Energy Address to the Nation.
Our Nation's energy problem is very serious—and it's getting worse. We're wasting too much energy, we're buying far too much oil from foreign countries, and we are not producing enough oil, gas, or coal in the United States.
In order to control energy price, production, and distribution, the Federal bureaucracy and redtape have become so complicated, it is almost unbelievable. Energy prices are high, and they're going higher, no matter what we do.
The use of coal and solar energy, which are in plentiful supply, is lagging far behind our great potential. The recent accident at the Three Mile Island nuclear Power plant in Pennsylvania has demonstrated dramatically that we have other energy problems.
So, what can we do? We can solve these problems together'.
Federal Government price controls now hold down our own production, and they encourage waste and increasing dependence on foreign oil. Present law requires that these Federal Government controls on oil be removed by September 1981, and the law gives me the authority at the end of next month to carry out this decontrol process.
In order to minimize sudden economic shock, I've decided that phased decontrol of oil prices will begin on June 1 and continue at a fairly uniform rate over the next 28 months. The immediate effect of this action will be to increase production of oil and gas in our own country.
As Government controls end, prices will go up on oil which has already been discovered, and unless we tax the oil companies, they will reap huge and undeserved windfall profits. We must, therefore, impose a windfall profits tax on the oil companies to capture part of this money for the American people. This tax money will go into an energy security fund and will be used to protect low income families from energy price increases, to build a more efficient mass transportation system, and to put American genius to work solving our long-range energy problems.
Now, let me explain all of this in more detail. This is very important, and I hope all of you will listen carefully and then give me your cooperation and support.
The energy crisis is real. I said so in 1977, and I say it again tonight, almost exactly 2 years later. Time is running short.
While the situation at Three Mile Island is improving and we've taken every precaution to protect the people of the area, this nuclear accident obviously causes all of us concern. I've directed the establishment of an independent Presidential commission of experts to investigate the causes of this accident and to make recommendations on how we can improve the safety of nuclear powerplants. You deserve a full accounting, and you will get it.
Although this accident is of immediate concern, the fundamental cause of our Nation's energy crisis is petroleum—oil and gas.
We are dangerously dependent on uncertain and expensive sources of foreign oil. Since the 1973 embargo, oil production in the United States has actually dropped. Our imports have been growing. Just a few foreign countries control the amount of oil that's produced and the price that we must pay.
Just 10 years ago, we imported hardly any oil. Today, we buy about half the oil we use from foreign countries. We are by far the largest customer for OPEC oil, buying one-fourth of that foreign cartel's total production. This year, we Americans will pay out $50 billion for imported oil-about $650 for every household in the United States.
This growing dependence has left us dangerously exposed to sudden price rises and interruptions in supply. In 1973 and 1974, shipment of oil was embargoed, and the price quadrupled almost overnight. In the last few months, the upheaval in Iran again cut world supplies of oil, and the OPEC cartel prices leaped up again.
These shocks have sent us stern warnings about energy, but our Nation has not yet responded to these warnings. Our national strength is dangerously dependent on a thin line of oil tankers stretching half-way around the Earth, originating in the Middle East and around the Persian Gulf, one of the most unstable regions in the world.
The National Energy Plan, which I proposed in April 1977, was the first major effort to deal with all these problems. Then, for 18 long months, Congress debated, and special interests struggled for advantage. Some of my original proposals were enacted, and the benefits are already obvious. But proposals dealing with oil were not adopted, and we have now lost precious time that we could not afford.
With new legal authority, I am now able to act without delay.
There is no single answer. We must produce more. We must conserve more. And now we must join together in a great national effort to use American technology to give us energy security in the years ahead.
The most effective action we can take to encourage both conservation and production here at home is to stop rewarding those who import foreign oil and to stop encouraging waste by holding the price of American oil down far below its replacement or its true value.
This is a painful step, and I'll give it to you straight: Each of us will have to use less oil and pay more for it. But this is a necessary step, and I want you to understand it fully.
Excessive Federal Government controls must end. Phased decontrol will gradually increase the price of petroleum products. In the short run, it will add a small amount to our rate of inflation, but that is the cost we must pay to reduce our dependence on the foreign oil cartel.
In the longer run, the actions I'm announcing tonight will help us to fight inflation. Other nations will join and support us as we cut down our use of oil and increase our own production of energy. The foreign oil cartel will then find it harder to raise their prices. The dollar will grow stronger, and the prices we pay for many imported goods will be less. This will strengthen our economy and reduce inflation in future years.
But decontrol could also further inflate the already enormous profits of oil companies. As I've said, part of this excessive new profit will be totally unearned—what is called a "windfall" profit. That's why we must have a new windfall profits tax to recover the unearned billions of dollars and to ensure that you, the American people, are treated fairly.
I want to emphasize that this windfall profits tax is not a tax on the American people. It is purely and simply a tax on the new profits of the oil producers which they will receive but not earn.
Even with the windfall profits tax in place, our oil producers will get substantial new income—enough to provide plenty of incentive for increased domestic production. I will demand that they use their new income to develop energy for America, and not to buy such things as department stores and hotels, as some have done in the past.
Congressional leaders who share my belief that a windfall profits tax is necessary warn me that we face two very real threats to these proposals.
First, as surely as the Sun will rise tomorrow, the oil companies can be expected to fight to keep the profits which they have not earned. Unless you speak out, they will have more influence on the Congress than you do.
Second, the inevitable scrambling by interest groups for a larger share of these revenues can leave the Congress divided, bogged down, and, therefore, unable to act. Unless your voice is heard, once again the selfishness of a few will block action which is badly needed to help our entire Nation.
I will fight to get this tax passed, to establish the energy security fund, and to meet our future energy needs. And tonight I appeal to you for your support. Please let your Senators and Representatives in Congress know that you support the windfall profits tax and that you do not want to see the need to produce more energy be turned into an excuse to cheat the public and to damage our country.
We can meet our energy challenge, but I am not going to put an undue burden on people who can hardly make ends meet as it is. Part of the proceeds of the windfall profits tax will go to help those among us who will be hurt most by rising energy prices.
I will also ask every State to pass laws protecting Americans from arbitrary cutoffs of heat for their homes. We will also channel the tens of millions of dollars we are winning in lawsuits against oil companies for price-gouging into further energy assistance for lower income citizens. And for the sake of fairness, I will ask Congress to close foreign tax credit loopholes that now give unnecessary benefits to the major oil companies.
In order to ease short-run inflationary pressures for the time being, I will see that action is taken to lift existing fees and duties on imported crude oil and its products.
Besides removing Government controls on oil to encourage production, we must take other actions to increase supply and to make the most of our own domestic fuel reserves.
I have today signed an Executive order that will set strict deadlines for cutting through Federal redtape on important new energy projects, such as pipelines to serve the northern part of our country, seaports, and also refineries.
We will move to eliminate bureaucratic barriers to construction of the pending pipeline from California to Texas, which has been stuck in a quagmire of more than 700 State and local permit applications for the last 14 months.
We will step up exploration and production of oil and gas on Federal lands.
This week, my personal representatives began negotiations in Mexico City which we hope will lead to an agreement on sales of Mexican natural gas to the United States at a price that is fair to both countries.
The three Federal agencies which regulate the coal industry will report to me within 60 days on ways to encourage greater use of coal, our most abundant fuel resource. And I will soon announce significant measures to increase and to accelerate the use of solar energy.
In addition to producing more energy, we must conserve more energy. Conservation is our cheapest and cleanest energy source. It helps to control inflation, and every barrel of oil we save is a barrel we don't have to import.
We have recruited 19 other consuming nations to join us in pledging to reduce expected oil consumption by 5 percent. To help accomplish this conservation goal in our country, I've asked Congress to grant me standby authority in four areas, one of which, for example, is to require that thermostats in all commercial buildings be set no higher than 65 degrees in winter and no lower than 80 degrees in summer. As soon as I get that authority, I will use it.
Steps will be taken to eliminate free parking for Government employees in order to reduce the waste of energy, particularly gasoline, in commuting to and from work.
We will use tax credits to encourage the use of wood-burning stoves.
I'm asking all citizens to honor, and all States to enforce, the 55-mile-per-hour speed limit. This is one of the most effective ways to save fuel.
I will set targets for our 50 States to reduce gasoline consumption and ask each State to meet its target. The timetable will be strict. If States fail to meet their targets when gasoline shortages exist, then ! will order mandatory steps to achieve the needed savings, including the weekend closing of service stations.
If these savings are not made, we will almost certainly have gasoline shortages as early as this summer.
In addition, I ask each of you to take an important action on behalf of our Nation. I ask you to drive 15 miles a week fewer than you do now. One way to do this is not to drive your own car to work every day. At least once a week take the bus, go by carpool or, if you work close enough to home, walk.
This action can make a significant difference for our country. For each day that we do this, we can save hundreds of thousands of barrels of oil. This will help to hold down the prices of fuel, and you obviously will save money you otherwise would have spent on gasoline.
As needed, on a temporary basis, I may extend certain environmental deadlines and make regulatory changes to help avoid serious shortages of gasoline.
Unless utilities do so voluntarily, they may be ordered to run non-oil-burning generating plants at full capacity and then to transmit the extra power to areas where oil burners can be phased out.
So far, I have spoken about producing more energy and conserving more energy. Now, in the next few minutes, I would like to talk about the third and the most promising part of our 'battle for energy security—shifting to more abundant sources of energy by the development and the use of American technology.
We're already investing some $3 1/2 billion each year to develop the new energy supplies we will need for the future. But we must step up this effort. Just as we harnessed American dedication and brainpower to put men on the Moon, we will make the same kind of massive, purposeful effort to achieve the goal of national energy security through technology. We must begin now so that we can regain control over our energy future.
That's why the energy security fund-with the tax on windfall oil profits that will pay for it—is so vitally important.
That's why every vote in Congress for this tax and for this fund will 'be a vote for America's future, and every vote against it will be a vote for excessive oil company profits and for reliance on the whims of the foreign oil cartel.
The energy security fund will let us pursue a sound strategy of energy research and development.
In years to come, we can then design automobiles, buildings, appliances, and engines that serve us better and use less energy.
We can improve mass transit and make our entire transportation system cleaner, faster, and more efficient. We can broaden the use of our huge coal deposits by turning coal into clean gas, liquid, and solid fuels.
We can learn how to use our immense reserves of oil shale.
From the products of our forests and croplands, we can produce more gasohol, already being used to replace gasoline in several Midwestern States. We can promote the use of small-scale hydroelectric plants, powered by the flow of ordinary streams, without the need for big dams.
And we can turn increasingly toward the ultimate source of all our energy-the Sun.
There are, of course, already solar techniques that are economical right now. With existing tax credits and with our new energy security fund, we can encourage even more rapid development and more use of solar power.
In the future, we will use solar energy in many other ways, including the direct conversion of sunlight into electricity. We already use this method for limited purposes, such as in our space program, but scientific discoveries will be needed to make it more useful directly in our homes and factories.
The energy security fund, derived from the windfall profits tax, will pay for these exciting new energy programs.
All of these steps can be part of a wider international effort. Other nations are eager to cooperate.
The actions and plans that I have announced tonight will move us away from imported oil and toward a future of real energy security.
These actions will give us a better life. These are necessary steps, because our country faces a serious petroleum problem and a broader energy challenge.
The future of the country we love is at stake. We Americans have met equal challenges in the past. Our Nation has endured and prospered. Ours is a great country, and we have bountiful resources and technological genius.
We must recognize the urgency of this challenge -and we must work together to meet it. Then we, too, will endure. We, too, will prosper. We, too, will triumph.
Thank you, and good night.
Note: The President spoke at 9 p.m. from the Oval Office at the White House. His remarks were broadcast live on radio and television.
Jimmy Carter, Energy Address to the Nation. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/249678