IMPACT OF HEATING OIL REBATE PROPOSALS ON SMALL BUSINESS AND CONSUMERS TUESDAY, JUNE 28, 1977 U.S. SENATE, SUBCOMMITTEE ON GOVERNMENT REGULATION AND SMALL BUSINESS ADVOCACY, SELECT COMMITTEE ON SMALL BUSINESS, Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 424, Russell Senate Office Building, Hon. Thomas J. McIntyre (chairman) presiding. Present: Senators McIntyre, Hathaway, and Weicker. Also present: John M. Cross, professional staff member; T. J. Oden, special assistant to Senator McIntyre; Jay Newman, assistant to Senator Hathaway; Bob Dotchin, assistant to Senator Weicker; and Larry S. Greenberg, minority counsel. Senator MCINTYRE. The subcommittee will come to order. The Subcommittee on Government Regulation today of the Small Business Committee convenes these hearings on the impact of home heating oil tax rebates on small business and consumers. We are in fact embarking this morning on a fact-finding journey. The purpose of these hearings is to determine the cost and fairness of that portion of President Carter's energy proposal relating to crude oil wellhead taxes. In the President's energy program he recommended that increased costs resulting from the wellhead tax not apply to residential consumers of home heating oil. On June 15, however, the House Committee on Ways and Means voted to delete Mr. Carter's proposed tax rebate to families who heat their homes with oil. I believe that the House committee in striking this feature of the President's energy program did not fully understand the enormous burden which will be placed on homeowners throughout the country, but particularly on those families living in the northern regions of the United States, from which I come, and from which our first witness this morning also comes. We will just put my statement in the record at this time so that I can welcome the distinguished Congressman from Massachusetts, Mr. Silvio Conte. [The statement follows:] STATEMENT OF U. S. SENATOR THOMAS J. MCINTYRE (D-N.H.) SELECT COMMITTEE ON SMALL BUSINESS ROOM 424, RUSSELL SENATE OFFICE BUILDING The Subcommittee on Government Regulation today convenes hearings on the impact of home heating oil tax rebates on small business and consumers. The purpose of these hearings is to determine the cost and fairness of that portion of President Carter's energy proposal relating to crude oil wellhead taxes. In the President's energy program he recommended that increased costs resulting from the wellhead tax not apply to residential consumers of home heating oil. On June 15, howevever, the House Committee on Ways and Means voted to delete Mr. Carter's proposed tax rebate to families who heat their homes with oil. I believe that the House committee in striking this feature of the President's energy program did not fully understand the enormous burden which will be placed on homeowners throughout the country, but particularly on those families living in the northern regions of the United States. This rebate, in my opinion, represents an essential equitable feature in the tax part of the Prsident's energy package. When Mr. Carter first announced his energy program on April 18 he listed ten principles which guided him and his administration in the development of his energy policy. The fifth principle was that the program must be fair. He stated and I quote: "Our solutions must ask equal sacrifices from every region, every class of people, and every interest group." In his statement before a joint session of the Congress, the President reiterated his concern for equity by stating and again I quote: "Our guiding principal as we develop this plan was above all it must be fair. None of our people must make an unfair sacrifice. None should reap an unfair benefit. The desire for equity is reflected throughout our plan in a dollar for dollar refund of the wellhead tax as it affects home heating oil particularly in the Northeast." The majority of the Ways and Means Committee in voting to delete the President's heating oil tax rebate based their decision apparently on the belief that the homeowners' rebate was a special relief section aimed primarily at the Northeast and was inconsistent with President Carter's general effort to induce energy conservation by making energy more costly. The President and Congress share a responsibility in shaping a national energy program that must consider its ultimate impact on the various users of energy. The home heating oil rebate, far from being a special exemption for a favored vested interest group, is an equitable effort to cushion the impact of higher prices on those homeowners who must rely on heating oil as the basic home fuel. While distillate fuel is used throughout the country as a home heating source, the severity of Winter weather determines the amount of heating fuel needed. The deletion of this rebate will create not only an unjust price situation to homeowners above the frost line, but one that will be intolerable. By striking the rebate feature, the Ways and Means Committee does not provide any alternative for millions of homeowners across the northern tier of our country. What type of action would the majority of the Ways and Means Committee recommend to a homeowner in North Dakota, Minnesota, Wisconsin, Missouri, Ohio, or New England. The deletion of the home heating oil rebate not only is unfair but it creates an anomoly. The President's proposal not only recommended rebates for home heating oil users, it would also rebate costs to farmers for their use of distillate in their business. A substantial number of farms not only use distillate as a tractor fuel but they use the same basic fuel in heating their homes. How can Congress justify and explain to a farmer that it will cost him more to heat his home than to drive a tractor. The fuel is the same. Both purposes are essential. But the cost will be different. If we are to achieve President Carter's goal of equity, I believe we must consider the entire issue of how the products refined from a barrel of crude oil are to be used. Are we trying to encourage gasoline consumption or are we trying to discourage home ownership? Citizens throughout the country who must use heating oil for their homes will be required without the rebate to spend more of their limited income on heating their home and less on other essential needs. This burden will be so great that I am sure that many of the elderly and those on fixed income will have to face the sad alternative of either selling their home or doing without other essentials. In conclusion let me say that I believe that each member of Congress, regardless of State or Region, shares a responsibility to assure to all citizens a national energy policy based on fairness. I must question the fairness of the decision by the House Ways and Means Committee to delete the President's proposed home heating oil rebate and am fearful of its ultimate impact on millions of Americans. Senator MCINTYRE. I am delighted to welcome you here this morning and will be happy to hear what you have to say about what seems to be going on over in your distinguished body. STATEMENT OF HON. SILVIO O. CONTE, A U.S. REPRESENTATIVE FROM THE STATE OF MASSACHUSETTS Representative CONTE. Thank you, Mr. Chairman. I want to thank you. I really appreciate appearing before your committee on behalf of the New England congressional caucus and its 25 members, regarding the effect of the proposed crude oil equalization tax on heating oil consumers. I say that sincerely because I have nothing but the greatest respect and admiration for the chairman of this committee and what he is doing on the Senate side to help the small businessman and protect the small businessman. I would like to commend your committee for holding these hearings on this vital measure of the President's proposal. This proposed tax and rebate will have a dramatic effect on both the small business marketers and the individual residential consumers. Since I understand that you will be hearing from the small business marketers, I would like, on behalf of the New England congressional caucus, to focus on the impact this measure will have on the residential consumer. Mr. Chairman, I would first like to quote the President on this issue. In a statement found on page 28 of the "National Energy Plan," the President states: The plan must assure that policies are equitable across the country, and that the special needs of each region are met. Prices for energy should be reasonably uniform to prevent economic dislocation and unjustified variations in consumer costs. One of the considerations the Administration took into account before finalizing this plan was the total dependency which some regions of the country have for one form of energy. This is reflected in the President's statement. Presently, we find four distinct regions of the country which are wholly dependent on heating oil, one of which is New England. Senator HATHAWAY. Good to see you here. Representative CONTE. I might say to the Senator who just came in, that he and I shared a podium at the Independent Baker's Association last week, and he went to acknowledge me and forgot my name. Senator MCINTYRE. Well, we should acknowledge his name. It is nice to see Senator Hathaway here. [Laughter.] Senator HATHAWAY. Silvio, it is a pleasure to have you with us. These regions of captive consumers do not have the flexibility to switch to alternate forms of energy because of their unavailability. And, it should also be noted that this body of consumers have above average heating costs, as compared with other regions of the Nation. Mr. Chairman, I can personally attest, as I am sure the chairman and the members of the committee can, to the hardships these individuals faced with our severe winter in New England, in the mid-Atlantic States, as well as in the north central States. Many of the residents of |