in that regard. Yet, we have seen from 1956 the inability by that industry to provide additional adequate sources of petroleum for our needs. So we have seen the failure to develop refineries, which you, yourself, have commented on, and without prejudging your recommendations I am a little bit jaded on the theory that all we have to do is find a new complex of tax incentives to encourage a reluctant industry which from its profit standpoint is not apparently suffering as much as other elements of our domestic economy. Secretary SHULTZ. I would agree completely with you. If you are understanding me to say is that all we have to say is develop new tax incentives and that will solve our problem. I'm not saying that at all. I am saying that there are a whole lot of things we can do that will help. Actually, in terms of the tax program, the tradeoff between our tax shelter proposals and our tax incentive proposals is debated. I think many in the oil industry feel we have taken more away than we have given. We think it's about a wash, or maybe some plus, but at any rate it's a close question. The overall impact may very well not be enough. We should perhaps be doing more. Of course, there are all kinds of things involved here. Here we have a lot of oil and gas up in Alaska which we practically stopped exploring for, because we don't have any way to get it down here. The pipeline is completely hung up in the courts. The environmental business goes on forever, and we have a lot of oil and gas up there. Let's get that job done and get it down here. Mr. UDALL. The gentleman's time is about to expire. Mr. FOLEY. One more comment on that. I sat here for 8 years and watched the very clumsy way that the industry proposed to build this pipeline, and I think some of the people in the industry would prefer to go back and redo that over again, if they could. I am probably going to support the pipeline, but I must say I think the matter would be much further along if we had a little bit more responsible industry reaction 3 or 4 years ago. Secretary SHULTZ. That could very well be. Let's not argue about the past. We have a big problem in front of us, and if we can get agreement to get that pipeline built it's going to help. So let's get her built. Mr. FOLEY. The other thing is, if I have any available time, we have the problem, too. I'm not trying to hash over old difficulties. But the decision of the administration on oil imports has been a rather confused one, and the industry itself was telling us a few years ago that maintenance of the quota system was absolutely essential to maintaining adequate incentives at home. Now we are told that's no longer true and the quotas have actually retarded development. Secretary SHULTZ. I have scars all over me on the program. Mr. RUPPE. Thank you, Mr. Chairman. We could, I think, very easily quantify the needs of the United States in terms of energy in the next succeeding years. Can we in any way quantify what actual energy resources are going to be available, available under existing technology and existing research? Second, is there any way of quantifying what would be available if the various research and incentive programs offered by the President are put into effect? Secretary SHULTZ. Within fairly wide ranges of uncertainty, I think the answer is yes. But one has to recognize that there are a lot of uncertainties. Let me just give an example. The field of natural gas. We know if the price rises then there is gas that is deeper, it is more expensive thereby to get, which is not being gotten now because the price doesn't allow you to cover those costs. If the price were higher you would get those. We know there is more gas there of that sort and so on. So we know that if the price rises there will be a response in terms of supply. Now I have spent a lot of time listening to people who, on the one hand, are experts on the geology and so forth of it. And, on the other hand, are gifted econometricians and so forth, who work at it from another standpoint. About what I conclude from it all is that there is certainly a very significant additional amount of supply. Whether there is market clearing at a reasonable price is a big question mark and no one can really answer that question, until we let the price go up and see. We know there will be a good response. We don't know how much. So therefore in terms of a projection, if you try to be too precise you are going to perhaps mislead yourself. But I think within some ranges we can probably provide this thing. Mr. RUPPE. I would like to see that, just so that those of us inclined to support your position can look next year or the year after to check whether we are in the ballpark as far as results being produced. Naturally, you are not going to be on target each year. But if you have a target range from the results you want to achieve in terms of estimated production, and additional production through the use of incentives and research, we would like to follow along and see if you are on target. Maybe we are spending too much. Perhaps we are not spending enough. We would like to follow through and see what are the results of this or any program that the administration and the economists can jointly agree upon. Secretary SHULTZ. I think that's a fair request and I would like to ask Mr. DiBona to comment on that. Mr. RUPPE. We have had different administration propositions. We have had hearings before this committee 4 or 5 years ago, hearings that summarized: "Everything is fine. You keep the oil import quotas. We will produce it domestically. Things are great and we can show you there will be no shortage." Well, the shortage did develop and it developed rapidly and I'm sorry we at that time didn't have some way to quantify the production schedules of the energy industry. Secretary SHULTZ. Well, the estimate of demand had been way low consistently. Mr. RUPPE. Perhaps we should establish those and see as we move from year to year whether we are on target or not. The figures can be wrong, but I think our desire to bring the statistics and projections together should be one we simply have to accept. Mr. DIBONA. We are doing that precisely right now. The kinds of uncertainties I think that Secretary Shultz mentioned are uncertainties, for example, about the increase in gas as a consequence of changes in the price. The estimates generally are around—a price elasticity of a supply of about 0.5. That means that if you approximately double the wellhead price of gas you increase the supply of gas by 50 percent, compared to the new supply you would have with no increase. Mr. RUPPE. In my view the thing to do would be to put in the positive characteristics and projections that you can develop, and then outline the imponderables. But let's follow the results in quantifying imponderables as we go along. Mr. DIBONA. We are engaged in doing that. Secretary SHULTZ. Why don't we try to provide as soon as we can a summary of this effort? Mr. RUPPE. Mr. Secretary, last year this committee reported out the Minerals Research bill and Congress went along and passed the bill. The bill, I believe, would have brought the Federal and State resources together in a cooperative effort, with private industry in the minerals research study field, particularly at the university and mining school level. I know the administration's opposition, and in fact the bill was vetoed, because of the dollar figures. If the bill would be put forth again this year with perhaps a more modest dollar figure or some amount that this committee and the administration can get together on. do you know at this point if you would be inclined to support the measure? Secretary SHULTZ. I am afraid I am just not familiar enough with that to be able to make a statement. But again, let me get it for the record. [The information supplied by Secretary Shultz follows:] MINERALS RESEARCH AND TRAINING INSTITUTES LEGISLATION Question. Would the Administration now reconsider its decision to veto legislation that would increase grant support for minerals research and training institutes, if the requested level of funding were reduced? Answer. The Administration decided, for a number of reasons, to veto legislation that would provide matching categorical grants to establish and support a mineral research and training institute in each of the 50 States and Puerto Rico, as well as provide grants for related research and demonstration projects. In addition to the level of funding, the Administration identified the following problems with the enrolled bill of the 92nd session of Congress: 1. it would fragment our research effort and undermine its priorities by supporting research centers in every State and Puerto Rico. 2. it would create an inflexible program that would preclude taking advantage of the best research talents of the nation, regardless of where they might be located; furthermore, it could also limit the full utilization of the available resources and personnel at existing institutions. 3. since adequate legislative authority already exists in the Department of the Interior for support of its ongoing research programs of a similar and related nature to the minerals research proposed in the enrolled bill, new authorizing legislation is unnecessary. The Administration recognizes the need to encourage the sound exploration. extraction, processing and development of our mineral resources, and we are continuing to seek flexible and efficient means of meeting minerals problems of the highest national priority. The Federal Government, under the Department of the Interior, is currently sponsoring a broadly based program (approximately $40 million annually) of research similar or related to that contemplated by the bill that was vetoed. The Administration is currently investigating the need for additional funding of research in the minerals area in the context of its concern for dealing with energy problems. To the extent that a greater and more intensive minerals research and training effort is required, we believe that Interior's program can be readily expanded or adapted to meet national needs. Therefore, the Administration would continue to be averse to the type of legislation previously vetoed by the President, for the reasons cited above. Mr. STEIGER. Will the gentleman yield? Mr. UDALL. The gentleman's time has expired. Mr. STEIGER. Mr. Chairman, I would like the record to reflect the presence of our Governor of Arizona, Mr. Jack Williams. I know with your vision problem you have a difficult time. Mr. UDALL. Governor Williams, we are happy to have you with us here this morning. Mr. Vigorito? Mr. VIGORITO. Thank you, Mr. Chairman. I would like to take this occasion to introduce some parliamentarians from Busmania, who are in this country for the past month as our guest. Today's guests of the House. Mr. Lewis, would you introduce Mr. LEWIS. This is Mr. Kenneth Inqua, Mr. Oguatchimi, and the other is Makutchee Opallay. [Applause.] Mr. HOSMER. Mr. Secretary, I was a little surprised in your colloquy with the gentleman from Washington that you didn't remind him that the domestic petroleum industry is inherently risky, and since 1946 competitive prices, domestic prices have been very soft because of the large foreign imports and the cost of productions have gone up, which leaves the industry, domestically, in a lack of incentive area which apparently you are trying to remedy with the incentives that you have outlined, is that correct? Secretary SHULTZ. Yes, sir. Mr. HOSMER. No. 2, on the Alaska pipeline, there are two issues before us here in the Congress about the Alaska pipeline. One relates to the width of the right-of-way and the second relates to environmental impact of the pipeline. You have said that the administration is for the pipeline. You recommended that we legislate it. However, when it comes to the environmental impact Mr. Whitaker, Assistant Under-Secretary of the Interior, believes that there should be no legislation with respect to the environmental impact and it could drag through the courts for 2 or 3 years or however long it takes before we resolve the issue. On the other hand your Assistant Secretary Simon, who is also chairman of the Oil Policy Committee, recommends that we legislate an answer to this question, so we can proceed with things. Since it is unclear where the administration stands on this particular issue, could you clarify it at this point? Secretary SHULTZ. I don't believe that anybody advocates dragging it out for 2 or 3 years, or thinks that there is a positive thing to be said about long delay. There is a difference in view about how broad legislative action should be. I think Mr. Whitaker states the administration's position. Mr. HOSMER. That means there is going to be a 2- or 3-year delay while this drags through the court. Are you differing with Mr. Simon's statement? Secretary SHULTZ. No, sir. I believe that we ought to get the darn thing built. Mr. HOSMER. I would advise you then, sir, that you'd better get your administration in order and speak in one voice on the issue. Mr. DELLENBACK. Will the gentleman yield? Mr. HOSMER. Not unless you will yield back. Mr. DELLENBACK. I will be glad to yield for this comment because I think in fairness when those witnesses appeared before this committee I put the express question about what appeared like a contradiction and Mr. Simon made clear that Mr. Whitaker spoke for the administration on this particular problem. So the result of the discussion that day was not that ambiguity resulted, but that Mr. Simon was speaking on certain economic matters and matters that related to the work outside the field of environment, and that Mr. Whitaker was speaking on the environmental matters for the administration. I will be glad to yield to my colleague equivalent time. Secretary SHULTZ. I don't think we should necessarily always speak with one voice. I think we should say what we think, what I think, what Mr. Simon thinks. And we'd better get this pipeline built, because we have a lot of energy up there and let's get it down here where we can use it. Mr. HOSMER. Mr. Secretary, that still leaves me a little cold. But changing the subject now to these geothermal areas in which you expressed an interest, we have had on the law books for 3 years now, after a long and arduous effort, laws to lease Federal lands for geothermal steam purposes. However, in the long 3 years since we've had it on the books they've been massaging it down in the Interior Department and your bureaucrats down there have not been able to come up with a device that will allow one single lease to be issued. That seems to me outrageous. I brought this up with the Budget Bureau 2 years and 9 months ago, and have been consistently after the Secretary of the Interior. Could you in any way, shape, or form help us unlock this resource by taking the bureaucrats in hand and putting them to work on some reasonable solution to issuing leases? Secretary SHULTZ. I think there are some good-sized projects in here; in fact Mr. DiBona will expand on that. Mr. DIBONA. I have talked to the people of Interior, both about this and about the shale oil leasing. Mr. Whitaker assures me that they are very close to finishing environmental impact statements and moving ahead. Their schedule now calls for completion of both this summer, so I think you will see some action on that in the near future. Mr. HOSMER. We have been getting that same answer for the last 2 or 3 years. We had the Secretary appear a couple of weeks ago. Maybe someday we'll get something done. Mr. UDALL. Mr. Roncalio. Mr. RONCALIO. I have no questions. Did Mr. Hosmer want more time? I will be glad to yield to him on that. Mr. HOSMER. Thank you very much. Mr. UDALL. Would you yield to me first on that question? Because it had to do with that one of the great strengths of the Jackson proposal. Every time we start to go into geothermal, which involved publie lands or oil shale, which involved public lands, there is a great hue |