Statement by Principal Deputy Press Secretary Speakes on Natural Domestic Energy Resources

June 6, 1986

The President believes the recent decline in oil prices will improve economic growth, reduce the cost of energy to consumers, and contribute to maintaining the current low rate of inflation. The decline in oil prices is an excellent example of the benefits of relying on the principles of a free market. At the same time, the President is intent upon maintaining our national energy security and ensuring that the United States does not become unduly dependent upon unreliable sources of oil.

To ensure the preservation of our national energy assets and protect our energy independence, the President has proposed a number of actions, all consistent with the free market. Today the President reaffirms his support for:

-- Repealing the windfall profits tax;

-- Enacting comprehensive natural gas legislation, including repealing several provisions of the Fuel Use Act; and,

-- Preserving the current tax treatment of the depletion allowance and intangible drilling cost provisions, as contained in the Senate Finance Committee version of the tax reform bill.

In addition, the administration will pursue several new initiatives to preserve the viability of marginally economic production wells in the United States and reduce regulatory barriers to the operation and development of natural domestic energy resources.

Interior Department

The Secretary of the Interior will:

-- Expand upon his action of April 17 by suspending production requirements on all economically marginal Federal oil and gas leases;

-- Initiate a review of the regulations, procedures, and policies implementing the Federal Oil and Gas Royalty Management Act to allow for more efficient, cost-effective implementation of the act;

-- Promote regulatory and program initiatives in historic preservation that support the economically efficient development and production of domestic petroleum resources;

-- Extend oil and gas lease terms whenever activity on the lease is not permitted for a period exceeding 6 months as a result of Federal actions beyond lessees' control.

Secretary Hodel also will fully consider every opportunity to strengthen our domestic petroleum capability when reviewing: (1) policies and procedures governing the availability of Federal lands both onshore and offshore and (2) leasing and operating regulations and procedures of the Bureau of Land Management and the Minerals Management Service.

Commerce Department

The Secretary of Commerce will immediately begin a review of State coastal zone management programs to advance the national interest in energy security. This review will include all aspects of energy exploration, development, and production. Secretary Baldrige will also use his regulatory authority to minimize the overlap in judicial and administrative jurisdiction over coastal zone practices. Finally, he will seek to streamline permitting processes and reduce administrative costs to applicants.

Environmental Protection Agency

The Environmental Protection Agency will be reviewing regulations affecting the petroleum industry to assure that maximum opportunity be given to regulatory approaches that are less costly, but equally protective. The Agency will continue to seek certainty and predictability in its regulations to foster an investment climate conducive to further development of the Nation's energy resources. Further, measures to encourage environmentally beneficial use of alternative fuels derived from natural gas will be explored.

Federal Energy Regulatory Commission

The Federal Energy Regulatory Commission (FERC) unanimously adopted on May 29, 1986, a rule recommended by Secretary [of Energy] Herrington to eliminate the myriad of prices for old natural gas and instead replace them with a new system including one, new maximum lawful price. This change is designed to increase gas recovery and production, lowering the price of natural gas to consumers.

The President has asked his Cabinet to continue their efforts to identify measures that will preserve our national energy security without diminishing the value of declining oil prices for consumers.