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is available. Hopefully, you are not going to have to repeat these numerous trips down to Washington, if we can get, as a matter of right, our fair share of oil and gasoline supplies.
We want to welcome you, Governor.
STATEMENT OF HON. FRANCIS W. SARGENT, GOVERNOR OF THE
COMMONWEALTH OF MASSACHUSETTS
Governor SARGENT. Senator, I am very pleased to be able to be here. I am glad I was able to get enough gasoline to get in from Dover this morning, and I am pleased to be able to once again be working with you on this. We have been working together in Washington on this, and I think it is tremendously important.
As you know, I received a call last night from the Federal Energy Chief, Bill Simon, indicating that Massachusetts will be receiving the additional 12.9 million gallons of gasoline and this, of course, is in addition to the special allotment that we received of 3.2 million earlier in the week.
We are, of course, pleased that we have gotten this additional action by the Federal Energy Office and I am sure it will help, but it still doesn't resolve the really very basic problem that we have with the national gasoline allocation program.
Senator, your hearing today couldn't have come at a more appro
There is an urgent need for bold and consumer oriented leadership in dealing with America's continuing energy crisis. Public frustration, panic, and anger are the products of our energy chaos.
States have been unable to deal with the causes of the energy crisis, the oil companies unwilling, and the Federal Government unprepared. Consequently, conditions have gotten worse.
Mr. Chairman, this situation really must change.
America can no longer afford mistakes, inefficiency and bad judgment in managing our energy resources.
We must develop an energy policy which is coherent and comprehensive.
We must develop a gasoline allocation program that achieves a fair distribution of the available gasoline at a reasonable price.
The Federal Energy Office has developed its present allocation system on soft data, oil companies statistics and a faulty formula. The predictable result has been confusion, controversy and contradiction.
However, State officials have been unable to change the basic allocation system. We have fought along with you, Senator, and the other members of our congressional delegation to get our fair share, but unless the rules of the game are changed, this region will be cheated repeatedly. Our gas station lines will grow even longer, and Mr. Chairman, our economy will begin to sag.
We need a new formula for the gasoline distribution system.
A formula which takes into account the change in our driving patterns.
A formula which guarantees that we will keep all of the gasoline even if some of our stations were to close.
A formula that demands a check on oil companies, on their statistics, and their deliveries, and a formula that considers consumer demand as well as oil company supply in determining how much gas a State will get.
Mr. Chairman, I have made these recommendations to Federal energy officials but I am fearful that they will not act quickly enough. And a fair distribution system is only the beginning.
We must also guarantee a fair price.
Just because we in Massachusetts are more dependent on imported oil and independent suppliers does not mean that we should
pay a higher price for gasoline and oil. For example: The Massachusetts consumer is forced to pay twice as much for his electricity as his counterpart in other parts of the country. This is clearly unfair.
The consumer in Massachusetts should not be penalized because of his reliance on foreign oil.
The Federal Government must develop a price policy that will insure that the people in all regions of this country have access to petroleum supplies at reasonable costs.
Mr. Chairman, the steps that I have outlined are basic actions which must be taken at once to insure a minimum standard of fairness.
I have talked to the people in this State, and I have listened to them, and I have watched their sacrifices. They have conserved more fuel, more electricity, and more gasoline than almost any State in the Nation.
I have asked for voluntary conservation and the people have complied here in Massachusetts.
We adopted the Oregon plan for gas distribution on a voluntary basis and it has been reasonably successful.
In short, our people have been willing to do their part, but they are becoming increasingly concerned that they are being treated unfairly.
It may be that the only fair system will be mandatory national rationing. But one thing is clear; if we do not act, rationing will be inevitable.
Up until this year, we have left the matter of a national energy policy in the hands of the oil companies, but the oil companies have never been in business to protect the consumer.
The Federal Government is only now beginning to develop policies which deal with complicated and critical energy issues.
I believe there is an additional need. A need for an outside force, an agency apart from the Federal bureaucracy, and independent of the oil industry. An agency to protect the consumer's interest and monitor the actions of both the Federal Government and the oil industry.
Today, I am calling for the creation of a national consumer councila watchdog panel that will guarantee a fair deal to consumers in all parts of the country.
I propose that the appointments to this council be confirmed by the Ū. S. Senate; that it be funded by assessments on the oil companies, and that it be empowered to itervene on behalf of consumers on matters before any public agency,
This consumer council would be vested with subpena powers. It would have the right to conduct its own independent investigations and make recommendations to Congress regarding the need for legislation.
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It would have the power to review Federal allocation formulas, and challenge FEO decisions.
It is an agency that is desperately needed, (I believe). Its constituency would be the consumer who has been caught in the crunch of Federal inaction and oil company self-interest.
Throughout this energy crisis, the American people have distinguished themselves. They have been buffeted by bureaucracies, misled by international oil giants, but the American people have sacrificed when they have been asked to. It is high time now that we act in their interest, (Mr. Chairman).
Senator KENNEDY. That is a fine statement, Governor.
Of course, the Federal Trade Commission is supposed to be doing that very job which you have outlined, and unfortunately, the Federal Trade Commission has been pretty well captured in many respects by the major oil companies. Last year, they filed some complaints against them, but if they were really monitoring this situation as closely as they should be—and we didn't have the appointments to the Federal Trade Commission that were representing these major oil interests we wouldn't have to be going this kind of route which you have outlined here, and which I think is a very constructive and a positive recommendation.
This past week, we have had monitoring teams in Massachusetts to try and review the extent of both the shortages, and weather, in fact, if the fuel that was being allocated for Massachusetts was actually getting to the various stations, and also, we are trying to provide some monitoring on the price. Could you tell us what your reaction to the team was. Dou you
think it would be useful and helpful to have this monitoring team as a continuing and ongoing means by which the Federal Energy Office would be able to gain the kind of information which, to date, they have not, about the critical shortages which exist in so many communities and perhaps the price gouging which has existed as well?
Governor SARGENT. I think it would be useful. I met with the team when they came. There was a representative of the local office, the regional office of FEO, there was a representative of OMB, and there was a representative of the Washington office of the Federal Energy Office, and I was very impressed by their knowledge of the overall problem. They listened very intently to the points that we made. They didn't have sufficient time, however, to really monitor the stations, to go out and listen to the gasoline dealers, and to find the problem as we find it in the field.
We tried to stress to them the importance of changing the basic concept that, I think, we have got to recognize. There is a change in driving patterns in this country, that urban areas have got to be considered somewhat differently than rural areas because, today, it is an interesting thing, we find, for example, on the Massachusetts Turnpike—the intown exits—there has been a dropoff in usage about 5 percent; out further on the turnpike, there is a dropoff of 25 percent, so that means that those intown drivers are not taking the long trips because they can't, and therefore, they are concentrating all their buying of gas right in the metropolitan area. I think this is one of the criteria that should be moved into the mix. We tried to make this point with the team. I also made that point when I met with Mr. Simon a couple of days ago, with some of the other Governors.
I think that the criteria ignores that basic factor that the driving habits, necessarily, of the American public have changed and should be so considered.
Senator KENNEDY. You have received now, under the announcement last night, an additional 8 percent allocation for the State. Could you give us any idea about how that will be distributed ?
Governor SARGENT. Well, one of the things that we don't knowI asked Mr. Simon when he called me last night, “Well, will this apply in March?” He said, "No, it applies immediately. Well, to move the 3.2 million gallons that we got, plus the new 12.9 million gallons, in just a week or so, with the trucking that is available and with the system that private enterprise uses to distribute it will be quite difficult to do, so we are attempting to determine today whether we can do it all in an orderly fashion or whether we have got to do it helter-skelter and get it all out in the next few days.
We have made that decision on the 3.2—because it was indicated initially that it would have to all be out prior to the first of March or would be lost to Massachusetts, but we are getting it out just as fast as we can, trying to place the emphasis on those parts of the State that need it the most.
If we have more time, we could do it in a more orderly fashion and I think perhaps, it could be fairer.
Senator KENNEDY. Isn't this situation extremely frustrating for you, for the State machinery, and for the local communities? Massachusetts was told early in the month that there would not be any increase in gasoline supplies. Then in the last week of the month Massachusetts received a 2-percent increase and was told there would be no additional supplies beyond that. Now you find Massachusetts will get another 8-percent increase, which should be distributed as soon as possible. Doesn't this kind of inconsistency, as a result of which available supplies cannot be predicted from one week to the next cause a great deal of confusion and frustration among service station owners, consumers, and business and industry who are already suffering hardships?
Govenor SARGENT. Very definitely. I think this is why you have the panic buying. I think the people feel, “My gosh, I don't know whether I will even get any next Monday, I had better stay in line Saturday even if it is all day long just to be sure that I get the gas so that I can get to work," and it has been just chaotic.
Now we all recognize that the oil industry has gone its own way over the years, and all of a sudden, the Government is attempting, with inadequate facts and inadequate data, to develop a system overnight, and we just never really planned for it, that amount, as a Nation, so that it certainly is a traumatic time.
I think that Mr. Simon is doing the best he can with an incredible problem. I don't think the good Lord Himself could straighten it out in a week or two.
I think it is important, as each week goes by, that new criteria be adopted. For example, we have changed the modified Oregon plan in Massachusetts this week by changing the arrangements on Saturdays and we will continue to try to have a fair system but it has to be kind of trial and error pretty much.
Senator KENNEDY. Don't you need to know, at the beginning of the month, just how much gasoline is going to be available? If you don't know, at the beginning of March, for example, how much gasoline will be available, doesn't this complicate the equitable distribution of the reserves available to Massachusetts ?
Governor SARGENT. Exactly, and then when you get the additional amounts at the very end of the month that you might not have been planning for, then how will you do that—how do you distribute it fairly and quickly? It is a very tricky thing to handle.
Senator KENNEDY. Are you going to in the development of your distribution plan, for March, going to try ... to try and provide some degree of priority to the urban areas?
Governor SARGENT. We are—it is going to be difficult to do.
I think that we should not overlook the fact that a very important part of our economy is also the outlying areas, the Berkshires and the Cape. They are very concerned with the tourist season-well, in the Berkshires, for example, right now the skiing is lousy but winter sports are very important to them. They don't want to be shortchanged, certainly, the Cape doesn't want to be shortchanged as they look toward the summer, so it is not going to be easy to do this, but if we could know what we are going to get, we could plan properly. I think we can take care of it but if it is just a helter-skelter arrangement, it will be very difficult.
Senator KENNEDY. I wanted to thank you for coming here, Governor.
Beyond the questions of allocation, distribution and pricing, you have been interested in the problem of unemployment, and the needs of our state. We are working on that together.
You and I have had the opportunity to exchange ideas on this and on public service employment. We are trying to provide some additional tax relief for consumers by increasing the personal exemption. We are also working on tax reform and closing loopholes with regard to the major oil companies.
The proposal you have made is one that warrants every consideration. We would like to work with you to try and find out whether your ideas would be applicable at the national level. I am sure it could be.
It is tragic that we have to have special legislation for this type of basic protection. We have existing machinery but it is just not functioning and working to protect the consumer. New legislation could be terribly important.
We want to thank you very much for your presence here and look forward to working with you in the future.
Governor SARGENT. Thank you very much.
Senator KENNEDY. Our next panel of witnesses represent the people in the trenches during the current gasoline crisis, the men who supply the service stations, the men who operate the gasoline stations. David Brewster, associate director of the Independent Oil Men's Association. That association represents the jobbers who supply 30 percent of the gasoline sold in New England; Harold Murphy, of Springfield is President of the Baystate Gasoline Retailers Association, with him are Robert McCarthy, a gasoline station operator from Newton and Sidney Benson, a gasoline station operator from Roxbury.
Mr. Brewster, will you start in?