Mr. Chairman, in the remainder of my testimony I will focus on what I understand to be the principal issue before this subcommittee: whether the current situation is sufficiently serious that we should reimpose price and allocation controls on middle distillates. I do not believe we should take such action at this time. Price and allocation controls can be effective as a last resort during a severe shortage to prevent price gouging or inequitable distribution of supply. We are not afraid to adopt this last resort if and when the circumstances warrant. Price and allocation controls do nothing to increase supplies or reduce demand, however, and can in fact be counterproductive to achieving such objectives. A more prudent course is to monitor continuously the price and supply situation as it unfolds. If we should reach the point where it is apparent that we will not have adequate supplies for the winter, serious consideration of the reimposition of controls would be in order. In the meantime, both our regulatory and nonregulatory efforts should be focused on increasing supplies of distillates and reducing demand. The best protection against both exorbitant prices and cold homes this winter is not price and allocation controls but an adequate supply of heating oil going into the winter. We are still capable of meeting our distillate targets, and we should be directing our efforts at this time at that objective. Mr. Chairman, that concludes my prepared statement. If you or the subcommittee members have any questions, my colleagues and I will attempt to answer them. I particularly refer you to the charts attached to the back of my statement which shows as best we can estimate data various components that go into the delivery price of middle distillate. I think that they are a very significant addition to our understanding of this problem. [The following charts were attached to Mr. O'Leary's statement:] |