EFFICIENCY. Beginning in 1977, automobile manufacturers must meet progressively stricter gasoline-mileage standards; by 1985 the average car must get 27.5 miles per gal., an improvement of more than 50% over the current average. Most U.S. automakers complain that meeting the requirement will require an unforeseen technological breakthrough, a relaxation of exhaust-emission standards and a massive switch by consumers to automobiles about the size of General Motors’ tiny Chevette, which seats four passengers and gets 32 miles per gal. The automakers would prefer using higher prices at the pump, penalties for gas-guzzling autos or refunds to buyers of efficient cars to achieve greater mileage efficiency. Further, the bill orders the Federal Energy Administration to set standards requiring manufacturers to improve the efficiency of such products as furnaces, television sets, stoves and refrigerators, so that they use 20% less electricity by 1980.

RESERVES. To provide a cushion in the event of another foreign oil embargo, the U.S. will stockpile 150 million bbl. of oil within three years and increase the reserve to 400 million bbl. by 1983. That would be roughly equal to less than one month’s supply at current consumption rates. In addition, if there is an energy emergency sometime in the future, the President is authorized to prescribe gasoline rationing and other means of conserving fuels, order a production increase at domestic oil and gas fields and restrict exports of coal, gas and oil.

AUDITS. The General Accounting Office is permitted to examine the records of any firm that produces or distributes energy, including the nation’s secretive oil companies. Although the records will not be made public, so as not to give a company’s competitors an advantage, the audits will make available to the Government far more financial and technical information than the industry has been willing to provide in the past. The data will be used by Congress and the White House in making future decisions on the nation’s energy policy.

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