AFTER SIX MONTHS as President Carter's energy czar, James Rodney Schlesinger is concerned about a number of things: America's continuing dependence on oil imports; rising gasoline consumption; congressional insistence on building a plutonium breeder reactor. Last week, in a taped interview with Post staff writer Thomas O'Toole, Schlesinger discussed these concerns:
Reports of at least a three-year oil glut due to increase production in the North Sea and the North Slope have reached the press lately. What is the White House view of this coming glut and what does it do to the President's attempt to conserve fuel oils and gasoline?
Of course, "glut" appears to be the journalistic headline of the week.We tend to forget that seven lean years will follow seven fat years. Indeed, it will be only two or three fat years. There is a reprieve in a sense because of the introduction of North Sea and North Slope oil. But this reprieve was not unexpected. Indeed, if one reads the CIA report which the President mentioned during the week of April 20, it was quite clearly indicated that the arrival of North Sea and North Slope oil would mean that there would be no expansion of sales by the OPEC nations up until about 1980.
The United States in recent years has moved from virtually no oil imports to a position earlier this year in which we were importing 50 per cent of our oil. East of the Mississippi, almost all the oil being refined is foreign. Even if we are successful in our plan, we will reduce oil coming into the United States to about 6 million barrels a day - still 33 per cent of the total. In no way can one suggest that that is an oil glut.
What we have here, I think, is a case in which the mortgage is falling due and some people leap to the conclusion that, because Aunt Tillie has died and left us a small estate, somehow or other that means that the mortgage will not fall due. It will, in the 1980s, and it is the purpose of the President's plan to avoid a painful trauma for the nation at that point.
You're calling it a reprieve. How much of a reprieve do we have from the North Slope and how much of a reprieve does the world have from the North Sea?
By past rates of growth, North Slope oil will provide us with the equivalent of about a year and a half, possibly two years' growth. North Sea oil will do about the same thing in relation to total world consumption, and that is why we have this brief respite that I referred to. The point that one must keep in mind is that the entire pool at Prudhoe Bay represents half of one year's world consumption. It is the largest find in recent American history and yet it represents half a year's world consumption. It represents a year and a half's consumption by the United States. That is all that North Slope will bring in, despite that vast energies that have been invested in this particular project.
We've got to recognize that, even at the current rate of world consumption, without any further growth, to maintain worldwide reserves the world would have to discover a new Kuwait or a new Iran every three years, and there's just no prospect of that. We must face the fact that we have a dwindling asset in the world oil supply, and I fear that discussions of local, transitory situations referred to as "gluts" are likely to mislead the American people with regard to this fundamental reality.
How do you deal with American attitudes during this period when Alaskan oil and the North Sea oil become available, when you'e trying to hold down gasoline consumption, talking about rationing, talking about a gasoline tax?
It is hard to convey the magnitude of the problem as long as there is sufficient oil in the short run and as long as there are no gasoline lines. But world oil production is not going to expand more than 25 per cent or 30 per cent above the present level, up to 80 million barrels a day, and it therefore is not capable of accommodating continued increases in demand. What are we going to face is the fact that the wells are going to rund dry one of these days, and we must be able to understand through vision, through foresight, what that problem will be before the wells run dry.
There is renewed talk of gasoline rationing. And in view of the fact that you haven't been able to get a gasoline tax in the Congress, can you tell us what alternate strategies the White House might have if gasoline consumption does not go down?
The rationing that was discussed in the press the other day is a standby rationing scheme to deal with a growing American vulnerability to the possibility of interruption of supply. In earlier years, when the United States supplied all of its own needs, shut-in capacity in the United States was sufficiently large that we could also supply European needs. Today we have become almost 50 per cent dependent on external sources of supply. We must be in a position, therefore, dramatically to curtain usage in the event of some supply interruption from whatever quarter. The President has directed me to develop a rationing scheme that will, on a contingency basis, cut consumtpion in the United States by 25 per cent under emergency conditions. That is necessary to reduce our vulnerabilities.
In terms of our long-term objective of curtailing the growth of gasoline consumption if there is no stand-by gasoline tax, I think that the response will depend upon a variety of measures. It will depend in part in conveying to the American people the magnitude of the crisis so that they will take voluntary measures, cutting out that unnecesary trip, establishing widespread use of carpooling and vanpooling, which we have been reluctant to do. Other measures that might have to be employed are intermittent shutdown of gasoline stations, such as the Sunday shutdown. These will cut gasoline consumption marginally, each of them, and we will have to survey these possibilities in the event that we do not get the stand-by gasoline tax.
The most visible part of the gasoline cutting program seems to be the fuel-efficient engine and the reduction in weight of automobiles. How much can that cut into gasoline usage?
We can, through the introduction of more fuel-efficient cars, improve mileage between now and 1985 by 50 per cent. We expect to see the use of the automobile continue to increase, so that by 1985 we may have, say, 30 per cent more driving and perhaps 20 per cent less gasoline usage. The typical car in the fleet at the present time gets 14 miles per gallon. By 1985, the typical car in the fleet should be at least 20 miles per gallon, almost a 50 per cent increase.
There are experts who see the United States running out of natural gas quicker than it might be running out of oil.
No, I think that the real problem for the United States continues to be oil. Natural gas is a less pressing problem for us in terms of prospective long-run supplies, and indeed, if one introduces the possibility of unconventional sources of natural gas such as Devonia shale or geopressurized brine, one can hold out some small hopes for relative optimism. There are probably 600 trillion cubic feet of natural gas to be found in the United States, perhaps more, and so we are hopeful that we can maintain gas production close to the present level of 20 trillion cubic feet a year. The problem of natural gas is that that market has become so dramatically out of balance. We have about 30 trillion cubic feet of demand each year to be satisfied by 20 trillion cubic feet of supply, and it is very difficult to supplement natural gas supplies from overseas.
Coal, our most abundant fuel reverse, is a key ingredient in the President's program to achieve energy stability. But it continues to be difficult to mine and difficult to burn. How will the President achieve his goal of 400 million tons more of coal?
It's more than 400 million tons of coal. The President said that we should increase production by at least two-thirds. And we must have the coal available as industrial use of coal expands. Watching supply in coal will require careful and continuous work. But coal to this point has not been supply-limited, it has been demand-limited. At the moment, we probably have some excess capacity of 100 million tons a year, without further development.
What about burning it, what about cleaning up the air? Will we turn our backs on the Clean Air Act and the events of the last seven years?
No, I think that the American people are prepared to pay a higher price for energy crisis as an opportunity to roll back all the protections of the environmental statutes and to begin to burn raw coal again. This seems to me to be going to the wrong direction. It would mean, as we move towards the burning of a billion tons of a coal a year, and ultimately 2 billion tons, that we would have grave problems in keeping the country a satisfactory environment. There are high costs of dirty air. We do not want to turn the country into something equivalent to Pittsburgh in the 1930s.
The President has endorsed nuclear energy as one of the future sources of electricity for the U.S. But the U.S. utility industry is not ordering any nuclear power plants, claiming they cost too much and take too long to build. What's the future for nuclear energy?
There has been a considerable slowdown in the growth of electrical power demand and many utilities therefore have deliberately stretched out construction. That kind of problem should not be blamed on the licensing process. Nonetheless, a nuclear plant does take about 10 years to build - about three years in licensing, a rather uncertain process, about seven years in construction - and we can and should do far better than that. The President has indicated that he will move legislation to the Hill that will simplify the licensing process. And, given the magnitude of the nation's energy problems, I believe that both industry and the unions will be prepared to move toward more efficient less time-consuming construction processes.
The President supports the light water nuclear reactor but has rejected the breeder and the recycling of plutonium, a decision that certain members of Congress say they will correct. What would you recommend to the President if Congress approves the Clinch River breeder reactor?
The government's costs in that plant have escalated eightfold. At the same time, the benefits have receded. The only thing that the Clinch River plant is likely to demonstrate is that, if you can produce electric power, you can sell it commercially. I doubt that it's worth $2 billion of government funds to demonstrate that simple point. Just on simple cost-benefit calculations, it would seem to be a waste of government funds.
Coming to the other side of the issue, plutonium could potentially provide a fissionable material for weapons around the world. The President is determined to take the lead in opposing the spread of nuclear weapons and nuclear weapons capabilities.Before we plunge into the plutonium economy, we should have explored all possible alternatives such as solar-electric production of power, fusion. If we can avoid long-term reliance on the nuclear fission option, we probably should. If we go in that direction, we should have the techniques in hand for the most meticulous control.
The President must be accorded the appropriate latitude for leadership in foreign policy, and if the Congress were to pass a bill which projects proceeding with the Clinch River plant, I think very careful consideration would have to be given to a veto.
If the energy crunch is as severe as the President painted it in his speech when he delivered this plan, why does the plan ask so little of us? Why, for instance, aren't you asking for really strick mandatory conservation?
There is a mixture here of mandatory measures, such as those in terms of automobile efficiency, and price measures that provide an incentive for people to change their habits. The government is not well-equipped to provide direct regulation for decisions that not only should but in the long run will be left to countless individuals and corporations. We think that we can get the appropriate response through basically a voluntary system, using the price signals.
We have given incentives for people to have proper insulation of their own homes. We have indicated that, unless the response to these incentives is appropriate, there will be mandatory measures further down the line. But, for the moment, the rate of insulation is more than adequate to absorb for all that producers of insulating materials can produce. With regard to conservation measures in fuel, we have established a goal. It may be necessary, as we indicated earlier, to reinforce the existing proposals with additional proposals in order to achive the reduction in demands.
But let me say more generally that the President has called for "the moral equivalent of war." This has been misunderstood to imply that the nation needs to go on war footing, or adopt wartime measures. We do not need and should not adopt such measures. Those measures are the type that will deal with an immediate set of circumstances, rather than a continual and chronic problem. Rationing systems, for example, tend to break down if used over an extended period of time, leading to the creation of black markets and of corruption. So rationing systems over an extended period can only be a last resort. What "the moral equivalent of war" implies is to find the psychological substitute for the galvanizing effect of wartime so that we achieve national cohesion in the sense of common purpose, and if we can achieve that in response to the President's call, we shall be able to deal with the nation's energy problem.