FULFILLING PETROLEUM'S ROLE

The adequacy of U.S. Energy resources is dependent upon political rather than technological developments. The current energy shortage is a direct result of governmental interference with the free market in energy dating back to the 1954 Supreme Court's decision directing federal control of natural gas prices. Petroleum, which supplies over 75 percent of this nation's energy needs, faces a crisis before it can fulfill its role in alleviating the energy shortage; a crisis of acknowledging the critical time in the nation's energy affairs and that our energy policies are at a turning point for better or for worse. For petroleum to fulfill its role in making the U.S. essentially self-sufficient will require achieving the critical balance between economic, energy, and environmental conditions---a balance that does not exist today. Restoration of the law of supply and demand without punitive "excess-profit taxes" would provide the proper economic climate; proper revision of radical ecology laws would permit cooperatively working out rational solutions to energy-environmental problems. A domestic capital investiment of 340 billion dollars will be necessary for petroleum to fulfill its energy resource role over a 15 year period. This will require approximately 200 billion dollars more than the earnings forecasted at the 1973 level if this investment were to be financed by diverting all profits with no dividends to the stockholder. Even without any additional taxes, this would require generating 400 billion dollars more revenues to be able to have the necessary funds after taxes. Fortunately, the volumes are such that even these huge sums could be generated by an increase over 1973 values of 65 cents per MCF of natural gas and 22 cents per gallon of gasoline. This would result in average natural gas prices of approximately 1 dollar per MCF and gasoline prices of 50 cents per gallon plus tax of 9 to 18 cents per gallon. One thing is certain: Prices will be substantially higher if federal price controls and allocations force further and continued dependence on foreign, cartel-controlled oil and gas. An additional benefit to using the free market approach would be that it would provide a rapid balancing of demand and supply with a concurrent efficient allocation of the available supply to the highest value end uses, two goals which have eluded the Federal Energy Office and which must always elude any Central Planning Agency attempting to cope with the 150-million, independent daily market decisions of the American people. /AUTHOR/

  • Supplemental Notes:
    • Proceedings of the 20th Annual Meeting held at the Shoreham-Americana Hotel in Washington, D.C. from April 28-May 1, 1974.
  • Corporate Authors:

    Institute of Environmental Sciences

    940 East Northwest Highway
    Mount Prospect, IL  USA  60056
  • Authors:
    • Dutton, G
  • Publication Date: 1974

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Filing Info

  • Accession Number: 00260112
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Aug 28 1974 12:00AM