Providence, Rhode Island Remarks at the Northeast Summit on Energy.

Governor Brendan Byrne, Governor Grasso, other members of this group, who are distinguished leaders throughout the northeastern part of our country:

I can't think of any more appropriate subject for a summit conference anywhere in our Nation and particularly in this part of our country than you have chosen. Summits are ordinarily called when there is a matter of grave significance to a nation or to a group of nations.

I had a summit meeting with President Brezhnev in Vienna not long ago to talk about the peace of our generation throughout the world and the control of nuclear weapons. There was an economic summit earlier this year in Tokyo, when the leaders of seven industrialized and democratic nations met to talk about the future of the Western World.

And today we are addressing a subject that is equally as important, because there are two things involved: One is the wellbeing of the people of our country, and the other is the security of our Nation. I don't make a statement like that lightly. When a President, the Commander in Chief of our Armed Forces, says that the security of our Nation is at stake, the words should be chosen carefully, and I choose them very carefully.

Our Nation has become overly dependent on foreign oil. This is a subject of grave importance to us.

In January of 1973, oil was selling freely around the world about $2 a barrel; that's about 6 or 7 years ago. Now oil prices are more than 10 times as great; on the spot market, 20 times as great, about $40 per barrel.

We rely on an uncertain source. We import half the oil we use. Along with oil, we import inflation and unemployment. Next year we will send from our country to foreign oil suppliers $70 billion. Think of the jobs and investment and a better life for the American people that could be bought with that kind of money.

Inflation is an all-pervasive burden on the American people. The driving force behind inflation is our overdependence on oil and the high prices paid for it. Four percentage points of our present inflation rate are directly attributable to one item-energy. If it weren't for the rapid increase in energy costs in the last 6 or 8 months, the inflation rate now would be the same as it was in 1978 or the same as it was in 1977.

The people of our country are losing confidence in the future, because they see that we rely on an undependable source which provides oil for a thirsty nation at uncontrollable prices. This is a very serious subject, and the fact that all of you would assemble here is proof that you agree with me about my expression of concern.

In April of 1977, about 90 days after I had been sworn in as President, I presented to the people and to the Congress an analysis of the energy question and presented also to the Congress a proposal for a comprehensive national policy on energy. Mine was a lonely voice. I referred to the energy problem as the moral equivalent of war. This statement was ridiculed by the press, discounted by many people in our country.

And after a year and a half the Congress, after one of the most divisive and bitter and difficult debates in the history of our Nation, finally passed last year about 65 percent of the energy package that I had presented to them—not one word, however, about oil; not one word.

So, here we sit, 7 years after the first oil embargo, 2 1/2 years after a comprehensive package has been presented to the Congress, still needing vital action by our legislative branch of the Government, and our country's still vulnerable.

There have been some beneficial changes made, however. The American people are now becoming aroused, and the Congress is beginning to take action, even on oil. I'm not discouraged about the future.

One very bright light throughout all this process has been the awareness of the Northeastern Governors and those who work with them that this was indeed a serious problem. I have had strong allies among the men and women at this table from the very beginning, and the fact that you are here indicates that their influence has been all-pervasive throughout the northeastern part of our country. You saw the dangers early, and you began to act.

One of the things that has been a serious problem, politically and otherwise, has been the artificial controls on the prices of oil and natural gas, which have caused Americans to continue to depend upon oil to an unwarranted degree, to the exclusion of conservation, the shifting toward renewable supplies of energy like solar power, and the realization among our Nation that we did have a serious problem on hand.

The most important single action that every single person in this country can take is to save energy, to conserve energy, to stop wasting energy. This is something that can be done at the national level, State, local levels of government, in private industry, in every community, in every family, in the life of almost every person.

And I hope that everyone listening to my voice here in this room or on television or otherwise will make an assessment today with family members: "What can I do as a patriotic American and to help my Nation, yes, but also to help my community, my family, and myself? What can I do to save energy in my home, going to and from work, to and from shopping, on my job?"

There are myriad different ways that Americans can save energy if we make up our minds that it's important enough to do it. And I might point out to you that this is not an unpleasant thing; it's not an unwarranted sacrifice; it will not even be an inconvenience. It will certainly not weaken our family structure, our communities, our States, our Nation. It can be an exciting and productive and positive action. It can bring families together in a closer unity. It can strengthen communities. It can strengthen our Nation. It's a patriotic gesture. It can be pleasant, not an unpleasant sacrifice.

The crux of the issue in conserving, meeting the needs of American families, developing new supplies of energy, is the windfall profits tax. The windfall profits tax is now being considered by the House and the Senate of the U.S. Congress.

The House has passed a reasonable windfall profits tax, not as strong as I advocated, not as strong as I would like. The revenues are not as great as what I proposed, and the House put a 10-year limit on the application of the tax. It should be permanent, and the lost revenues, below what I advocated, should be restored.

The Senate Finance Committee has reported out a framework only of a tax structure that can be built on the floor of the Senate, in the conference committee, and ultimately by the Congress.

The House would give back to the oil companies, as a portion of the unearned profits over a 10-year period, $151 billion. The Senate Finance Committee would give back to the oil companies, in unearned profits, $374 billion, at the present price of oil, as projected, and at the present inflation rate. This could become a $1 trillion giveaway to the oil companies.

I hope that every one of you will help me to convince the Congress that an adequate and acceptable windfall profits tax should be levied on the oil companies to take away a major portion of their unearned profits, because that would give us a reserve supply of money to be used for things that are crucial: first of all, to meet the needs of our American families, to pay the increasing cost of energy. The increasing costs are inevitable. The poor families of our Nation must have added financial help to pay those costs.

And the second need, of course, is to have a strong, consistent, permanent conservation program, to encourage Americans to do what's best for them, through tax credits, home audits, shifting away from the scarcer supplies of energy to more plentiful supplies of energy, the evolution of new kinds of energy from supplies which in our country are adequate-synthetic fuels from coal, geothermal supplies, biomass, low-level dams which 'have been abandoned in the past that can now be reconstituted-a heavy dependence upon insulation of homes, more efficient automobiles, research and development.

These things are all possible; in fact, in our country they're inevitable, provided we have adequate incentives. And those incentives financially must be derived and can be derived only from a windfall profits tax. It sounds so logical and so clearly to the advantage of our country that you might say, "Why the doubt; why the delay; why must the President continue to pound on this one subject for 2 1/2 years, yet without success?"

I represent and lead. in effect, two different nations. One is the largest oilconsuming nation on Earth, and the other nation is one of the largest oil-producing nations on Earth. And in the past there has been one strong all-pervasive voice on Capitol Hill, and that has been the oil companies' lobbies. Now, in the last couple of years, we've built up an effective countervoice as the American people have become aroused to protect their own interests.

The third quarter oil company profits are adequate proof of the need for a rapid passage of the windfall profits tax in an acceptable form for me and for you.

We must meet the needs of the poor families, particularly in the northern part of our Nation. In April of this year, I made two basic pledges. One was that this winter we would have an adequate supply of home heating oil. At that time we were far below the reserve supplies needed. We've been successful with that. Our goal was 240 million barrels in reserve supply in October. We have already passed that point. We will have adequate fuel oil supplies for homes during this winter. That's a notable achievement.

But the other part of that commitment was to provide, from Federal revenues, assistance for poor families, to help meet the rapidly increasing costs of home heating oil brought about by OPEC price rises. Very quickly now, $250 million will be distributed throughout the country, particularly the Northeast, for Governors to allocate through their own mechanisms for poor families. This is a growth of a program that I established the first year f was President, with the help of the Congress. It's been effective so far.

We're advocating that this be increased substantially and that we add to the $400 million from this program another $1.2 billion to be paid out through other means to the poor families of this country. In addition to that, we've advocated $2.4 billion per year for 10 years to have a permanent, stable, predictable program to meet these high needs of the poorer families in our midst.

These revenues will come ultimately from the windfall profits tax, but in order to expedite the process and not delay the payments until the windfall profits tax is passed, they'll be paid out of general revenue funds and then repaid when the windfall profits tax is collected from the oil companies.

I'd like to remind you again, however, that the best way, the cheapest way, the quickest way to cut down on costs, to make our Nation more energy-secure, and to reduce oil imports is conservation-conservation. Every family can help. It's one of the most important and patriotic challenges that we've ever faced.

If we could just insulate, for instance, all the buildings in our country adequately, we would, in effect, have another Prudhoe Bay supply of oil, equivalent to the oil that we are deriving now from the recent discoveries in Alaska.

The tax credits for insulation of homes was passed a year ago and already in an embryonic stage of use. Of this ability for families to take credit on the income taxes to insulate their own homes—which they should do anyhow—about 10 percent of the middle-and upper-class families, the ones who pay the most income taxes, are already participating. That percentage will undoubtedly grow.

I'd like to point out one other thing to you. We have established, to make sure that energy supplies are distributed quickly and equitably in your region, a fuel oil management group. The headquarters for this group will be in Boston. It's already been constituted. It's comprised of representatives from the Department of Energy, the Department of Agriculture, the Department of Transportation, and, to make sure that in cases of heavy snowfall or icing of waterways that we can overcome those difficulties rapidly, the Coast Guard and the Corps of Engineers.

The primary coordinating effort will be through the Governors, so that if a distribution problem should arise during this winter, this group is already in existence, planning carefully to avoid mistakes and to avoid interruptions in supply, but eager to correct defects in the distribution whenever they should become apparent.

Our Nation is in a state of transition, from a time when fuel was so cheap that we never gave it a thought to a time when fuel is becoming so expensive that we can think of little else. And it's very important that all of us—leaders with an effective voice and effective influence—unite.

The delays have been unwarranted. They've damaged our country. We should have had a national energy policy 5, 6 years ago. The challenges have not been easy to overcome. The questions have not been easy to answer. The problems have not been easy to solve. But it's too late to try to find scapegoats, to try to affix blame for delays. Now is the time for us to work together, to recognize that we have a common problem, a common challenge, that we face common questions.

All the Governors on this platform and I represent the same people. We're in it together. We need not fear the future. It may be that the early warnings and the increasing prices, which were inevitable in any case, have come at a time to restore our Nation's integrity and to improve our Nation's security.

We've been blessed beyond all other nations, even in the field of energy. In its totality, our country has about 24 percent of all the energy supplies known on Earth. The OPEC nations all put together have about 5 percent. But ours are in forms that have not yet been adequately tapped-hydroelectric power, wood, coal, oil, geothermal supplies, natural gas, shale, tar sands. They are ready to be tapped by a nation that can marshal its resources in an effective way, which can unite with one another and not be divided from one another as we grasp for some selfish advantage in a time of transient shortage or transient inconvenience.

We've been blessed not only with reserve supplies of energy; we've been blessed with a form of government that makes us quickly sensitive to the needs and demands of the American people; and we've been blessed with the free enterprise system, which encourages innovation, dynamism, competition, and flexibility. So, we have everything on our side.

And with the passage of the proposals that I submitted to the Congress in April of 1977 and again in July of this year, our country will have the framework, with a comprehensive energy policy based on financing with the windfall profits tax, to meet this challenge successfully.

There is no reason for us to fear. We're going through a temporary time of inconvenience and rapid change. We were not adequately prepared for it by past action, but now we understand the problem much better.

My only plea to you in closing is this: that we not be divided one from another, that we not be confused or deluded, that we not dream of the restoration of past times when oil was plentiful and cheap. It'll never come back. The chances are, in the future, that oil will be less plentiful, and it's certain that oil will be more expensive. But we can accommodate this change, because God has given us such tremendous blessings in our free Nation, an opportunity to cooperate. And we should not be distracted by allegations of impropriety among those who occupy positions of leadership.

We all have the same motivations: to have a nation strong, competent, united, determined, concerned about those who are less fortunate than we, recognizing that we are a world leader, and recognizing that our Nation must be secure. All these goals can be achieved if we work together, and I have no doubt that you and I together and other Americans who share our common purpose can assure, without further delay, that we will make the greatest nation on Earth even greater in the future.

Thank you very much.