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term possibility of shortages in certain grades or brands of gasoline. Without price controls, a sudden demand for certain products would have led to a price increase and would have caused some customers to shift to other products. This happens in every other product in the marketplace every day. It is remarkable that the only places where true shortages occur, where customers with money in hand, willing to pay the asking price, cannot get served, is in products under Government controls.
When Government rules require that a popular product be sold at a relatively low price, there is little to wonder at when lots of people want to buy that product.
The repeal of price controls, however, would not totally solve some of the longer range problems associated with gasoline production. A series of environmental regulations have attempted to ignore certain laws of chemistry and physics that tell us how much of what kind of product we can get from a barrel of crude oil. The necessity for unleaded gasoline in new cars has reduced the total output from a barrel. The continuing reduction in the amount of lead in leaded gasoline has had the same effect. And, neither one of those effects was neither unpredictable nor unstated at the time they were placed into effect.
EPA's continuing refusal to allow the use of other additives, such as MMT, in an effort to meet both customer demands and Government regulations, has still further diminished the industry's ability to obtain a given amount of gasoline from a barrel.
In the absence of price controls, the effect of all these Government regulations could be seen directly. The regulations would result in price increases because of the increased costs of the new processes and new investments required to meet Government standards. In that event, the citizens and their representatives could judge directly whether the higher prices were justified by the alleged good.
Because of controls, however, the effect is masked, at least for a short time. It shows up later, in spot shortages, because of rigidities imposed on the marketplace and in foregone investment. Again, it is hardly surprising that investors don't want to spend money to make expensive products when they are forbidden to sell those products at a market price.
A final source of difficulty is still another set of Government regulations, and public response to those regulations, concerning automobile performance and equipment standards. Now just without going into any detail, first of all the rigidity of the pollution control which was imposed by Congress in the regulations, in the Clean Air regulations, and the response which accompanied it in the shift in marketplace preference by customers who buy vans and light trucks and campers and recreation vehicles that are less subject to those regulations and also consume a great deal more gasoline, have something to do with the problem we are confronted with today.
Across the board these Government plans might have some hope of succeeding, if only Americans would just stay put and quit trying to change and improve things and better their lot in life. Bureaucratic planning will work only if everyone will stay in a straitjacket so the bureaucrats try to put us all there.
We have always been able to meet changing conditions in America by the freedom of individual choices and individual initiatives. The sooner we can get back to that, the sooner we will do away with the need for hearings like today where we try to discover just which regulation created exactly which problem.
Let me say, Mr. Chairman, I agree with my friend from Louisiana who says the Congress also shares in this responsibility. Because the regulations we are all talking about have either been directly required or have been very often reviewed by various committees of the Congress and the laws that are enacted by the Congress.
The CHAIRMAN. Senator Durkin.
STATEMENT OF HON. JOHN A. DURKIN, A U.S. SENATOR FROM
THE STATE OF NEW HAMPSHIRE
Senator DURKIN. Mr. Chairman, thank you for calling these hearings. I would like to ask unanimous consent my full statement be printed in the record, and I would just paraphrase.
I am one who was involved in the fight against decontrol of homeheating oil, a fight that we lost, and now we see homeheating oil prices jumping upward, especially in New Hampshire and New England and the Northeast. It is a rare day that I thank the oil industry, but I would like to publicly thank the oil industry for its efforts in support of our fight against the decontrol of gasoline.
The situation is this: Create a shortage, artificially; increase pressure to decontrol and literally charge what the traffic will bear. When we started to count votes on a possible motion to decontrol a month or so
ago, it looked very bleak. But the actions of several of the oil companies in allocating the unleaded gas and creating the artificial shortage, I think, has made it quite likely that if the administration is foolish enough to send up a decontrol proposal which violates its inflation guidelines, that we have the votes in the Senate to defeat the effort to decontrol.
I find it ironic that the British press has charged Shell Oil with illegally supplying oil to Rhodesia but it cannot supply its own dealers in this country. I find that quite disturbing.
Thank you, Mr. Chairman.
[The prepared statement of Senator Durkin follows:] STATEMENT OF Hon. JOHN A. DURKIN, A U.S. SENATOR FROM THE STATE OF
NEW HAMPSHIRE Mr. Chairman, the events which require this hearing have created one of the most paradoxical situations I have encountered since I began serving on the Energy Committee when it was created nearly two years ago. For months, high officials of the Department of Energy have been threatening to ask Congress to lift all controls on gasoline prices. Their major justification for this assault on New Hampshire and New England gasoline consumers was that the price would not rise more than about one cent per gallon and that in return the oil companies would invest in additional domestic refining capacity. Yet the decontrol proposal was never made.
Now, without any advance warning, the price of gasoline and of home heating oil which is essential to heat Northeastern homes has begun to skyrocket at the same time that shortgages of certain types of gasoline are being announced. The same Administration, which recently announced an anti-inflation policy, declared that gasoline price controls will be lifted the day before the Department of Labor revealed that gasoline and home heating oil price hikes were in large part responsible for the latest dose of double-digit inflation in the wholesale price index. Thus, it appears that Congress is being asked to decontrol gasoline at exactly the time when the need for continued controls is greatest.
HENRY M. JACKSON, Washington, Chairman FRANK CHURCH, Idaho
CLIFFORD P. HANSEN, Wyoming J. BENNETT JOHNSTON, Louisiana MARK 0. HATFIELD, Oregon JAMES ABOUREZK, South Dakota
JAMES A. MOCLURE, Idaho FLOYD K. HASKELL, Colorado
DEWEY F. BARTLETT, Oklahoma DALE BUMPERS, Arkansas
LOWELL P. WEICKER, JR., Connecticut WENDELL H. FORD, Kentucky
PETE V. DOMENICI, New Mexico
PAUL LAXALT, Nevada
GRENVILLE GARSIDE, Staff Director and Counsel
D. MICHAEL HARVEY, Chief Counsel