Word: oiled
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Dates: during 1960-1969
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Oilmen argue that the special allowance is necessary to compensate them for the tremendous costs and risks involved in prospecting for oil, and to give them extra incentive to search for more of it. The search has been slowing lately. Since 1957, the number of new wells drilled in the U.S. has dropped 40%; domestic reserves have remained nearly constant but demand for oil has increased by as much as 29%. Two weeks ago, Michael A. Wright, chairman of Humble Oil, told Senator Hart's antitrust subcommittee that 87% of the nation's oil needs by 1985 will...
...that exploration would be discouraged by a reduction in the depletion allowance. On Capitol Hill, the feeling is growing that the allowances, which cost the Government about $1 billion a year in lost taxes, are indefensible from the viewpoint of tax equity. Partly because of its tax privileges, the oil industry has fairly high profits. Oil companies earn an average of 11.2% on their invested capital, which is slightly above the norm for all U.S. industry; they also earn 10% on sales, which is about double the figure for other U.S. industry. Oilmen seem reconciled to seeing the allowance...
Another target for congressional fire is the oil import-quota system, which helps keep domestic oil prices up by keeping foreign oil out. Middle Eastern oil costs about 4? a gallon compared with U.S. oil's 7?; best estimates are that the quotas oblige U.S. customers to pay $4 billion to $5 billion a year in higher oil and gasoline prices. Imposed by the Eisenhower Administration in 1959 on the grounds of "national security," the quotas limit imports of crude to 21% of domestic production...
Like the depletion allowance, the quota system is also justified as a means of encouraging exploration for more domestic reserves. The quotas, according to the oilmen's argument, save the U.S. from becoming too dependent on the oil sheiks of the unstable Middle East. They would probably raise their royalties -and thus the price-if the U.S. needed substantially more oil...
...other hand, the protectionist system forces the U.S. to use up its reserves at a time when much cheaper oil is readily available abroad. Senator Hart has, perhaps extravagantly, accused the oil companies of "playing Russian roulette with national security" by supporting import restriction while drawing down the domestic supply. Ted Kennedy scoffs that the industry maintains that "our reserves will be conserved if we consume them first." In view of such attacks, Congress is likely next year to increase the import quotas...