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INTERFUEL COMPETITION

HEARINGS

BEFORE THE

SUBCOMMITTEE ON
ANTITRUST AND MONOPOLY

OF THE

COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE

NINETY-FOURTH CONGRESS

FIRST SESSION

ON

S. 489

THE INTERFUEL COMPETITION ACT OF 1975

57-567

JUNE 17, 18, 19, JULY 14, OCTOBER 21, AND 22, 1975

Printed for the use of the Committee on the Judiciary
(Pursuant to S. Res. 72, Sec. 4)

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1976

For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C., 20402-Price $6.10

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Hruska, Roman L., a U.S. Senator from the State of Nebraska--

178

ORAL AND PREPARED STATEMENTS OF WITNESSES

Hansen, Clifford P., a U.S. Senator from the State of Wyoming-

119

Prepared statement____

127

Hopkins, John, acting president, Synthetic Fuels Division, Union Oil Co. of
California (see also Brinegar, Claude S.)‒‒‒‒‒‒

360

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Moore, Thomas G., professor of economics, Hoover Institute, Stanford,
Calif.

Prepared statement_.

O'Leary, John F., Mitre Corp., McLean, Va----.

Otte, Carel, vice president and manager of Geothermal Division, Union Oil
Co. of California, (see also Brinegar, Claude S.).
Patrick, Harry, secretary-treasurer, United Mine Workers of America,
accompanied by Messrs. Woodruff, Bethell, Nathan, and Lawson, UMWA
associates

Prepared statement____.

Wagner, Aubrey J., chairman of the board, Tennessee Valley Authority,
Knoxville, Tenn., accompanied by Robert H. Marquis, general counsel;
William L. Osteen, Jr., assistant general counsel; and James J. Wil-
liams, Jr., director of purchasing_

Wilson, John W., economic counsel, J. W. Wilson & Associates, Washing-
ton, D.C‒‒‒‒‒

135

152

85

361

262

267

154

94

Prepared statement_____.

107

Wilson, Wallace W., vice president, Continental Illinois National Bank &
Trust Co. of Chicago..

234

MATERIAL SUBMITTED FOR THE RECORD

"Oil Supply and Tax Incentives," by Edward W. Erickson, Stephen W.
Millsaps and Robert M. Spann__.

419

"Oil: Its Time Allocation and Project Independence" by Paul Davidson,
Laurence H. Falk, and Hoesung Lee--

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"An Economic Analysis of Price Increases in the U.S. Coal Industry".
Paper prepared for: American Public Power Association, Emergency
Committee for the Tennessee Valley National Rural Electric Coopera-
tive Association, and Tennessee Valley Public Power Association, by
James R. Barth and James T. Bennett_____

FTC, Bureau of Competition-Attorneys currently assigned to Exxon,
et al____.

498

522

Correspondence between Senator Philip A. Hart and FTC re coal, oil, and
natural gas, 1970-73--

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Perry, Harry, senior consultant, National Economic Research Associates,
Inc.

23

Fannin, Paul J., a U.S. Senator from the State of Arizona_

116

Aidlin, Joseph W., vice president and general counsel of Magma Power
Co.

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Answers to questions asked of Peter Max during hearing on June 17, 1975,
which he referred to Mr. Netschert for responses_

704

Responses to questions asked of Mr. Kasch during the hearing on Octo-
ber 22, 1975_

709

DIGEST OF THE HEARINGS

TUESDAY, JUNE 17, 1975

Senator Abourezk convenes the hearing_-.
Senator Abourezk presents reasons justifying the passage of S. 489, a
bill that would prohibit persons engaged in the production and refining
of petroleum or natural gas from owning any interest in the coal, oil
shale, uranium, nuclear reactor, geothermal steam, or solar energy
business. He asserts a lack of the existence of a free market in energy
resources, and alleges that the market is controlled by eight oil com-
panies. The Senator expresses his belief that to allow these companies
to gain control over other energy sources would be to permit them to
structure a large proportion of our economy to meet their needs and
assure their continued corporate well-being. Senator Abourezk pre-
sents statistical data to back up these contentions (the data if found
at pages 4-6 in his prepared statement)
Senator Bartlett expresses his dissatisfaction with and opposition to
the bill. Instead of promoting competition in the energy industry and
encouraging the development of energy supplies, Senator Bartlett
feels that the bill will have the effect of reducing available capital,
and retarding future development of all energy resources. He asserts
that the industry is competitive and feels that firms in the industry
have not made profits at a rate commensurate with monopoly status
(powers). He further maintains that no anticompetitive behavior has
ever been proven against the oil companies. The Senator attributes
the interest of petroleum companies in other energy fields to their
expertise and ability to deal with problems of this nature. Finally,
Senator Bartlett sums up a series of reasons as to how the bill would
deleteriously affect the economic status of the United States, and
do great damage to its position as a worldwide oil power_.
Prepared Statement of Harry Perry, Senior Consultant, National
Economic Research Associates, Inc. Mr. Perry reviews the testimony
of three NERA witnesses that appeared before the committee in
1970_____

He then details the effect of the OPEC oil embargo of 1973 on the oil
market in the world and, particularly, in the United States. He also
discusses the effect of the National Environmental Policy Act of 1969
(NEPA) on the energy situation in the United States. Mr. Perry
states several goals for American energy policymakers_
Mr. Perry discusses the goals he has set forth: Reducing import de-
pendence; reducing total demand without reducing economic growth;
values__.

Statement of Peter Max, vice president of National Economic Research
Associates, Inc__.

Mr. Max expresses his concern over the tendencies of energy companies
to merge with one another. However, he questions whether the drastic
alteration of section 7 of the Clayton Act, as applied to oil companies,
would have the effect intended by the sponsors of this legislation. He
outlines the manner in which an economist analyzing a merger looks
at the corporations. The primary focus is on whether the effect on
competition will be beneficial, benign, or adverse. Mr. Max feels that an
economist should recommend against the merger only if it falls into
the latter category. (Note: A substantively similar but expanded
statement to this effect is presented at pages 31-34 of Mr. Max's
prepared statement) ____

Page

1

1-3

8-13

23

23-24

24-26

26

26-27

Mr. Max discusses the interrelationships of different types of fuel. He notes the recent tendency of petroleum refiners to acquire interests in other energy sectors. He suggests that this is both logical and natural in view of their present needs and as future alternative fuel sources. He then expresses a basic quandary: The uncertainty as to whether existing fuel companies will delay the advent of synthetic fuels in order to protect their own interests, as opposed to the capital, resource, and management ability possessed by the larger firms------ 27-29

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