legislation, mainly that of recognizing that in most instances the 50-foot "right-of-way" is insufficient to cope with construction equipment and techniques for any pipeline of reasonable size.

The immediate question before this committee today is the construction of the trans-Alaskan oil pipeline. This is a matter which must be resolved expeditiously so that the vast oil reserves of the Prudhoe Bay area can be made available to American consumers.

The National Coal Association fully supports expeditious action on this particular problem as part of a national program for indigenous energy resource development and this committee and others involved in this all-important endeavor.

Attachment.

TOWARD RESPONSIBLE ENERGY POLICIES

(A Joint Energy Policy Statement of the American Gas Association; American Petroleum Institute; Atomic Industrial Forum, Inc.; Edison Electric Institute; National Coal Association)

PREFACE

The United States is facing a critical energy problem. The supply of secure and environmentally-acceptable energy will not be adequate to meet prospective demand unless there is a change in the economic and political climate affecting the energy industries.

The few brief local interruptions of energy supplies in the past few years, and the restrictions on sales of natural gas now in effect in a number of states throughout the nation, are only a taste of what may lie ahead a few years from now.

Energy problems must be placed high on the list of our national priorities. Time is of the essence, since it often takes from five to ten years after a decision is made to develop new fuel sources or to construct electric generating facilities before additional energy supplies can be delivered to consumers. Unless prompt actions are taken, serious energy shortages will spread to all parts of the nation.

The attached joint energy statement, "Toward Responsible Energy Policies," has been prepared to alert the nation to the imminence of a major energy crisis and to recommend constructive actions to avert it. We present this statement with the hope that it will make a contribution towards these goals.

F. DONALD HART,

President, American Gas Association.
FRANK N. IKARD,

President, American Petroleum Institute.
CHARLES ROBBINS,

President, Atomic Industrial Forum, Inc.
W. DONHAM CRAWFORD,
President, Edison Electric Institute.
CARL E. BAGGE,

President, National Coal Association.

The United States is faced with a growing energy problem which has the potential of developing into a major national crisis. Public awareness of this is vital to its resolution.

The symptoms of difficulty first appeared in the 1960's, although they were largely obscured by an economic slowdown. It became increasingly apparent that we were living on our basic fuel reserves. Fuel additions were not matching fuel consumption, a warning that our energy economy was shifting from one of abundance to one of scarcity. The nation, and particularly the Eastern Seaboard, became more and more dependent upon imports of foreign oil. Natural gas service curtailments began to take place in scattered locations around the country.

Today, natural gas curtailments are becoming more widespread. Domestic oil production from presently proved reserves in the lower 48 states is at maximum levels and excess capacity has disappeared. Demands for low-sulf fuel oil and low-sulfur coal cannot be met. The energy problem is continuing to worsen, to the point that the nation is on a collision course with a major energy shortage.

ENERGY-THE KEY TO PROGRESS

The history of the U.S. is one of unprecedented and unparalleled growth. No nation yet approaches the industrial strength of the U.S. No society in the history of the world has reached its level of prosperity.

Energy, readily available at reasonable cost, has been a major factor in this progress. A worldwide comparison of per capita energy consumption and real income points out the close correlation between the two. The higher a nation's per capita use of energy, the higher its per capita real income. Conversely, nations with low rates of energy consumption have low positions on the percapita income scale. The reduction of poverty coupled with progress toward satisfying rising economic expectations throughout the world will require vast increases in the supply and utilization of energy.

Because of the long history of abundant energy at low cost in the U.S., the nation had come to believe that a limitless supply of cheap energy would always be available. One of the most alarming aspects of the current energy situation is that many Americans do not yet realize there is a problem. Even some of those who are aware that a problem exists do not understand its severity or its dangers. They are unaware of the possible impact of inadequate energy supplies upon their day-to-day activities and life styles.

THE EXPLOSIVE GROWTH IN DEMAND

The public demand for energy in the United States is expected to grow rapidly through the end of the century. Based on a 3.6 percent annual growth rate, a recent study by the U.S. Department of the Interior projects almost a tripling of energy consumption by the year 2000.

Although the share of total energy consumption supplied by each fuel may change, the actual amounts of each energy source which will be required to meet these demands will be far in excess of current levels.

THE NEED FOR ENERGY GROWTH

One way to conserve energy supplies would be to restrict the growth rate of energy use. This would reduce economic progress. We would fail to achieve our most pressing national goals, including full employment, alleviation of poverty, and protection of our national security. We would have to curtail efforts to clean up our environment, since additional eneergy will be required to secure needed environmental improvements to treat sewage, to recycle waste, and to remove sulfur from fuels. Little support can be given to the assumption that the nation will choose "no growth" in the energy sector of our economy during the rest of his century. Although every effort must be made to assure that our natural resources are used wisely, and for the benefit of all segments of our society, we must assume a growing energy requirement.

THE WISE USE OF ENERGY

An effective means of helping to meet the growing energy demands of the American people is to maximize the efficient utilization of energy in our society and minimize the waste of human and fuel resources. Insofar as practicable, we must strive toward maximum efficiency in the production, distribution and utilization of all forms of energy.

NO SHORTAGE OF RESOURCES

The U.S. has sufficient resources to meet its foreseeable energy needs. While the U.S. has become a "have not" nation in terms of usable commercial supplies of fuel, we are still a "have" nation in terms of available resources. Declining reserves of crude oil and natural gas reflect a low level of exploration and development relative to demand, not an exhaustion of these resources. Estimates by government and other informed specialists indicate that potential domestic resources of oil and gas could support substantially higher rates of production. Coal reserves are abundant, and represent a supply of at least several centuries at existing levels of consumption. Potential uranium supplies for nuclear power are more than adequate, assuming the timely development of breeder reactors. Synthetic oil and gas can be produced from coal. Looking to

the longer-run future, liquid fuels can be produced from oil shales and tar sands. There are huge reserves of these minerals in the Western States and Canada.

THE FORERUNNERS OF SHORTAGE

A host of vexing problems, some of long standing and others of recent origin, have led to the current tenuous energy supply situation. High on the list are the delays and costs created by a lack of coordinated government policies. The many Federal departments and agencies which rule on energy matters have suffered from the lack of coherent policies to follow. Their decisions have been piecemeal and inconsistent, based upon narrow and shortrun interpretations of conditions affecting particular fuels at a particular time. The results have been chaotic, and have discouraged the development of badlyneeded energy resources.

The rapid introduction of stringent environmental standards has further constricted the nation's fuel supply. All existing energy sources have been affected. Oil from the huge Prudhoe Bay field in Alaska is still unavailable due to the long delay in approval of the trans-Alaska pipeline. This, in turn, is delaying the availability of new gas supplies from that area. Federal offshore leasing delays are affecting supplies of both oil and gas. In some states, bills have either been passed or are pending which seek to bar the search for petroleum off of their coasts, and make it difficult to find suitable sites for terminal facilities and refineries. Sulfur restrictions in major cities have curtailed usage of both domestic coal and fuel oil. In some states and in Congress, there are proposals to bar surface mining. Delays resulting from prolonged Federal regulatory procedures and court-ordered environmental evaluations of about 100 nuclear power facilities have slowed development of this important new energy

source.

Government efforts to superimpose its direction as a substitute for market forces have exacerbated energy problems. As an example, regulation of natural gas prices at the wellhead by the Federal Power Commission, resulting in artificially low levels, acted to stimulate demand and discourage the search for new supplies. This imbalance led to a shortage of this clean-burning fuel, which could assist in reducing air pollution problems in major urban areas. Such government actions often overlook economic and technological interactions and lead to unexpected and undesirable effects.

Imports are playing and will continue to play a role in meeting the nation's fuel needs. It is inevitable that the U.S. will require larger oil and gas imports in the 1970's and nearly 1980's. However, attention must be given to the implications of rising energy imports and their impact upon the development of domestic supplies as well as upon national security. Most of the proved petroleum reserves of the world are located in the Eastern Hemisphere. Supplies of oil from some of these sources have been curtailed a number of times. Excessive reliance upon imported fuels would pose grave dangers to our economic health and national defense. In addition, with producing nations now banding together to demand higher prices and impose higher taxes, foreign oil is becoming more costly. Imported liquefied natural gas is now more expensive than domestic gas. The nation should also recognize that growing energy demand in the rest of the world will result in increasing competition for fuels in coming decades. Thus, looking to the future, foreign energy supplies are likely to be neither secure nor inexpensive. However, some of the risks inherent in fuel importation can be reduced by importing both oil and gas from a variety of sources.

Energy industries are also faced with huge capital requirements, and to an increasing extend must obtain these funds from financial markets rather than from internal sources. Adequate profitability is needed to attract the capital required for new facilities.

A long-range commitment to research and development in the energy field is needed. Government R&D programs should be closely coordinated with research efforts of the energy industries.

THE IMPORTANCE OF TIME

An all-out effort must be made to strengthen our energy economy. The time to make crucial decisions is now. Continued delay will permit minor shortages and inconveniences to develop into major shortages and serious disruptions.

This is because a common characteristic of all significant sources of energy is the long lead time involved in the planning, production, transportation and utilization. Delays can only add to the magnitude of our energy problems.

THE OBJECTIVES OF ENERGY POLICIES

There appear to be four main objectives of sound energy policies:

(1) The development of an adequate supply of energy at reasonable prices, to permit our nation to enjoy continued economic progress and a high living standard.

(2) The achievement of relative self-sufficiency through the maximum development and utilization of domestic fuel resources to the extent justified by appropriate economic and national security considerations, supplemented by oil and gas imports as needed.

(3) The maintenance of a safe and healthy environment for both present and future generations. High energy use has provided a high standard of living, but has also been partly responsible for adverse effects upon man's environment. These effects must be squarely faced and met in a balanced and responsible manner.

(4) The attainment of maximum efficiency in the production, distribution and utilization of all forms of energy.

There is no real conflict among these goals. By reshaping our energy policies to broaden the energy base, we can provide adequate and secure sources of reasonably-priced energy in harmony with environmental needs. Both nature and the marketplace can be served.

ELEMENTS OF RESPONSIBLE ENERGY POLICIES

The American Gas Association, the American Petroleum Institute, the Atomic Industrial Forum, the Edison Electric Institute and the National Coal Association, recommend the following basic policies in order to assure adequate supplies of secure and clean energy at reasonable prices :

(1) Comprehensive energy policies must be formulated to bring about greater coordination and harmony between Federal, state, and local government agencies whose decisions affect energy industries. Government regulation of energy industries, to the extent that it is necessary, should be streamlined in order to adapt more rapidly to the changing needs and requirements of modern society.

(2) Energy policies should fully recognize the benefits of the free enterprise system and should be formulated within the context of sound business principles. Energy fuel prices should relate to actual demand and actual market conditions. Policies which stifle initiative in the development of any form of energy are contrary to the public interest.

(3) A balance must be struck between the need for environmental protection, and the need for economic development (including energy growth). National environmental policy should give consideration to the availability and cost of pollution control methods and the resulting impact upon energy prices. Costs must be balanced against the resulting social and environmental benefits. (4) Incentives for energy development appropriate to the unique characteristics of fuels and minerals should be strengthened. An attractive economic climate must be developed which will elicit the massive amounts of venture capital needed to develop new supplies of energy fuels.

(5) National land use policies affecting both private and public lands, including the Outer Continental Shelf, should be coordinated with national energy policies. Energy production requires land use. Land use policies must recognize the non-renewable nature of fuel resources and the fact that they, unlike many other products, must be produced where found. Federal leasing regulations should permit optimum utilization of all energy resources in harmony with sound ecological principles. Multiple uses of land should be encouraged.

(6) Sound and stable import policies should be maintained in order to pro-mote the development of indigenous fuel resources and technology to the extent justified by appropriate economic and national security considerations. While every effort must be made to meet environmental standards, the nation must also make every effort to minimize its dependence for energy upon those foreign sources which could pose problems of possible supply interruptions. In 97-839-73-pt. II-2

addition, unlimited fuel imports could represent a serious drain upon our balance of payments position. Import policies should be designed to allow the competitive use of overseas supplies of oil and gas in a manner that will supplement, but not supplant, domestic sources of supply. Such policies must recognize the special problems, such as environmental requirements, which may arise in particular industries or regions.

(7) The long-range governmental commitment to research and development in the energy field must be strengthened, and existing cooperative industry/government efforts in research and development must be augmented. Parallel development of both fossil and nuclear fuels is essential if our nation is to meet short- and intermediate-term energy needs as well as longer-run needs. Balanced federal funding is needed to develop new technology which will permit the full utilization of our vast domestic fuel reserves. Primary responsibility for research and development should continue to rest with industry. Government's role should be concentrated mainly in the funding of longerrange programs which do not have an immediate impact, but which do have potential benefits for our nation's consumers of energy.

High priority must be given to projects such as the development of breeder reactors and fusion technology. At the same time, the Federal Government should continue to share with industry the burden of constructing demonstration plants designed to remove sulfur oxides from the stack gases of coal and oil-fired power plants. In addition, more energetic government programs are needed to aid in the development of technology to convert coal to the more environmentally-acceptable gaseous and liquid forms and for utilizing it

directly.

There must also be a more active program for conducting the essential research and development of pollution control technology. Government should insure that environmental goals and standards are set with due regard to existing technology and achievable improvements in the state of the art.

(8) Health and safety regulations should be carefully designed and administered to minimize hazards to workers and the public and maximize operating efficiency.

(9) Wise and efficient utilization of all forms of energy should be promoted and encouraged. Economies in energy consumption can be achieved in homes, transportation, agriculture, business and industry, and government.

(10) Both industry and government must recognize their obligation to inform the public on energy matters. Public awareness of the energy situation is a major key to resolving the energy supply situation.

THE CONSEQUENCES OF FAILURE

The responsibility to maintain a supply of energy which is adequate to meet the needs of our people must be shared by industry and government. It can be met if all segments of American society join together to formulate new energy policies which will remove existing roadblocks to progress.

One overriding need is to sweep away preconceived ideas concerning energy problems. It must be recognized that the era of energy abundance and cheap fuel has ended. Factors such as environmental costs, rising labor and equipment costs, and the need to attract venture capital, must be reflected in prices. The nation's fuel bill is going to go up. Recognition of these basic changes in the energy situation will contribute to a more responsible appraisal of the energy situation and a more realistic approach to the framing of new policies. The consequences of failure, either by imprudent actions or inaction, are likely to be severe. The result could be energy shortages which could imperil the nation's economic well-being and cause substantial hardships to our citi zens. If sound and timely decisions can be reached on energy policies, such a crisis need never arise.

Mr. MELCHER. We have here a letter from Mr. Spahr of Standard Oil Company. I had an additional letter from him and I assured him that this letter will be made a part of the official hearing record. Without objection, I will make it a part of the record at this point.