Senator HANSEN. I did not want to let that out until I got firmly entrenched at the witness table, you see. Mr. Chairman, I appreciate this opportunity. Inasmuch as the author of this bill and I serve on the Committee on Interior and Insular Affairs, we do have something in common, although not exactly in the way we look at the various options and proposed solutions to our energy problems. And I suggest that legislation such as this is not only directly related to the energy problems this country and the Congress is facing, but like too many other bills that have been introduced, is facing in the opposite direction to what is needed to put us back on the track toward energy self-sufficiency. My colleague from South Dakota is only too well acquainted with the problem we are facing. Even before he joined the Interior Committee, the Senate had approved Senate Resolution 45 more than 4 years ago to conduct a study, headed by the Interior Committee, on national fuels and energy policy. Since that study was inaugurated in 1971, the energy problem did, in fact, evolve into a crisis. Just under 2 years ago a warning became a reality when the Arab countries shut the oil valve as my colleague from South Dakota knows. At that time we were importing about one-third of the oil we were using. I do not need to remind anyone of what followed, nor do I need to reiterate what some of us have been saying since then, and that is, that we are even more vulnerable now than we were then, to another oil embargo. I am sure my colleague knows that we were importing, at the time of the Arab embargo, about 17 percent of our foreign oil from the Arab OPEC countries. That percentage has now gone up to about 23 percent as imports from Canada and Venezuela have declined. Senator ABOUREZK. Excuse me, Cliff. You said we were importing at the time of the embargo 17 percent of our oil from who? Senator HANSEN. From the Arab OPEC countries. Senator ABOUREZK. And what is that percentage now? Senator HANSEN. I think I probably have that figure in here and if I do, let me try to pick it up further down in the testimony. Senator ABOUREZK. I think it is down to about 10 percent now. Senator HANSEN. From the Arab countries? Senator ABOUREZK. From the Arab countries only, right. Senator HANSEN. As the Senator knows, I believe the importing countries now are in this order in terms of priorities. Venezuela, No. 1. Nigeria, No. 2. Saudi Arabia has replaced Canada and has taken the No. 3 spot. I am sorry that I do not have that precise figure. If I may, I would be happy to submit it.1 Senator ABOUREZK. Well, it is somewhere between 10 and about 12 percent, perhaps, to be more precise. Senator HANSEN. I mention these figures as a preface to the overall energy situation and especially any further weakening of the only real 1 See letter of June 20 to Senator Abourezk from Senator Hansen, p. 134. hope we have of reestablishing some semblance of energy self-sufficiency. If I could, Mr. Chairman, let me digress to point out that while it is a popular thing these days in America to point at the Arab countries, that really is not the problem. The fact is that any oil that we get from anywhere, as the chairman knows so well, is always subject to cutoff if the interests of that particular country dictate that their own interests could better be served by refusing to export. I think Canada is a classic example. I remember when the Minister of Energy up there assured us a number of years ago we could always count on Canada. Now they have found that they no longer are able to sell oil from the western provinces at a greater price than they have to pay for that imported into the eastern provinces, and as a consequence, they are in the process, now, of building a trans-Canada pipeline, and by the end of this year they will be charging $1.93 per 1,000 cubic feet for natural gas that is exported to the United States. So the point is valid. We would be very myopic, indeed, to assume that the Arab countries and their failure to find merit in our foreign policy is not a real threat to America. The fact is that any country that sees that it can do better someplace else than it can in dealing with America is likely always, of course, to take a hand in the energy picture, and I wanted to make that point clear, because I share the chairman's great respect and high regard for the Arab countries. Senator ABOUREZK. I wonder, Senator Hansen, if just for a brief second of dialog, it has been fashionable in the past year or so to denounce, of course, high oil prices charged to us by the Organization of Petroleum Exporting States, of which some are Arab and some are not Arab, and in addition, by Canada, which is neither Arab nor a member of OPEC, charges the same prices to us. But is it, while it might be fun and politically popular to do so here in this country, is it unreasonable to expect those countries, which are selling a depleting resource that belongs to that country, is it unreasonable to expect them to get whatever the market can bear? Senator HANSEN. Not unreasonable at all, in my opinion, Mr. Chairman. I see in this morning's paper that the valves have been opened for the first time on oil that is owned by Great Britain and I will be very much surprised if they try to cut the market price. Incidentally, the figure you asked for, Mr. Chairman, follows in the next sentence here, and if I may, let me read that entire paragraph again. "I am sure my colleague knows that we were importing, at the time of the Arab embargo, about 17 percent of our foreign oil from the Arab OPEC countries." Now, I would like to check this one figure. Iran, of course, is not an Arab country, but generally, it works very closely with the Arab countries, and my guess is that this 17-percent figure probably includes the oil coming from Iran. The next sentence which responds directly to your question is this. "That percentage has now gone up to about 23 percent as imports from Canada and Venezuela have declined." In other words, my testimony reads that with the decline in exports from Canada and Venezuela, we are now importing into the United States about 23 percent of the total amount of our imports from Arab countries and I suspect, as I have indicated, that would include the nation of Iran. Senator ABOUREZK. Actually, if you want to talk about the Arab countries, it is about a third of our imports, and two-thirds come from Canada, Iran, Venezuela, and other smaller importers. But to get back to this question just briefly, while it is in my interest and the interest of my constituents to bring oil prices down as low as we can possibly get them and to do our allocating of how much gasoline we intend to burn up in the atmosphere of natural gas, to me that is a different question of how we do that. But to bring prices down from the oil exporting countries. I just might remind you and the public that the Petroleum Minister of Saudi Arabia has said, and he said it to me, that if the Middle East conflict is settled, that they would be willing to cut their oil prices by at least $2 a barrel, which they consider to be the amount they have to spend on arms. And, secondly, that they would be willing to sign a long-term petroleum supply agreement, with the United States free of fear of embargo. And so, as I said, while it is very, I suppose, politically popular because of the political attitudes in this country to denounce those oil prices and those people in those countries, the least we ought to do is to try to emulate them and make as much profit as we can outside of the country, yet be reasonable with their own people. And, of course, since the major oil companies, for the most part, control oil policy in this country, the treatment of our own people is not as good as it ought to be. In other words, we are gouged by our own oil suppliers in this country. We are price gouged and there is just no question about it. Senator HANSEN. Well, I do not happen to share that full conviction with you, Mr. Chairman, I do not minimize, at all, the important role that the oil companies play in the price of fuel in America, but coming from my State of Wyoming, and knowing as I do a number of independent oil men, I think, that of equal importance in determining the price of petroleum products in the United States are several factors, one of which is the availability and accessibility of competing forms of energy, and, secondly, the encouragement and incentive that may be given to the independents to go out and make new discoveries. Obviously when the oil wells have been discovered and nothing remains but pumping the oil, then I fully recognize and agree with you that the major companies play a very dominant role. But I think that we should not minimize or overlook the damage we have done to this industry, and recently passed Senator ABOUREZK. Tax the oil industry? Senator HANSEN [continuing]. Recently passed tax legislation, that we have taken from their profits over $2 billion and we are going to find, as we already have discovered in Wyoming, that with the completion of wells out there being drilled, either resulting in a discovery on rare occasions, and dry holes on most occasions, we have, in 1 county alone in Wyoming, 15 oil rigs stacked right today, because the typical oil man is just like anyone else. He is going to be in business. He is going to be operating if he thinks his chances for making a profit are good. If he sees a better opportunity someplace else, he will stack his rig and he will go someplace else, and 15 such rigs are stacked in 1 county in Wyoming alone because of the diminished interest in trying to strike a wildcat. And, of course, as the Senator from South Dakota knows, that is still a very risky business, despite all of the technological aids we now have. I mention these figures-referring back to the imports from the Arab countries as being 17 percent and not 23-as a preface to the overall energy situation and especially any further weakening of the only real hope we have of reestablishing some semblance of energy self sufficiency. As my colleague knows, the Interior Committee is now holding hearings on a bill which would require conversion or reconversion to coal for many utilities or industries now using oil or natural gas. During the oil embargo, a number of eastern utilities that were burning oil were required to convert back to coal, where possible, even in violation of air quality standards which were temporarily suspended. A good many of these have since gone back to oil because of State laws even more stringent than Federal laws. This is the case-maybe not the case in Wyoming, but I just point out parenthetically that while the SO-2 emission standards for the Nation are set at 1.2 percent, in my State of Wyoming, they are set at .2 percent. They are six times more restrictive, more demanding, than is the Federal law, and two utilities in the State of Wyoming, alone, say that the costs of putting in wet scrubbers will add to powerplant installation capital investments in that State between $150 and $300 million. My colleague knows the only hope we have of reversing this suicidal trend to more and more dependency on foreign oil is to increase, as rapidly as possible, our own energy resources. And the most abundant and immediately available source of energy we have in this country is, of course, from coal. I speak with some first-hand knowledge about coal. Wyoming has abundant known and proved coal reserves and most of it is low in sulfur content and readily available. There has been a spectacular increase in coal production in Wyoming in the last few years. There will be even more- -a doubling and redoubling of production as the coal and oil industry join hands to break the OPEC energy stranglehold. A few years ago the Committee on Interior held hearings on this very same issue, the ownership and production of coal by oil companies. At that time, the former Senator from Tennessee, the Honorable Albert Gore, testified before that committee about the concentration of coal production and reserves by oil companies. At those hearings, the president of Island Creek Coal Co. also testified. He said that Island Creek Coal Co. could not have expanded and increased its production to the extent that it had done without the financing after the merger or acquisition by Occidental Petroleum. And Occidental is not one of the eight major oil companies now under investigation by the FTC. It is also interesting to note that former Senator Albert Gore, after testifying against oil company ownership of coal resources in those hearings, and after his retirement from the Senate, became president of Island Creek Coal Co., a position which he still holds. The FTC announced, about 5 years ago, that it was reviewing all oil company acquisitions of coal firms and coal reserves which the FTC and the Justice Department did not oppose with antitrust action. As a result of that review, I know of no divestiture order against any oil company. The FTC has, I believe, ordered Kennecott Copper Co. to divest itself of Peabody Coal Co., one of the largest. But Kennecott is not an oil company. Also, FTC now has underway an investigation of the eight largest integrated oil companies and only last week, the chairman of this subcommittee announced that he was reintroducing a bill intended to do away with monopolies. Also there are several bills now pending to disintegrate the oil industry and limit the activity of any one company to not more than one of the functions of producing, refining, transporting, or marketing. So it seems to me there are now more than enough studies, investigations and legislation to determine whether oil companies should be barred from ownership of other energy resources. It is interesting to note that oil company ownership of coal reserves on Federal lands does not show any large concentration of oil company ownership. The Bureau of Land Management has prepared a chart showing the concentration of Federal coal leaseholds of the top 20 lessees. Of a U.S. total of 783,868 acres of Federal coal lands under lease, 512,877 acres or 65.5 percent of the total are now under lease by the top 20 lessees. Of the top five, only one is controlled by an oil company, Consolidation Coal-Conoco and their percentage of the total is 5.8 percent. Peabody is first with 10.7 percent, Garland Coal & Mining Co. with 5.9, Resources Co., et al., with 5 percent and Pacific Power & Light with 4.5 percent. The next oil company on the list is Atlantic Richfield with 2.5 percent, Carter Oil-Exxon-with 2 percent, Sun Oil with 1.9 percent, Kerr McGee Corp., with 1.7. Total oil controlled acreage of the top 20 amounts to 13.9 percent. Conoco and Kemmerer Coal Co. jointly own another 2.4 percent and El Paso Natural Gas Co. owns 3.5 percent and is planning to build commercial size coal gasification plants. I ask the chairman that the BLM chart and another showing the top 5 and 10 lessees by States 1 be included in the record of the hearing, and I want to hand those to the reporter, if I may, Mr. Chairman. These 533 outstanding leases are estimated to contain 16.1 billion. tons of recoverable coal. In the case of oil shale, I do not know who could or would develop this great resource except the oil companies. In oil shale alone we have the potential for more oil than all of the Middle East, but it will undoubtedly be more expensive than even OPEC oil prices are today. One of the pioneers in oil shale development is the Oil Shale Corp., commonly known as TOSCO, which is an integrated oil company itself 1 Charts appear at the end of Senator Hansen's prepared statement, beginning on p. 132. |