Expert testimony Before the United States Senate Committee on the Judiciary, Joint Hearing before the Subcommittee on Antitrust and Monopoly and the Subcommittee on Administrative Practice and Procedure; expert testimony dealing with natural gas reserves in the United States, October, 1973. Committee on Commerce; expert testimony on market conditions in the natural gas producing industry and field price regulation, October, 1973. Committee on the Judiciary, Subcommittee on Antitrust and Monopoly, expert testimony dealing with Competition in the Petroleum Industry, June, 1973. Committee on the Judiciary, Subcommittee on Antitrust and Monopoly, expert testimony on matters pertaining to S. 403, A Bill to Prohibit Certain Combinations and Control Between Electric and Gas Utilities, May, 1971. Committee on Government Operations, expert testimony pertaining to S. 607, A Bill to Establish an Office of Utility Consumers' Counsel, 1970. Before the U.S. House of Representatives— Committee on Interstate and Foreign Commerce, Subcommittee on Energy and Power, expert testimony of natural gas producer regulation, March, 1975. Before the Securities and Exchange Commission Expert economic witness for the U.S. Justice Department on the matter of American Electric Power Company, Inc., SEC File No. 70-4596 (proposed merger with Columbus and Southern Ohio Electric Company), FebruaryMarch, 1971. Before the Federal Power Commission Intervenor Witness in Docket No. E-8884, Carolina Power & Light Co.; testimony concerning rate of return, managerial efficiency, and cost of service. Intervenor Witness in Docket No. E-8570, Southern California Edison Company; testimony concerning rate of return, economic efficiency, cost of service, and anticompetitive price discrimination. Intervenor Witness in Docket No. E-8176, Southern California Edison Company; testimony concerning rate of return. Intervenor Witness in Docket No. RP74–50-5, Florida Hydrocarbons Company and Florida Gas Transmission Company; testimony concerning natural gas curtailment exemptions for liquefied petroleum gas production. Intervenor Witness in Docket No. E-8881, Carolina Power and Light Company; testimony concerning rate of return and related economic matters. FPC Staff Economic Policy Witness in Docket No. C173-501, Louisiana Land and Exploration Company; testimony concerning prices and competition. FPC Staff Rate of Return Witness in Docket No. E-7738, Boston Edison Company. FPC Staff Economic Policy Witness in Docket No. C173-293, et al., Belco Petroleum Corporation, et al.; testimony concerning prices and competition. FPC Staff Economic Policy Witness in Docket No. E-7679, Florida Power Corporation; testimony concerning rate structure design and antitrust matters. FPC Staff Rate of Return Witness in Docket No. E–7679, Florida Power Corporation. FPC Staff Economic Policy Witness in Docket No. CI72-301, et al., Northern Michigan Exploration Company et al.; testimony concerning prices and competition. FPC Staff Antitrust Witness in Docket No. E-7618, Southern California Edison Company. FPC Staff Rate of Return Witness in Docket No. E-7645, Public Service Company of Indiana. FPC Staff Rate of Return Witness in Docket No. E-7602, Central Telephone and Utility Corporation. Other Recent Professional Activities Member, Board of Editors, Energy Systems and Policy, an International Interdisciplinary Journal. Speaker, "Structure of the Energy Industry," National Conference on Rural America, Washington, April, 1975. Member, Program Committee, National Academy of Sciences, for Academy Forum on "Energy: Alternatives and Risks," 1974. Director and Editor, British Columbia Energy Conference, April 18-19, 1974. A book based on the papers presented at this conference will be published in Panelist, "Competition in the Natural Gas Producing Industry," American Public Gas Association Annual Convention, September, 1973. Panel Moderator, "Fuel Crisis as Related to the Power Industry," 1973 Joint Member, Economics Committee, United States Water Resources Council, 19721973. FPC Coordinating Representative, National Power Survey Technical Advisory Committee on Finance Task Force-Future Financial Requirements, 19721973. Consultant, U.S. Department of Justice, Antitrust Division, 1970-1971. Participant (awarded first price for research paper on the economics of public utility regulation), Iowa State Conference on Public Utility Valuation and the Rate Making Process, 1970 and 1972. Fellow, Economics-in-Action Program, Case Western Reserve University, 1970. Participant, Annual Seminar on Central Banking, Federal Reserve Bank of New York, 1970. PREPARED STATEMENT OF PAUL J. FANNIN, A U.S. SENATOR FROM THE STATE OF ARIZONA A few years ago, a professor at the Massachusetts Institute of Technology coined a term called Forester's Law. For those who haven't heard it, Forester's Law holds that: "In complicated situations, efforts to improve things often make them worse sometimes much worse on occasion, calamitous." Considering the complexity of America's energy problems and the obvious need for effective solutions, the legislation being considered today (S. 489) is an almost perfect example of Forester's Law at work-on an overtime basis. It's designed to cure an alleged problem of excessive concentration in the energy industry, a concentration that doesn't exist. And it would create problems far more difficult and destructive to America's economy than the non-existent concentration it is supposed to solve. If this legislation is adopted, calamity is a mild word to describe what would happen to America's energy industry and to this country's efforts to achieve greater energy self-sufficiency. It would be pushing a "destruct" button for the petroleum industry that would wipe out millions of jobs. Oil and gas is a finite resource. When it runs out, the jobs will disappear too unless the petroleum industry is free to develop other forms of energy to meet America's needs. This bill would make it illegal for petroleum companies to acquire, own or control any interest in coal, oil shale, uranium, nuclear reactors, geothermal steam or solar energy. Let's see just what that means. The United States currently relies on oil and natural gas for three-fourths of the energy we need. As everyone knows, domestic oil and gas production has been declining and the U.S. now imports almost 40% of the oil and gas required for our economy-at a cost of some $62 million a day. The energy crisis is the most critical national problem before Congress. This country is desperately trying to control inflation, increase employment opprtunities and reduce our excessive dependence on foreign sources of energy. We must achieve a greater level of energy self-sufficiency for reasons of national security; to ease the nation's balance of payments problem and to assure the stable long-term energy supplies we must have for a prosperous economy. Passage of this bill would work against all these urgent national goals. It would prohibit the natural progression of technology and economic investment that built America. Passage of this bill means that companies which now supply 75 per cent of America's energy would be forever prohibited by lawfrom helping the United States develop alternate energy resources. Yet if we ever hope to achieve even half the goals of Project Independence, this country must encourage more investment, more exploration and more research into all forms of energy production. The petroleum industry is the best equipped to help in this critical effort. America's petroleum industry has been responsible for most of the great energy discoveries, not only in the U.S. but throughout the world. Few other American industries can claim similar worldwide technological superiority. It has the skilled scientists and engineers, the experience in drilling under all conditions and the capital to make an enormous contribution to the development of alternate energy resources. In the past, the U.S. government has encouraged the industry to do just that-in research programs of all kinds. Yet this legislation would prohibit America from making use of these technical skills in helping to meet our future energy needs. It would place America's alternate energy resources in a legal and economic straitjacket. To prohibit the petroleum industry from participating in alternate energy development is like telling Thomas Edison that he should have stopped working when he took out his first patent. To make it illegal for the petroleum industry to broaden its technological base, to conduct the research necessary to develop alternate resources would simply be to freeze the nation's energy technology at a time when it should be expanded as rapidly as possible. Such a policy is not only detrimental to the energy industry. It would destroy all hopes for economic recovery and future expansion. Energy is the single most important factor in all industrial expansion. Strangling this industry's development will set America on a one-way road to economic stagnation. The basic premise on which this legislation is based is incorrect. Testimony previously presented to the Senate has demonstrated the intensely competitive nature of the oil and gas industry in the United States. No single firm is capable of a majority interest and even when considered as a group, the oil and gas industry is not dominating other forms of energy. The 10 oil companies which had coal production in 1972 produced less than 20 per cent of the nation's coal-combined. And together, they owned even less of the nation's coal reserves, roughly 10 per cent. The 5 oil companies which were engaged in uranium production in 1972 accounted for only 25 per cent of total U.S. uranium production. This is an important contribution, but it's not monopoly. America is the Saudi Arabia of coal, with reserves sufficient to last several hundred years by even the most conservative estimates. Petroleum firms which have invested in the coal industry are helping expand the use of coal. Oil companies are investing millions in desulfurization-a process that also is critically important to make more use of America's coal resources. An oil company, Continental Oil, produces about 55 millions tons of coal a year through its affiliate, Consolidation Coal Company. This company is currently working on expansion that will produce an additional 61⁄2 million tons a year. There is a similar natural economic progression in other forms of energy. In Oklahoma, Kerr-McGee Corporation has been active in uranium since the early 1950's. It currently produces about 25 per cent of total U.S. mill production of uranium and now operates the largest uranium ore processing plant in the U.S. Union Oil Company of California operates the Geysers Field, the largest and only commercial geothermal development in the U.S. Other oil firms are also engaged in geothermal work trying to make available this environmentally clean form of alternate energy. Instead of retarding progress in developing alternate resources, petroleum company investments have made possible most of the advances that have been made in recent years. For example: A founder of the Magma Power Company, a pioneer in geothermal development, recently credited Union Oil's investment of funds and technology with being the most important reason for the success of the Geysers Field. This year, the Geysers geothermal field will achieve a capacity of 500,000 kilowattsenough to supply electrical requirements for a city of half a million people. These developments and many other projects financed and managed by petroleum firms are helping ease America's need for oil and gas. We all know America must move ahead in coal production: There must be research into synthetic fuels from coal, oil shale, and tar sands. We must encourage development of geothermal steam energy and start building the nuclear power plants we need to supply our future power needs. The energy industry is the logical and the only part of America's private economy that has the experience, the technical personnel and the financial capacity to speed this development. There is no conflict in petroleum companies being involved in other forms of energy. It's a natural outgrowth of oil and gas operations. Studebaker made buggies when the primary means of transportation was horse power. Then it started making automobiles. Television firms started out making radios and when technology produced TV, they went into this field. It's 57-567-76 -9 a natural economic progression for a basic industry to move into other related areas of endeavor. Congress should not pass laws that make it impossible for free enterprise to function efficiently and produce the goods and services our people need. To prevent petroleum firms from investing in alternate energy resources would condemn America to power and fuel shortages that would cripple our economic expansion in the future. That's what this bill would do. That's why it should be defeated. Senator ABOUREZK. The hearings will recess until tomorrow at 9:30 a.m. in this room. [Whereupon, at 10:32 a.m., the proceedings were recessed, to reconvene on Thursday, June 19, 1975, at 9:30 a.m.] INTERFUEL COMPETITION ACT OF 1975 THURSDAY, JUNE 19, 1975 U.S. SENATE, SUBCOMMITTEE ON ANTITRUST AND MONOPOLY The subcommittee met at 9:30 a.m., in room 318, Russell Senate Office Building, Hon. James Abourezk presiding. Present: Senator Abourezk. Also present: Charles E. Bangert, general counsel; Henry M. Banta, assistant counsel; Walter S. Measday, chief economist; Patricia Y. Bario, professional staff member; Catherine M. McCarthy, chief clerk; Peter N. Chumbris, minority chief counsel; and Harry Dixon, assistant counsel. Senator Abourezk. The subcommittee hearings will come to order. Senator Hruska, who is the ranking minority member, has been unable to attend the hearings today because of other Judiciary and Appropriations Committee business. We have this morning as the first witness a distinguished colleague and friend of mine, Senator Cliff Hansen of Wyoming, who has a statement to present to the committee, and if you are ready, Cliff, we are ready to hear it. STATEMENT OF CLIFFORD P. HANSEN, A U.S. SENATOR FROM THE STATE OF WYOMING Senator HANSEN. Thank you very much, Mr. Chairman. I appreciate this opportunity to appear before this very important subcommittee to discuss a bill that is of real interest to me. Let me say, though, I happen to disagree in this particular instance with some of the ideas that are held by the distinguished acting chairman of the subcommittee. I find myself in agreement in many, many respects with him. I think he has provided a very important and essential element of balance in terms of worldwide perspective as we try to seek ways and means of bringing about more peaceful conditions throughout the world, and I am delighted to serve with the distinguished Senator from South Dakota. He and I, as most members know, are members of the Interior Committee and we have had a good many problems in common and I appreciate this opportunity of being here this morning. Senator ABOUREZK. We are very glad to have you here, and if I had known that you did not agree with me I do not know that we would have invited you, Cliff. |