News Conference in Plains, Georgia

Governor Carter. I believe that everyone who looked at the list of those who came to advise me this afternoon would be impressed with the diversity of background, experience, and interests that comprise this group. There is a remarkable degree of unanimity among them on some of the basic principles. One is the extreme importance of conservation.

We had a temporary dip in the consumption of energy in this country in 1973 and 1974 and it's now picking up. We've arrived at our pre-embargo level of consumption in spite of the fact that in fall of 1973, President Nixon said that we were importing 25 percent of our oil. We are now approaching the 50 percent level. And we're getting into a very vulnerable position as far as our nation's security is concerned in overdependence on foreign supplies of oil. I think it is also a general agreement that we can never avoid completely imported oil. As long as oil exists in the world, we are probably going to have to have a policy of importing a substantial portion of it.

Leaving the vulnerability factor—one that we can accommodate if there is a temporary embargo—I think we also have agreed that if we can stabilize or reduce the present worldwide consumption of oil—and the United States can contribute a major factor to that—then the OPEC nations' influence will decrease over a period of time. If the worldwide consumption of oil increases substantially, their influence will increase.

We also have had quite a long discussion today on the trends in consumption of overall energy. Our present consumption in the country is roughly 70 quads—which I think is 1 and 15 zeros—10 to the 15th power BTU's. According to studies that have been done by the scientific community—and I think this is a very conservative figure—by the end of this century, the year 2000, that will increase to 100 quads. Other estimates have placed it much higher than that. This is a 2 percent or less annual growth rate, compounded. Right now the rate of growth is perhaps more than that but with decreasing estimates of population increases in our country, with an estimated population by the year 2000 of about 250 million, then that relatively low and slow rate of increased energy usage is a possibility even without external constraints like mandatory conservation measures.

Another point that was made was that our country does now utilize a great deal of energy per person. We consume about 64 barrels per person per year, or its equivalent, whereas in the Scandinavian countries or West Germany, it's about half that much. And in Canada, next to us, it's considerably less than that. So we do have a long way to go as far as having more efficient use of energy.

Another point that I think was agreed to was this. That anything that's done to deregulate the price of energy, and I believe that everybody agrees that over a period of time energy prices are going to go up substantially, that it ought to be done in a carefully phased and predictable way. That the greatest adverse impact on our economy and on peoples' individual lives comes with the shocks of abrupt, unanticipated energy price increases. To the extent that we can do this in a carefully planned, predictable, and phased fashion, those inevitable price increases can be accommodated best in our economy.

I think there was also a general agreement that we now have no comprehensive, long-range, understandable energy policy. And this absence of a policy hurts all of us. It makes whatever inevitable problems arise be greatly exaggerated in their adverse impact on our lives.

Another point that was made was the comparison between present use of major forms of energy and available reserve supplies. These figures are quite interesting to me: 16 percent of our energy now comes from coal. 90 percent of our energy reserves are from coal. So we're underutilizing coal compared to its reserves. Oil—we get 40 percent of our energy now from oil; oil comprises only 3 percent of our reserves. Thirty percent of our energy now comes from natural gas; only 4 percent of our reserve supplies are natural gas. So another inevitability, in addition to conservation, is a shift over a period of time to coal.

We had quite a discussion about the relative advisability of continuing to emphasize the use of coal from the Appalachian region or continuing the present apparent Nixon-Ford government policies to shift strongly toward increased use of coal in the far West. We had a very long discussion about how the sulphur—SO—content as a component of the use of coal from the different regions of our country, and it was pointed out that the sulphur content in the coal on the eastern seaboard now is too high. Only about 10 percent of the present eastern coal—that's east of the Mississippi—can comply with present air pollution standards. That's with known technology. But that obviously can and probably will be improved. It's also a factor that's very important that the present concentration of labor and investment is in the Appalachian region primarily, and the move toward the West will create some disruption in labor opportunities and will require the shift of the coal mining profession to the West.

Another factor that was raised by Dr. Weinberg, a scientist here, was that after we use 20 percent of our total fossil fuel supplies, the percentage of carbon dioxide in the atmosphere would double. And this would create very severe environmental questions. Possibly, problems that could not be accepted by human beings. So in addition to the depletion of our energy supplies, you also have an inevitable buildup in pollution problems with the higher concentration of carbon dioxide.

Another frequently expressed concern is that we now have 10 or 12 different major agencies in the federal government which are directly responsible for energy policy. And it's almost impossible for a consumer or a state or an environmentalist or even an oil company or a coal company to go anywhere in the federal government and get a definitive answer from any one of those entities in the federal government.

I think the general advice to me as a possible President was that I would have a great opportunity to help derive a comprehensive energy policy in the absence of a crisis. We can consider this in a careful methodical way now, and for the first time perhaps, open up the decision making process to involvement by the states in addition to the federal government. And by consumers and environmentalists in addition to the oil companies. And this broad-ranging involvement in the establishment of a national policy, absent a crisis pressure, is a great opportunity for me or for the next President.

Another question that was discussed, and I think this is very interesting, is that we now in some oil wells leave 60 percent of the oil in the ground. And once that point is reached with 35 or 40 or 50 percent extraction, the environmental consequences have already been felt. So we have a good opportunity there with the new extraction techniques which might be more costly, to get a substantial amount of additional oil and natural gas from the ground without the concurrent environmental degradations of our quality of life.

Governor Boren of Oklahoma suggested as one of the alternatives perhaps to vertical divestiture, what he calls vertical accountability. So that the oil companies for instance, would be required to file income tax returns for the different levels of oil exploration, extraction, refining, distribution, wholesale and retail sales. So that there could be an analysis made to further insure that there is competition within the oil industry.

Just a couple of other points. One experimental program that's been described and is quite interesting is, I think, in Seattle, Washington, where the bank, or at least one of the banks there, gives reduced interest rate on loans to purchase a home or to build a new home if that home meets rigid insulation standards. It gives also reduced interest rates on loans to buy an automobile if that automobile will get greater than 25 miles per gallon efficiency. So through the financing structure, which can be extrapolated as you can well and quickly see toward even government guaranteed loans, there can be built in an economic incentive to comply with stricter conservation measures. This is in some ways voluntary and not mandatory, as you can understand.

Dr. Weinberg pointed out several times that we need to coordinate in the governmental structure our energy policy with research and development allocations. Quite often these two decision themes work at cross purposes, and we have research and development allocations made which are completely incompatible with an overall energy policy for our country. He also points out that we ought to keep all energy options open and not completely wipe out as a possibility in the future any particular kind of energy until we know much more certainly what a long-range policy would include and which would involve world supplies, the rate of exploration and discovery, the rate of depletion of our present supplies, price pressures over which we have no control. We ought not to close out any particular aspect of energy policy. What he was referring to specifically is not to have a nationwide moratorium, for instance, on the use of atomic power for the production of electricity until we can make sure that we have some alternative to it and I agree with this statement.

And we had Mr. Harris Arthur here who represents a Navaho tribe of Indians in New Mexico. I think he made a very vivid presentation to us about the human aspect of energy policy. Sometimes we only think about the price of gasoline or we think only about different governmental policies, but as a member of the Navaho tribe in New Mexico, they're facing a complete change in their style of living and perhaps even a termination of the existence of their tribal life as a consequence of insensitive government decisions.

So these are some of the things that we discussed this afternoon, just hurriedly. There are a number of them, I didn't try to make the list complete. But I think you can see the kind of exploration of ideas that we covered in the short 4 hour period. The group will be preparing over die next few weeks to put all these factors in a more comprehensive form, four or five of them, and then this will be submitted back to these persons and also to others who are knowledgeable about the energy field, and I'll be deriving from this advice my own attitude as the next President so that I can help to shape, with a major role, a comprehensive and fair and predictable and sensitive energy policy for our country. We don't have an energy policy now that meets any of those criteria. I would like first of all to give the folks standing behind me an opportunity to correct any errors that I made. And don't be reticent about it because I don't want to inadvertently ...

James Griffin. I think the level on imported oil has gone from 25 percent to right at 40 percent, instead of 50 percent.

Governor Carter. I think somebody said almost 50 percent—well, between 40 and 50 percent. I know that in the month of March it did reach 50 percent. So it's between 40 and 50 percent imported oil.

Q. The other day, in West Virginia, you said, if I understood you correctly, that you felt coal production should be mainly maintained in Appalachia and that there should not be a major shift out West. Now here today, you seem to be raising that possibility of labor shifts and so forth.

Governor Carter. You can't freeze production exclusively in the Appalachian region. In my speech the other night I pointed out some figures that I think were confirmed to be accurate today. We now produce about 630 million tons of coal per year. About 110 million of that comes from West Virginia, coincidentally. There is a feasibility study by the American Society of Engineers that shows that by 1985 this can be roughly doubled. The needs following 1985 to the year 2000 call for another doubling. The technology to be used in doubling the production of coal and the environmental quality standards for sulphur dioxide reductions to make that coal possible to be burned, is a very serious question. If there is a choice to be made, my own attitude would be to strengthen the production of coal in the Appalachian regions. You've got some very serious problems in the West. One is that the source of coal is distant from the point at which the energy is consumed. Another one is that you would have to have a substantial shift of an entire industry across our country. Another one is the extreme shortage of water. As you know, with liquifaction and the gasification of coal you have a doubling or a tripling or a quadrupling of the price of either gasoline or liquid fuel or natural gas as compared to the present cost. And we also have the additional problem of the change in the kind of life that is lived in those areas. And m addition to that, of course, you have the policy of protecting the public lands, the Indian lands, grazing lands, farmlands, and natural areas that are in our parkland areas. So as a general proposition I would favor accentuating the production and the use of coal in the Appalachian region.

Q. Could you tell us in more detail how vertical responsibility or accountability will lead to greater competition and what if anything was discussed about horizontal divestiture?

Governor Carter. The position that I've maintained is that I'm not in favor of divestiture of the oil companies in a complete vertical way as long as I'm convinced there's an adequate degree of competition. And that's a very important caveat

My own concern has been more in horizontal investment—the oil companies investing in coal and uranium and geothermal—than it has been in the vertical integration. This was a proposal that Governor Boren made and I'll let him answer the question after I briefly respond. One of the allegations that has been the basis of the divestiture proposal is that the oil companies controlling the process all the way from exploration, to extraction, to transporting to the refinery, refinery refining, distributing through the oil pipelines, and wholesale and retail sales, it permits the oil companies to eliminate competition by making a heavy profit at the crude oil level and taking an actual loss at the retail level to freeze out competition. But if you require the oil companies—this is a proposal I never heard about until today, by the way—but if you require the oil companies to reveal their profit in segments so that you could see how much profit they made at the crude oil level, how much in the refining, how much in the piping, how much at the wholesale and retail level, that would tend to maximize competition. I'd like to ask Governor Boren to develop this further since this is his idea.

Governor Boren. Governor, I think you've explained it very, very well. I think that what the people of the country want to be assured of is that if they're being asked to make personal sacrifices in terms of higher energy costs in general that they're not bearing this burden alone. That no one's making excessive profits from it. And I think that we've been in a sense putting the cart before the horse in talking about divestiture. When at the present time the oil companies, the large companies, that are in all of these levels, file comprehensive tax returns which don't break down their profits by area. I think if we have accountability at each level—in other words, what profits are they making in production, in marketing, in transportation, and so on— this will give the people of the country much more information than they've had in the past. This of course will be public record so the people would know themselves what levels of profits are being made. If abuses were found at any level then within the system, the antitrust laws could be applied to that particular level effectively. So I think it's really a matter of public accountability is what we're talking about.

Q. Governor, do you endorse this idea? Or is it just an idea you're considering?

Governor Carter. I think it has interesting possibilities. I would like to go into it further before I make an unequivocal endorsement, but I think it's a good one to pursue. I might say that this is a question that came up at the "Public Citizen Forum" the other day, not relating to the oil industry, but say relating to General Motors. There is no requirement now that stockholders in General Motors, for instance, be acquainted with the profits that are made from, say, the Frigidaire Division, which manufactures home appliances. And the public disclosure of corporate profits, as it would relate to an easier enforcement of antitrust laws, is a proposal that I favor as a general proposition. Specifically, I would rather look into it a little further, but I can say that it is an attractive thing to me and my inclination would be to support it.

Q. What about horizontal divestiture, Governor? What was your discussion on that?

Governor Carter. We didn't discuss that, this afternoon, very much. I think that there—in fact, I don't believe we discussed that at all this afternoon. I can't recall that coming up. But my own position is that horizontal divestiture, in my opinion, is a much more worthy subject of discussion than even vertical divestiture and I, unless I'm convinced that there is an adequate amount of competition there, I would look with favor on horizontal divestiture. By my own first preference would be to insure competition through other means. I have been concerned in recent years that there has been very little increase in the production of coal. Some of that perhaps is because of inadequate competition. But the other part of it is artificially low prices for natural gas and, for a number of years, artificially low prices of imported oil. And, of course, other governmental policies concerning air pollution standards which makes the burning of coal now much less attractive by some power producers. So it's a complicated thing, but if I'm convinced that there is adequate competition I would not favor divestiture. If I'm not convinced, and I'm going to be very strict about that, looking at it from the consumer viewpoint, then I would favor divestiture. Does anyone here feel that you ought to add something to what I've outlined? I've tried to keep notes and do the best I could, but if any of you have a comment that you'd like to make ...

Shearon Harris. I could live with my utility colleagues if I just got on record as saying that I urged you to give nuclear equal footing with coal.

Jerry Decker. I'm Jerry Decker from Dow and I'd just like to make a strong plug for conservation in industry and also the use of coal in industry, getting back to the kind of percentages that we used to use in industry before 1950. I think we can also take care of all the environmental aspects of this from a standpoint of strip mining that you've just mentioned and the transportation and burning.

Governor Carter. I might say this, I wish we had more time because Dow Chemical, for instance, which has been a company that suffered severely during the Vietnamese war for other reasons, they pointed out that in the last 5 years they have cut down, I believe 40 percent, their consumption of energy for the production of the same products. And one particular company in Baton Rouge, Louisiana, I believe he said, has a procedure worked out now so that an additional 30 percent savings in the consumption of energy for the same production might be realized. So there's a tremendous opportunity here for industry, for homeowners, for the transportation sector of our economy, all to conserve greatly in the consumption of energy. And I don't think anybody felt that it wouldn't be best for our whole economy if we could eliminate waste. Even though the sale of coal, the sale of oil, the sale of natural gas would go down every time you saved, everybody thought that in the long run, and the short range, there would be a strong benefit for the economy of our country if we could eliminate waste through strong conservation measures.

I want to thank all of you again. I know you have to leave. And you've meant a lot to me already. I think we're going to get more out of you in the future.