79-02-A2
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OPEC[edit]
Transcript[edit]The OPEC oil producers have told us the price of oil is going up and our energy agency has informed us that will call for an increase at the gasoline pump. But before we call them greedy monsters, guilty of adding to inflation, let me play the devil's advocate. OPEC oil is priced in American dollars. I n the last few years our dollar has been going down in value relative to more stable currencies such as the West German mark and the Japanese yen. And, guess what? The actual price of oil for Germany and Japan has been going down. It's pretty obvious that if $14 will buy a barrel of oil, but 14 American dollars now are only equal to a lesser number of marks or yen, then the Germans and Japanese are getting their oil at a lower price. The OPEC nations have to "up" the number of dollars they get just to stay even. And it is we who are responsible for reducing the value of the dollar. That is only a small part of our foolishness. With some plain common sense we could break up the OPEC monopoly. Item number 1 -- there are vast quantities of natural gas available in the U.S. if our own government regulations did not stand in the way of it being produced. This untapped natural gas would break the back of the OPEC cartel. A deplorable tragedy was preventable and unnecessary in the bitter winter of 1976-77. There was cold and discomfort in homes, but even worse, was the loss of jobs, production and income as industry had to shut down for lack of fuel. We had been warned in 1974 that we were in danger of running out of natural gas. Part of the problem is that deeper wells must be drilled. It costs $3 million to drill a 20,000 foot well in Texas. Off-shore wells can be drilled for $1 million, but it takes several years to get them into production. These harder-to-get-at gas deposits cannot be delivered to the pipe lines for the price the government allows them to charge. So that gas is neither drilled nor delivered. You can't sell a pencil for a nickel if it costs a dime to make it. Right now in my own state -- California -- a shortage of natural gas exists, and it's getting worse. If we substitute coal or oil we aggravate an already serious smog problem. It is estimated that California could lose 800,000 jobs by 1981 because of reduced gas supplies. We are currently buying liquified natural gas from Indonesia for $3.50 per 1,000 cubic feet. A study by the government's own Energy, Research & Development Agency tells us that at $3.25 and below, there is enough natural gas available for hundreds of years. This study was done in 1974 and nothing has been done about it. The magic word is "decontrol" of the well head price. It would take about five years lead time to get much of this production under way and we'll have shortages for those five years. This wouldn't have been true if we'd gotten under way in 1974. But decontrol now and production of the gas available in our own land would literally break up the OPEC cartel. What are we waiting for? This is Ronald Reagan. Thanks for listening. |
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