Energy Interview With John Dancy of NBC News.

MR. DANCY. Mr. President, you've been meeting with oilmen this past week to get firsthand information from them on the shortages. I'd like to hear from you what we can expect in terms of supplies in June, July, and August.

THE PRESIDENT. I'm meeting with both the oil people and also consumers and other groups.

We have a permanent problem with oil supplies. We lost 200 million barrels of oil because of the problems in Iran. The last 2 weeks, oil imports have increased somewhat.

We believe that in the summer, we'll be better off than we were in May, which was perhaps our worst month, but even at best, in the summer, we're going to have no more oil or gasoline than we had a year ago. And demand for gasoline, because of more automobiles and a lack of conservation ethic or commitment, is going to cause some continued shortages.

We have relieved the spot shortages, I think, to some degree in California, primarily because of the small increase in supply and also because of strong conservation efforts made by the people of California.

MR. DANCY. Let's talk about that demand problem for just a moment. The latest NBC News-AP poll shows that 65 percent of the people in the country simply don't believe that there is a gasoline shortage. Is there a shortage in this country?

THE PRESIDENT. Yes. In April of 1977, more than 2 years ago, I proposed to the Congress a comprehensive energy policy for the first time in the history of our Nation. After 18 months of tough debate and argument, the Congress passed not one bit of legislation concerning oil. It's that difficult.

The Congress hears from the special interest groups, particularly the oil lobby. They very seldom hear from the American people. We have now come back to the Congress with a package that will work—slow, steady, carefully monitored decontrol of oil to get the Government out of it and to let the free enterprise system work, which will improve conservation, increase domestic exploration and production, and also open up an opportunity to decrease imports and dependence on foreign supplies. There will be some increase in the price of oil and gas inevitably, no matter what we do.

So, we're going to tax the oil companies very heavily—they can keep 29 cents out of every dollar—with a windfall profits tax. The windfall profits tax will go into an energy security fund. That fund will grow year by year because of increase in OPEC prices and because of increase in prices on domestic oil because of its shortage.

That energy reserve fund, or security fund, will be used to alleviate the heavy burden on the poor families of our country, to improve mass transit, which we need, and to provide a reservoir of money for research and development to develop other sources of energy—solar power, geothermal, gasification, liquefaction of coal.

The essence of it is this: If the American people will work together and accept the fact that we do have too much demand for limited supplies of energy, our country is strong enough to resolve the problem. We have the capability to resolve the problem. But we've got to face it frankly, and we've got to work together.

MR. DANCY. But people are skeptical about this. And one reason seems to be that the crisis appears and disappears mysteriously. One week there's a gasoline shortage in California. The Governor of California comes here and talks to you, and you say that, "Well, the situation is going to get better." And the next day Jody Powell says, "Well, it's not going to get all that much better." How can people know what to believe?

THE PRESIDENT. Sometimes people don't want to face an unpleasant fact. That's a characteristic of my own, and it's a characteristic of the American people as well.

May was a very bad month. In the latter part of last month, May, we did have an increase in imports of oil. The California people helped a great deal, because they recognized the problem. Perhaps at first they overreacted to it, but eventually they began to use more rapid transit, they began to share automobiles, they began to observe the 55-mile-per-hour speed limit. The odd-even days imposed by Governor Brown helped to some degree, and the problem was partially alleviated.

The problem is not going away. Even at the best of circumstances in June or July, we are still going to have less gasoline available in California than they had a year ago. So, it won't be good. It will be better than it was in May.

MR. DANCY. Mr. President, the poll also shows that 55 percent of the people don't believe that you or the Congress are doing a good job of managing this gasoline shortage. How do you restore, you and the Congress, restore some faith in your leadership?

THE PRESIDENT. That's a hard question to answer. I don't claim that the Government has done a good job with the energy problem; it hasn't. I would say last year, the Congress passed about 65 percent of the legislation that I had put forward 2 years ago on energy. We have not yet had the political courage or ability to deal with oil. We're not only the world's greatest consumer and waster of oil, we're also one of the world's largest producers of oil, and the oil lobby is extremely powerful in Washington. And it's been difficult to deal with this subject.

If the people ever get aroused enough to demand action, there's no doubt in my mind that the Congress will act. I think we have an excellent chance now to get the windfall profits tax passed, which will discourage waste, encourage production in America, and set up a reserve fund to explore other sources of energy. If this is done, it'll be a major step forward. And I think under those circumstances, the people will begin to see that the Government is doing its best.

We don't have a good record at all so far. But part of their need is for people to realize that we do indeed have a problem, that we can solve it if we work together, and that they will encourage the Congress to act.

MR. DANCY. Do you believe that the debate over energy has become so political, so highly emotional that when people vote against, say, the standby rationing plan, for example, they are, in effect, voting against you and against your leadership?

THE PRESIDENT. I don't interpret it as a personal attack on me or a rejection of leadership. It's an inability or unwillingness to deal with an unpleasant subject.

The problem is with us on a permanent basis. We're going to have to quit wasting oil; we're going to have to increase American production; we're going to have to decrease imports from foreign countries; we're going to have to shift toward more use of rapid transit; we're going to have to shift toward more research and development of other sources of energy to replace oil. Those are facts. You can't get away from them. And I think we've made a tremendous amount of progress in the last 2 years, because there's a growing awareness that we do indeed have a problem.

Now we're in a phase of trying to find an easy way out or trying to find a scapegoat to blame for the problem. But if we all work together, as I say, our country is strong enough and able enough to deal with this problem and not let it become a crisis.

MR. DANCY. You've been trying to build up supplies of home heating oil, I know.

THE PRESIDENT. Yes.

MR. DANCY. And one way that you have done that is the Government has offered the oil companies a $5-a-barrel subsidy in order to encourage them to go into the world market and buy that oil and import it so that we'll have enough heating oil in the wintertime. But our European Common Market allies now say that this is bad, because it is shifting the problem to them and it's raising the world price of heating oil. How do you answer this criticism?

THE PRESIDENT. We've had two shortages identified recently, in addition to the one that you've described. One was tractor fuel to get our crops planted. I think we successfully weathered that potential crisis period. We were planting as much as 5 million acres of crops per day, and we didn't have any serious spot shortages, because the Governors—Republicans and Democrats—the Agriculture Department, the Energy Department, and the White House worked together on it.

We have another potential shortage next winter, and that is with home heating oil. I have committed myself to build up reserve supplies of home heating oil so that our people, in the Northeast, particularly, won't go cold this winter.

We were having a problem because some refineries that make home heating oil, say, in the Caribbean, because of high prices in Europe, were shifting that oil to Europe when we should have had access to buy it for American homeowners.

So, we did try to impose and did impose a difference in the price to make us competitive in that market. The Europeans didn't like part of what we did, but I think it'll help us to alleviate that potential crisis.

MR. DANCY. Gasoline prices were the leading cause last month of the big jump in the cost of living in the country. Isn't there a great danger in all of that for your anti-inflation program?

THE PRESIDENT. Yes. I might point out that this increase in price that we've experienced has been under so-called Government controls, and the slow, carefully monitored, phased out Government controls, I think, will help to alleviate the problem over the long run. We'll still have a problem; it'll help with it.

Obviously, the price of energy is something that I cannot control. We can do our best to alleviate the problem.

We have been asked by the OPEC nations, who have been the cause of the great increase in prices, to cut back on waste and consumption. Our European allies look at Americans using twice as much oil per person as they do, with the same standard of living, and say, "Please cut back on waste and on the consumption of oil."

I'll be meeting with the leaders of six major nations, democratic nations, in Tokyo, the last of this month, and that will be one of the high, important points on the agenda. How can the consuming nations reduce our demand for imported oil in return for which the OPEC nations would agree to stabilize supply and also to stabilize prices? This has to be a multinational approach. It's one of the greatest responsibilities on my shoulders, as a leader of a great nation, and also on the shoulders of others who represent the major consuming nations.

We've not yet successfully addressed it. We have to be courageous and tenacious, we have to tell the people the truth, the people have to believe the truth, and we have to work together. There is no magic answer to a very difficult question.

MR. DANCY. Finally, the poll does show that there is a rising awareness of the energy problem. When people were asked about it, they now place it number two behind inflation as one of their concerns. I would assume that you find that encouraging.

THE PRESIDENT. Yes, I do find it encouraging, but also I think it illustrates vividly that the two are tied together. As long as we have excessive demand for a given level of supply of energy, it creates enormous increase in prices, and those prices for oil and for other sources of energy wind up increasing prices for almost every product that we use. So, successfully addressing the energy question will take us a great step down the road to successfully solving the chronic inflation problem.

MR. DANCY. Mr. President, thank you very much.

THE PRESIDENT. Thank you, John.