Statement on Petroleum
Imports and Energy Security
January 3, 1989
am today announcing my determination with respect to the Department of
Commerce's investigation into the effect of petroleum imports on the national
Department's investigation was in response to a petition filed in December 1987
by the National Energy Security Committee. The Secretary of Commerce has
concluded that there has been a substantial improvement in U.S. energy security since
the last section 232 petroleum finding in 1979. However, declining domestic oil
production, rising oil imports, and growing free world dependence on
potentially insecure sources of supply raise a number of concerns, including
vulnerability to a major supply disruption. The investigation found that the
maintenance of U.S. access to sufficient
supplies of petroleum is essential to our economic security, foreign policy
flexibility, and defense preparedness. Given these factors, the Secretary of
Commerce found that petroleum imports threaten to impair the national security.
However, taking into account the administration's detailed program to improve
energy security, transmitted to Congress on May 6,
the Secretary has recommended that no action to adjust imports under section
232, such as an oil import fee, be taken because such action would not be cost
effective and, in the long run, would impair rather than enhance national
approve the Secretary of Commerce's finding, and based on his recommendation, I
determine that no action to adjust oil imports under section 232 need be taken.
My administration has done a great deal to build the Nation's foundation for
long-term energy security and to strengthen the domestic oil industry. We have
decontrolled oil prices and eliminated allocation controls. The Strategic
Petroleum Reserve (SPR) contains over 555 million barrels, compared to 108
million barrels 8 years ago. U.S. imports come from
diversified sources, and there have been important developments in conservation
and interfuel substitution that contribute
significantly to enhancing U.S. energy security. In
addition, implementation of the U.S.-Canada free-trade agreement will promote
increased bilateral energy trade and provide reliable supplies at competitive
prices. Today the Nation is far less vulnerable to an oil supply disruption
than in 1973 or 1979.
these improvements, important energy security concerns remain. While lower oil
prices have provided substantial benefits to the U.S. economy, they have also
led to rising oil consumption, declining U.S. crude production, and
rising oil imports. In addition, projections show that the free world will
become increasingly dependent on oil supplies from potentially insecure
sources. Therefore we must continue our efforts to ensure that these trends do
not leave the free world more vulnerable to economically damaging oil supply
was heartened by congressional action on some of my May
recommendations, such as repeal of the windfall profit tax, repeal of
restrictions on the use of natural gas, and reauthorization of the
Price-Anderson Act for nuclear power plants. However, a number of my
recommendations to improve the Nation's energy security have not been acted upon.
I once again urge Congress to take the following actions:
Enact comprehensive legislation to deregulate wellhead prices of natural gas
and to mandate open access to natural gas pipelines.
Permit environmentally sound exploration and development of the Arctic National
Wildlife Refuge (ANWR) in Alaska and the Outer
Continental Shelf. These areas are the most promising prospects for discovering
major new oil reserves in the United States.
Increase the availability of the percentage depletion allowance used in
calculation of independent oil and gas producers' income taxes by repealing the
``transfer rule'' and increasing the next net income limitation to 100 percent.
Continue to fill the SPR to reach the goal of 750 million barrels. The Naval
Petroleum Reserves at Elk Hills, California, and Teapot Dome, Wyoming, should
be sold as a means to accelerate the SPR fill rate and to pay for a new 10
million barrel Defense Petroleum Inventory.
Enact a comprehensive reform of nuclear power licensing to streamline the
process and reduce costs while enhancing public safety.
the nature of the international oil market, the United States alone cannot assure its
energy security. Consequently, we continue to work closely with our partners in
the International Energy Agency (IEA) to improve our mutual energy security.
With our encouragement, our IEA partners have built up their strategic stocks
to 400 million barrels. Together we are making significant progress towards a
more balanced mix of energy options. The specific actions I have outlined
above, when implemented, will make a further significant contribution to
improving the energy security of the United States and the free world.