Energy Remarks at a White House Briefing for Community and Civic Leaders.

A couple of weeks ago, I was in New Hampshire. And the primary concern of the people in that State, I believe, above every other issue, was the prospect of entering next winter without an adequate supply of home heating oil. Eighty percent of the homes in New England use oil for heating, and more than 80 percent of their oil comes from overseas.

Last weekend, I was in Iowa, and no matter what I wanted to talk about, the number one consideration of a county officials' convention and the press conference was what the farmers were going to do when they finally got in the fields to plant—they're about 3 weeks behind-without an adequate supply of tractor fuel, diesel fuel, and gasoline for tractors. And they were equally concerned that when their crops were harvested in the fall, that they may not have enough natural gas or propane to dry their crops.

And then I went to California directly. [Laughter] And there was a situation bordering on panic with just 2- or 3-percent shortage of gasoline. They had evolved panic buying—those with tanks three-quarters full were sitting in line for hours and hours to buy $2, $3 worth of gas. The average purchase of gasoline during the preceding week had been less than $3 per purchase.

This puts a very sobering responsibility on my shoulder and on yours. More than 2 years ago, I informed the American people, in a speech on television—the next night I spoke directly to the Congress, one of my few appearances before the Congress—that we faced an energy crisis with "the moral equivalent of war." There was a lot of frivolity about the alarmist approach. And the Congress considered this legislation for 18 months, finally passed about 60 to 65 percent of what I had advocated, did not pass anything concerning oil.

Many of the Members of Congress who've served 25 or 30 years told me that that was the worst session of Congress they had ever served in and that the energy legislation was the most complicated and difficult that they thought the Nation had ever addressed in its 200-year history.

The situation is not going to get any better. My guess is that it will get worse. We're going to have less oil in the future on a worldwide basis compared to demand, and the price is going to continue to increase. That means the American people are going to have to use less to meet a given need, and they're going to have to pay more for it.

This is not an attractive statement to make, because people ordinarily look to political leaders for the expression of words of a panacea, the resolution of a difficult problem with a simple or simplistic answers, and the alleviation of problems, at least a promise of alleviation of problems.

Those hopeful and pleasant political dreams are not going to come true. We've not had adequate support from Congress, and the American people still refuse to face the inevitable prospect of energy shortages, even the most well-meaning and patriotic Americans—still looking for a scapegoat.

Many believe that there is no energy shortage and there's not going to be an energy shortage, that the problem is that the Federal Government in some way is in collusion with the oil companies, that artificial shortages are being contrived in order to drive up prices and that if prices could get high enough, all of a sudden there would be enough energy for everyone. That's obviously a false analysis or premise. So, what do we do about it?

The Congress in 1975 mandated that then-President Ford and his successors would evolve a gasoline rationing plan. Nobody but a political fool would advocate the implementation of gasoline rationing in this country on a voluntary basis. But I was mandated by law to present to the Congress a gasoline rationing plan as a standby. I don't have the authority to develop a gasoline rationing plan. It takes a lot of money. It would require some Federal employees to evolve a gasoline rationing plan with coupons, regulations, and all that go with it. But we presented to the Congress an outline of a plan to be developed, a process that would ordinarily require about 8 or 9 months.

After that time, if an emergency should arise, then the President and the Congress would both have to agree that the rationing plan would be put into effect. Even under those circumstances, the Congress refused to give me the authority to develop a standby gasoline rationing plan—I thought a remarkable demonstration of political timidity.

We have now tried to assess on a continuing basis what can be done. Obviously, the most inexpensive and effective means of dealing with the energy crisis is to eliminate waste of energy. For a given level of income, per capita income, the American public consumes about twice as much energy as, say, a resident of Germany, most European countries. We have an enormous amount of waste.

In the last 2 years, there has been a substantial improvement in the efficiency of energy consumption within the corporate world because of the pressures of savings and the profit motive which is an integral part of our Nation's societal structure based on the free enterprise system which I cherish.

Among the average American consumer, that has not been the case. In spite of the large amount of publicity that has swept the Nation, indeed the whole world, in the last 12 months about energy shortages, the consumption of gasoline, for instance, continues to rise quite rapidly. It's much higher now than it was in California a year ago. And I think there's a general sense among American people that the issue's going to go away.

But conservation is obviously the best approach, if we can ever induce the American people to recognize the need for conservation, to hold down thermostat settings, to obey the 55-mile-per-hour speed limit, to cut off unnecessary consumers of energy, equipment, to eliminate unnecessary trips; that's not yet been done. I see no indication of it being done so far in our country. The second thing that we can do, obviously, is to increase American production of oil, gas, and other energy sources. And, of course, the third thing is to shift toward more permanent types of energy, replenishable energy sources, and to increase the production and use of coal.

We have been addressing this issue in a fruitless way, almost, for the last 2 years. The Congress has a law on the books that gives me the authority as of June 1 to decontrol oil if I choose. I have announced that over a 28-month period, step by step, carefully phased, oil prices will be decontrolled. In October of 1971 [1981],¹ the control law expires. And rather than having a peremptory decontrol of all energy prices overnight, which would have an adverse impact and uncontrollable inflationary pressure on our economy, my judgment was to phase out controls carefully in a predictable and controllable fashion. And I do not want the increase in oil prices to go to enrich the oil companies.

1 Printed in the transcript.

I have no animosity against the oil companies, but I believe that their profits are adequate. And as these prices are decontrolled, the oil companies will reap an additional income, about 29 cents on each dollar of price increase, which amounts to about $6 billion over the period. And this can be used, in addition to the present oil company profits, for substantial increases in exploration and production of American oil and natural gas.

We need additional money in the Federal Treasury earmarked for the specific problem that I've described to you. There are some very poor families in our Nation who will have to suffer personally if the decontrol results in an increased price of energy when their budgets are severely limited. That's one need that I am determined to meet.

The second need that I am determined to meet is to provide some alternate transportation for people in urban areas other than automobiles. And so, an additional supply of money is needed to increase even beyond what we are presently doing for rapid transit.

And the third need, of course, is for the Government itself to embark upon a substantial research and development program that would build year by year, in addition to what we've already got going now. So, we've advocated to the Congress, that began hearings last week on the 9th of May, a windfall profits tax which would leave the oil companies about 29 cents out of every dollar. We would tax the increase in price above and beyond what it would have been, plus future increases on OPEC prices, and establish an energy security fund. And that fund would be used for the three purposes that I've described: to help the very poor families meet the increased price of energy; to improve our rapid transit system, mass transit systems; and then to allocate funds for research and development in the field of new energy sources.

At first, the following day after I made my announcement, Senator Jackson, Senator Kennedy, many others, said that it was absolutely impossible to have a windfall profits tax passed. Now some of the same voices say that it's an accomplished fact, that the windfall profits tax is not severe enough, and we don't have to worry about it getting passed in its present form. I can tell you that my own experience is, it is not going to be easy to get a windfall profits tax through the House and Senate with the degree of severity or stringency built into my own proposal. My guess is that the Congress and the House might pass a little bit more stringent tax bill. My guess is that when the House and Senate get through with the legislation, that we will be very fortunate indeed to get the windfall profits tax passed in the form that I advocated.

If the Congress wants to strengthen the bill, to have a heavier tax burden imposed on the increase in profits, I would favor it if I consider it to be fair and equitable. But it's going to require a lot of support throughout the Nation from leaders like you who've come here from all over the country, a few associated with the oil industry itself; others, distributors; others, consumers; others, civic leaders. I need to have you join in with me in addressing one of the most serious threats to our Nation in peacetime that I have seen in my life, because there is a destruction of the confidence of American people in our future.

I think just facts, demonstration of political will, and predictability about the future will go a long way toward alleviating this problem. And then we can get people to join in, in a self-sacrificial, patriotic way, so that the adverse impact of energy shortages will fall very lightly on the shoulder of any particular American, if we form a partnership based on mutual trust, not trying to blame one another, but to address an issue in a way that has been used historically in our country under times of difficulty and trial.

Our proposals are fair, equitable, simple, and workable. And I'll be doing the best I can under existing law to deal with the energy problem, but I do need, in order to address this on a permanent basis, to have the windfall profits tax passed and the energy security trust fund established.

I think this, combined with the legislation passed last year by Congress on natural gas and other elements of the energy problem, will give us a fairly good package for me as President, for Governors, local officials, private citizens, and leaders like you, to meet the future with confidence.

Our country is so strong and so able and so secure, that it's almost heartbreaking to see some issue like this, which festers like a cancer, carry on from one month to another, sapping away the basic strength of our Nation and the confidence that people ought to have in a governmental and a free enterprise system.

And I hope that every one of you will leave this room, having been thoroughly briefed by the Secretary of Treasury and by my own staff aide, Stu Eizenstat, and become not just a quiet supporter of these proposals if someone asks but to become a strong and fervently committed American, a leader who joins in with me to meet a challenge successfully, showing that the strength and the will of Americans is still adequate to meet a challenge as we have so frequently done in the past to make our Nation so great.

I need your help. I'm willing to do my part, and I believe that you will do yours. Together, we can solve this problem and have an even greater America in the future.

Thank you very much.