79-12-B3
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Administration Report Clears Oil Companies[edit]
Transcript[edit]While American citizens enjoy the legal right to be considered innocent until proved guilty, apparently the same does not hold for the oil companies. When the first spot shortages of gasoline appeared in California in May, many angry motorists assumed that the oil companies were deliberately withholding supplies in order to force prices higher. President Carter ordered two in-house investigations, one by the Department of Energy and one by the Justice Department, to determine whether the oil companies have entered into a conspiracy to manipulate prices. To many Americans, the oil companies were guilty until proved innocent. Well, now we may have that proof. The Washington Post reported recently that the Justice Department has told the White House that it has turned up no evidence of anti-trust violations. Of greater significance is the private Energy Department study which expands the scope of the investigation beyond the narrow legal concerns of Justice. The report was made public by the White House only after the Washington Post obtained a copy and printed excerpts. The report clears the oil industry of hoarding supplies to create an artificial shortage. "DOE has not found evidence of hoarding of oil by refiners, but some refiners have been conservative in their use of stocks. But this conservatism appears to be due in large part to their pessimistic views about future availability of oil imports." Well, then what did cause the energy crunch? The report confirms that U.S. companies were able to import 200,000 fewer barrels a day during this period than during normal times. They might have compensated for some of this shortage by purchasing higher priced oil on the spot market, but the federal government discouraged this practice. Meanwhile, domestic production of crude oil was running more than 200,000 barrels a day under the previous year. The other major factor contributing to our oil crunch, the Energy Department's report says, is the government's own system of price controls and allocation program. The report offers a laundry list of evidence which demonstrates the various ways which the allocation system has exaggerated, and, in some cases, caused gasoline and heating oil shortages. The fundamental flow of the allocation program is that its provisions cannot be realized fast enough to take into account sudden changes in the market. The free marketplace can do a much better job than the government in allocating gasoline, the report infers. "Any allocation system is likely to be ineffective in responding quickly to continuing changes in demand." The reports of the Energy and Justice Departments should silence those who have used the oil companies as a scapegoat for our energy problems. Those who are not silenced will be flying in the face of an increasing body of facts and research. As more evidence emerges, it is becoming increasingly evident that the Energy Department's allocation program is creating the very problems it was created to solve. This is Ronald Reagan. Thanks for listening. |
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