(3 of 9)
This would stimulate more drilling, but it would also result in what critics call "windfall profits" for industry.
Indeed, because all the energy companies would pass along higher costs to the consumer, critics have charged that the energy crisis could conceivably serve, in Freeman's words, "as a massive exercise in picking the pocket of the American consumer to the tune of billions of dollars a year." No one is suggesting a conspiracy to raise prices; the literally hundreds of electric utilities, gas, coal and oil companies that all seek competitive advantage over one another could not effectively coordinate such a campaign. But the critics fear that consumers might be faced with excessive price boosts unless the Government intervenes.
In his special energy message to Congress last month, President Nixon tried to steer a middle course while easing the shortages. He acted to increase supplies of foreign oil by abolishing the rigid import quota system and replacing it with a flexible system of tariffs on imported oil. To spur domestic output, Nixon ordered the Interior Department to triple by 1979 the amount of federal acreage leased to oil and gas companies. Moreover, the President asked Congress to drop price controls on new finds of natural gas, to extend investment tax credits on both dry and producing wells and to streamline time-consuming administrative procedures designed to protect the environment.
Although Nixon pledged to safeguard the environment in all these measures, his lack of emphasis on cutting demand for energy provoked a storm of criticism. So did his apparent unwillingness to fund accelerated federal research programs to develop new energy sources for the future. But Nixon left no doubt about another point: "We must face up to the possibility of occasional energy shortages and some increase in energy prices."
An End to Cheap Energy
At present, despite the fact that the U.S., with only 6% of the world's population, consumes almost one-third of its total energy output, only about 4% of the gross national product is required to pay the bill. Nixon has proposed that energy prices "reflect their true cost" —which increasingly includes ransom-sized tax increases by the oil barons of the Middle East, environmental cleanup expenditures and other indirect expenses that U.S. consumers are hardly accustomed to having tacked onto their electric bills or service-station tabs. "The days of cheap energy are definitely behind us," Robert Dunlop, chairman of Sun Oil Co., told the Nassau conference.