There is finally a solution to the American public's problem of being reluctant to believe what the oil companies say about the energy crisis.
The public can own an oil company of its very own.
Yes, the Energy Co. of America could be the solution everyone has been waiting for. Although it would not mean nationalizing the oil industry, it would mean new competition for the Exxons and Mobils of the nation.
Few people have heard of them, but three bills pending in Congress would authorize creation of a national energy company to develop and produce energy from sources found on federal lands.
The bills, S.580 (introduced by Sen. Adlai Stevenson [D-Ill.], H.R.3885 (introduced by Rep. Joseph Minish [D.N.J.] and H.R.4649 (introduced by Eugene Atkinson [D-Penn.] call for creation of an Energy Co. of America (ECA) that Stevenson said "would help tide us over until fusion, solar power, coal and other alternative sources can make a significant contribution to the nation's energy supply."
The idea of a government-owned energy company is now new. Ten years ago, Lee White, proposed such an entity in his final press conference as a Federal Power Commission member. Nineteen sixty-eight was the first year the country used more natural gas than it produced, White pointed out.
This year's proposals are not very different from several others that have popped up in the decade since White's trial balloon went up - and came down.
The ECA would have four specific functions:
It would negotiate with foreign governments for the purchase of all crude oil imported into the U.S., in the hopes that one entity would drive a tougher bargain than each oil company presently does negotiating only for itself.
It would enter into joint ventures with foreign governments for exploration, development and production of various energy sources. This prsumably would help spur development of energy sources in nations that will not deal with private companies such as those in the U.S.
It would explore for, inventory and develop domestic oil and natural gas resources in the public domain. Ost of the nation's proven yet undiscovered energy reserves are on public lands. Rather than the government always auctioning tham off to private companies as is now the case, the ECA itself could develop the resources the government already owns.
It would be authorized to mine and produce coal and uranium and toreprocess nuclear fuels. This portion of the proposed legislation has drawn the most criticism from others who generally favor the ECA concept. Alternative proposals would substitute synthetic fuel development for nuclear activity.
The ECA would be "an alternative to regulation and nationalization," said Stevenson. "It would supplement, not supplant, private enterprise."
"The arguments for the federal energy company are ascompelling today as they have ever been," White, now a Washington attorney specializing in energy matters, said in an interview last week. "This country has enormous leverage in its purchasing power, yet that is not utilized in any fashion."
In fact, White said, the U.S. is "the only major industrialized country that leaves its oil and gas exploring, producing and distributing to private industry exclusively."
The main problem with the ECA is that is perceived as "a first step toward nationalization of the oil industry, even though those who promote it don't see it that way," Whtie said.
"What it does do id provide a useful technique for measuring what energy companies do, and develops a cadre of personnel who understand who understand what the information from those companies mean," he added.
The Consumer Federation of America's director, Kathleen O'Reilly, agrees with White on that score. "The benefit of such a corporation would be the generation of accurate data on the real cost of production," O'Reilly said.
And consumer advocate Ralph Nader takes the argument for ECA's step futher. "Sure, it will promote competition, produce credible information about energy reserves and costs and prevent the inflationary impact of manipulated shortages," he said. "But it will also provide for national security contingencies that we don't now have."
White believes that the ECA actually would "spur the oil industry on to do more exploration and development of resources." He contends that the oil companies will be threatened by the competition from the government and take the attitute that if they don't develop certain available resources, the government will.
And finally, there are people in the oil industry who would secretly welcome the ECA although they will not say so publicly, according to White. "Some of those people would like to share some of the criticism they have been getting lately with the government," White said.
Another argument in favor of the ECA comes from David Freeman, the controversial head of the Tennessee Valley Authority, the government-owned electricity corporation that many say would provide the model for the ECA.
"I think there is an overwhelming case for a federal energy corporation," Freeman said in an interview from Knoxville, Tenn. "If we created such a company and gave it the powers discussed, it most likely wouldn't have to invest a single dollar because it would spur the private companies into investing much more."
Oil companies have not built enough refineries because they didn't feel they would make an adequate profit on those refineries, Freeman contends. "And it is important to realize that they have the right to invest where they want to invest.Their stockholders come before their consumers, which is something the consumers of this country are now finding out the hard way."
Freeman advances the argument for the ECA while at the same time calling for energy companies to have the same responsibilities we give to utilities.
"What is missing in this debate over oil is raising the question of who is reponsible for oil supply. Utilities have a responsibility to make sure the lights go on," he said. "Oil companies have no such responsibility, yet they are dealing with a product as important as electricity."
If we are not willing to force this responsibility to supply energy on the oil companies, the federal government should have a national oil company that would serve as "a supplier of last resort," Freeman said.
"I feel that we ought to have a system in which the oil companies would say what they will be coming up with in the way of supplies, and if that is not adequate for our projected needs, we should have a government organization to fill the gap," he added.
The oil industry predictably opposes the ECA. "We've reviewed all of the arguments for the creation of a national energy company, and none of them stand the test of scrutiny," said Charles DiBona, president of the American Petroleum Institute.
"The principal reason given for it was that it provided a yardstick to assess private petroleum firm performance, yet the basic characteristics of the national company would have precluded its use in any such activity," he said. "It would, for example, have unique advantages that no private firm would have: the ability to borrow at low interest rates, to pay reduced taxes and others. It is ludicrous to think of it as an effective yardstick. You can have good years and bad years in this business, and you couldn't tell much by comparing one public firm with the 200 private firms that make up this industry."
Nader disputes this, pointing out that the oil industry already receives many subsidies, and the government corporation does not have to be structured exactly like a private company for it to have a better idea of what the private company's cost of operation is, or how well it is doing.
DiBona also claims that the ECA would not result in increased competition in the private sector. "The force of the competition argument is equally weak," he said. "There is competition in this industry on the basis of rate of return, concentration and entry. The petroleum industry is highly competitive."
The high price of oil will not change with the creation of a national oil company, DiBona added. "The problem is with the purchase of oil, and therefore OPEC" (the Organization of Petroleum Exporting Countries), he said. "Pricing has little to do with who is buying oil," the price is set by the seller, he added.
"The problem is that this country depends too much on foreign oil," he said. "We have government policies which still encourage and subsidize the purchase of foreign oil. Until we encourage domestic production and discourage imports, we are making no difference."
DiBona believes also that a public oil company would be less efficient than its private counterparts, citing Federal Energy Administration figures that show poor performance on the part of public energy companies around the world.
"Private oil companies produces 44.2 barrels of crude oil per day per employe, according to the FEA figures," said DiBona. "Government-owned companies average 6.6 barrels per day per employe." He said the figures on how much oil is refined give the same story. Private international firms refine some 36.4 barrels per day per employe, while government-owned refiners average 14.1 barrels, he said.
Proponents of the ECA point out, however, that the TVA is an extremely efficient operation that compares favorably with privately run utilities.
And the fact remains that there is little confidence left in the domestic private oil industry. People tend to put that industry on the same side as the OPEC countries. "It is high time that the stranglehold of the OPEC nations and the multinational oil companies be broken," said Sen. Howard Metzenbaum (D-Ohio). He is calling for the establishment of a national corporation that would at least make all imported oil purchases and then distrbute that oil to the domestic companies.
Claiming the oil industry and the oil-producing countries are "in partner-ship," he said recently, "We cannot afford to allow the oil companies to continues to act against this nation's interests."
In a letter sent to President Carter earlier last week, Metzenbaum and Sen. Mark Hatfield (R-Ore.) reminded Carter that under the Emergency Petroleum Allocation Act of 1973 he had the authority to "exercise the exclusive right to import and purchase all or any part of the crude oil, residual fuel oil and refined petroleum products of foreign origin for resale in the United States."
And for the final word on the subject comes from Felix Rohatyn, the banker who helped keep New York City afloat during its financial crisis as the head of the Municipal Assistance Corp. In a recent article calling for a public energy corporation to serve the northeast section of the U.S., Rohatyn wrote:
"This nation's energy program lacks even the appearance of innovation. The energy corporation . . . is obviously not the total solution to the problem. But it could be a most useful part of a series of solutions and provide an invaluable proving ground for the public and private cooperation so desperately needed to move this country ahead." CAPTION: Illustration, no caption, By Robin Jareaux - The Washington Post