27-213 JOINT ECONOMIC COMMITTEE NINETY-THIRD CONGRESS For sale by the Superintendent of Documents, U.S. Government Printing Office Stock Number 5270-02213 APR 1974 DOCUMENT JOINT ECONOMIC COMMITTEE (Created pursuant to sec. 5(a) of Public Law 304, 79th Cong.) WILLIAM PROXMIRE, Wisconsin, Vice Chairman LESLIE J. BANDER GEORGE D. KRUMBHAAR, Jr. (Counsel) WALTER B. LAESSIG (Counsel) CONTENTS Reuss, Hon. Henry S., chairman of the Subcommittee on International Page Economics: Opening statement_. Stein, Hon. Herbert, Chairman, Council of Economic Advisers_ Sawhill, Hon. John C., Deputy Administrator, Federal Energy Admin- Carter, Anne P., professor of economics, Brandeis University__. ཨར་ Hegeman, George B., senior staff member, Arthur D. Little, Inc., Cam- Reuss, Hon. Henry S., chairman of the Subcommittee on International Swidler, Hon. Joseph C., chairman, New York State Public Service Com- Heller, Walter W., regents' professor of economics, University of Meyer, John R., 1907 professor in transportation, logistics, and distribution, Beigie, Carl E., executive director, C. D. Howe Research Institute, Mon- treal, Canada, accompanied by Judith Maxwell, director of domestic Gardner, Richard N., professor of law and international organization, Saxonhouse, Gary R., professor of economics, University of Michigan_-_ AFTERNOON SESSION Hegeman, George B., et al.: "United States Petrochemical Industry Im- pact Analysis," a report to the Petochemical Energy Group, November (III) Vailland, Michel: Prepared statement.. 173 ECONOMIC IMPACT OF PETROLEUM SHORTAGES TUESDAY, DECEMBER 11, 1973 CONGRESS OF THE UNITED STATES, OF THE JOINT ECONOMIC COMMITTEE, Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 345, Cannon House Office Building, Hon. Henry S. Reuss (chairman of the subcommittee) presiding. Present: Representative Reuss and Senator Proxmire. Also present: John R. Stark, executive director; Loughlin F. McHugh, senior economist; William A. Cox, Lucy A. Falcone, Sarah Jackson, Jerry J. Jasinowski, John R. Karlik, L. Douglas Lee, and Courtenay M. Slater, professional staff members; Michael J. Runde, administrative assistant; and Walter B. Laessig, minority counsel. OPENING STATEMENT OF CHAIRMAN REUSS Chairman REUSS. Good morning. The Subcommittee on International Economics of the Joint Economic Committee will be in session today for the commencement of three days of hearings on the economic impact of petroleum shortages here and abroad. To date there has been no organized assessment of the impact of prospective oil shortages on the U.S. economy. Official estimates of the short-fall range between 2.5 and 3.5 million barrels a day or approximately 15 percent of our expected utilization. Some forecasters have predicted a near-zero growth in 1974 and unemployment rates in the coming months rising to more than 6 percent. Already we are seeing the first effects of the shortages-protests from truckers, layoffs by airlines, plant closings in petrochemicals. If we are to formulate policies now, we must determine the impact of the shortage on employment and growth, both for the economy as a whole and in specific industries and regions. The conservation measures already announced are clearly not going to be sufficient. Gasoline consumption must be cut. Would coupon rationing or higher taxes be more effective? What consequences might these measures have on standards of living, including those of the poor? What measures are available to limit consumer use of heating oil and electricity? The allocation programs for fuel oil and propane provide the beginning of a sound program to assure equitable distribution, but we need to develop more detailed priorities to make sure that we can protect as many jobs as possible. Regulations authorized by the Mandatory Allocation Act are expected soon. Will they go far enough? (1) |