Cabinet Meeting, July 16, 1975

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As of May 1998, the Ford Library had not located any formal typed minutes for this Cabinet meeting. The following document describing the discussions at that meeting has been substituted.

Press Briefing, 7/16/75, Box 11, Ron Nessen Files, Gerald R. Ford Library.

N E W S C 0 N F E R E N C E

AT THE WHITE HOUSE

WITH RON NESSEN

AT 12:30 P.M. EDT

JULY 16, 1975

WEDNESDAY

MR. NESSEN: Well, the main business of the Cabinet meeting was energy, so let me run through the rest of the stuff and save the energy part for last.

The President began the meeting by introducing Pat Moynihan, who was attending his first Cabinet meeting as a UN Ambassador and member of the Cabinet.

The President quickly ran through a brief report on the Vietnamese refugee program and recalled to the Cabinet members that the supervision of the program, the interagency task force, has been shifted from State to HEW. The reason for that is obviously that the refugees are all now in the United States and they don't have any foreign policy aspects any more.

The President said he is getting a weekly report on the status of the refugee situation. That is between 650 and 750 refugees a day who are moving out of the camps into the society.

He said there are about 70,000 refugees left now in the camps which means that roughly half have been relocated in their permanent --

Q How many?

Q 7,000 or 70,000?

MR. NESSEN: 70,000 are left, which means half have been now moved into the society.

He said that the hope is to phase out all the camps except Chaffee, because it has the best climate for the winter months, and he said the program is being expedited as fast as possible.

(END OF PAGE 1)

Q They are expecting them to be there through the winter?

MR. NESSEN: Well, at this rate I think some would be left by the wintertime.

Q What about on Guam, Ron? Have all been moved from Guam?

MR. NESSEN: Guam is closed.

Then the President said he wanted to give a little report on his meeting with the regulatory agencies. He called the meeting beneficial. He asked Jim Cannon to give a report, and Jim said that the reform is moving ahead.

He called the meeting a milestone, said it shows that the President means business about regulatory reform. He said that the White House is now preparing the next step in regulatory reform, which is the regulations within the departments and agencies as opposed to the independent regulatory agencies.

He said the purpose of this whole plan of the President's is, one, to promote competition; two, to let the Antitrust Division of the Justice Department handle many of these areas now handled by the regulatory agencies; and to have the regulatory agencies, as well as the Executive Branch departments and agencies, rethink their role to make sure they are really doing what they are supposed to do, which is to serve the public interest.

He said that there has been a large degree of cooperation within the regulatory agencies with the White House.

The President closed that portion of the meeting by saying that the atmosphere he has found surrounding this issue is constructive to getting something done, and that the Domestic Council will be continuing to pursue this.

Finally, there was the discussion of the energy program and the President said that he would send up his phased reasonable compromise decontrol program late this afternoon, to the Congress.

Q He calls it that -- a phased reasonable compromise?

MR. NESSEN: He does. He believes that is an accurate description of the program and he uses it when he speaks of it.

(END OF PAGE 2)

Q I mean, that is the official title of it -- phased reasonable?

MR. NESSEN: Compromise decontrol program.

It will be as outlined in the fact sheet the other day; that is, a phase-out over a 30-month period for old oil, with a $13.50 ceiling price for all domestic oil under control.

One of the reasons for it, of course, is to increase production; the other is to get away from a system of two or three different prices for different kinds of oil.

Then he pointed out that Congress has five days to act. He said that Congress will have to fish or cut bait because the current authority to have any controls on oil expires August 31, and he pointed out that Congress was going off on another month's vacation on August 1 so they would have to fish or cut bait before they go.

Frank Zarb said that he had been up there testifying for the last five business days, which is part of this public discussion that we talked about the other day. Frank pointed out that the House has passed the Elk Hills production bill and the Senate has passed the bill to set up an emergency storage program, and they were both in the form precisely as proposed by the President. Frank said this indicated that a piece at a time, of the President's program, is being enacted by Congress.

Frank then presented some charts. Some of them were the same or updated versions of charts that have been used here before.

The first one--I think you have a copy of it--shows the decline of domestic oil production over the years. Frank said that the trend of declining domestic production will continue unless the President's program is enacted.

In addition, there is a complicating factor in that Canada is reducing its oil shipments to the United States, as you probably know. And because of both the declining domestic production and the reduced Canadian shipments, he said the United States will have to run fast just to keep up.

(END OF PAGE 3)

He said -- this is Frank Zarb speaking -- with the President's decontrol program we will get an extra l-1/2 million barrels of oil a day, by 1985, out of old oil fields. Q How is this going to happen, Ron? Did they just find an old dry well that has already got a hole and just dig down deeper?

MR. NESSEN: No. I think those of you who keep up with this know that under the legal definition in the legislation of old oil it is not only oil in wells that have already been dug, but it is new wells dug in already-established fields, fields that were started before 1973. Those fields have some holes in them already, but if you go into that same field and try to dig a new hole, that is considered old oil.

In addition, by allowing the price to rise, you make it economic for the oil companies to use secondary and tertiary recovery methods to pump out oil that would just be left alone, because they cannot afford to use the more expensive methods when they can only sell the oil for $5.25 a barrel.

Frank said that as the economy recovers we are going to need more oil imports, and then he showed a chart indicating that an increasing portion of oil imports -- now 65 percent of oil imports -- come from OPEC countries.

By the end of this year, by the end of 1975, we will be importing more oil than ever before in our history.

Then he showed a chart which the President said that he had never seen before, but found very interesting. It compared how imports will decrease until 1985 with the President's program, how they will increase without the President's program, and how a growing portion of the imports will come from the Arab countries without the President's program.

Q Ron, are these the charts that Zarb has been showing on the Hill?

MR. NESSEN: Some are and some are new ones.

The same chart showed that by 1985, without the President's program, 12 million to 13 million barrels a day would need to be imported, I think it is about six or seven now. It would be 12 million or 13 million barrels a day by 1985 without the President's program, imported oil, and he said a good part of it will come from the Arab countries.

(END OF PAGE 4)

There was a rising orange bar for each year and the orange bar represented the imported oil from the Arab countries.

Q What would the total consumption per day be -- 12 million to 13 million out of what?

MR. NESSEN: Then you add to that domestic production, which is going down. He did not give a total consumption figure.

Q Did he say Arab countries or OPEC countries?

MR. NESSEN: Various charts showed various things, but this chart was used to show the proportion from Arab countries.

Q Ron, won't the North Slope oil increase domestic production when it comes into the pipeline?

MR. NESSEN: That was taken into consideration and there was a brief discussion of the progress being made on the pipeline.

Q But you said domestic oil will continue to go down.

MR. NESSEN: And you are saying would it increase with the Alaska North Slope oil?

Q Yes. Would that curve not change?

MR. NESSEN: I will have to check that, Bob. It did not come up today.

Q Ron, when you are talking about Arab countries, you are talking about the Persian Gulf, including Iran, aren't you? You are not just talking about Arab countries?

MR. NESSEN: It was just referred to as Arab countries and was not broken down by whether Iran was in there or not.

Then Frank showed the natural gas chart, which has been shown before, and said that the shortage of natural gas for this coming winter will be in its magnitude, comparable to the effects suffered because of the oil embargo in 1973

(END OF PAGE 5)

He said that the results would be somewhat different this time because you can shift some industries which run on natural gas to other fuels but in its overall magnitude it would be comparable to the effects of the oil embargo. He said there would be considerable dislocation.

Q Ron, there are a half-million jobs supposedly lost because of the Arab oil embargo.

MR. NESSEN: I am coming to that. He said there would be considerable dislocation. He said we will have to work hard to protect jobs. Then he said in the winter after this coming one we are going to suffer an even more serious problem. Then he said if we don't get deregulation, we are going to suffer the consequences in a very serious way.

Q Does he say anything about the foul-up of natural gas in Algeria?

MR. NESSEN: No, Algeria did not come up.

Some of the Cabinet members raised a question that some of you have raised about isn't there a lot of natural gas around that is being held within a State because the prices are higher with intrastate sales of gas rather than interstate sales.

Rog Morton said that he had heard of a case recently where the town of Midland, Texas, had enticed a very large industry to move there and the move was based pretty much, or largely, on a guarantee that the industry was given a five-year supply of natural gas, and he said there is going to be more and more of that.

Now I think you know the basis of that; that gas which is produced and sold within the same State sells for about $2 a thousand cubic feet whereas gas that is transported across State lines is regulated and held down to 52 cents.

The natural gas producers obviously have no incentive to ship gas out of the State. As Rog pointed out, the incentive is for the industries to move to places like Texas and so forth which would have an effect on jobs.

Q Is there any way that the President could get a Texas gas producer on restraint of trade on something like that? I mean, does he have to have decontrol? Does he have no other choice? Can he just jawbone these people and say, "Look, you are wrecking the economy in New Jersey. Why don't you do something?"

(END OF PAGE 6)

MR. NESSEN: Walt, I think you put your finger on the real core of this problem, and that is that you cannot force people to sell their product for 52 cents when they can sell it for $2.

I think you know the President's philosophy and I don't need to talk to you about it, but really the American system runs on the profit motive.

You work for AP Radio because they pay you the going rate, but you would not want the President to sit down and say, "Walt, why don't you go to work for this guy over here, for $50 a week?" You get what you can and that is the way natural gas producers are.

Q These are apples and oranges.

MR. NESSEN: It is not. It is the way the American economic system works.

Q But that has always been and it is now in terms of regulation, in many cases -- the utilities, primarily, the telephone company, profit and margins --not that we are talking about Government regulation, but the incentive is there within a reasonable profit margin as occasionally determined by jawboning or regulation. The whole energy thing is the extent of the profit and has been for a number of years.

MR. NESSEN: Well, clearly 52 cents a thousand cubic feet is not and has not been enough money to persuade natural gas producers, first of all, to drill for new wells, because that production is really falling down, and secondly, to sell their product at a quarter of what they can get within the State where it is produced.

Q Ron, does the President no longer view natural gas as a natural resource that belongs to all of the people?

MR. NESSEN: I have not heard him say that, Phil. I don't know what would raise the question.

Q Ron, the question gets back to whether there is no other alternative, really, to complete the decontrol or some in-between situation.

MR. NESSEN: Well, you know, you have your State utility commissions, and so forth, which do protect the interest of the consumer and do watch out for profit margins, and so forth, but a system where you can sell your product for four times more if vou keep it within the State is obviously disrupting the American economy, and as we point out over here it is going to have an effect on jobs in the coming winters unless there is incentive to ---

(END OF PAGE 7)

Q It does not disrupt the economy when they get four times the price that they are getting now, and that is factored in on inflation.

MR. NESSEN: Well, the President's program is deregulation of the interstate price of natural gas so that States like New Jersey and Ohio and M Michigan and Pennsylvania and others will not have to have their factories closed and lose jobs.

Q Ron, Frank was supposed to present some recommendations to the President today -- I believe you told us that a week or a week and a half ago -- on specifically the natural gas thing; at least that was my understanding.

MR. NESSEN: Did I say that? I don't recall saying that.

Q A week or two ago we talked about natural gas quite a bit, and you said July 15 Frank was going to be coming back and giving the President's view.

MR. NESSEN: That is yesterday. All right.

He did not give any specific recommendations other than the President's basic program, which is decontrol or deregulation.

Q One other question. Did the matter of whether the President would veto a simple extension of controls authority come up at all today in the meeting? John Rhodes yesterday made some comments on the Hill.

MR. NESSEN: I am told he later said it a different way, I think.

Q After he was notified by the White House that he should not say that.

MR. NESSEN: Ann?

Q In all you have told us, these are figures and things that we have heard before, and arguments in favor of the President's program. What does the President get out of this kind of exchange with Zarb and Morton and the rest of them today? Is he learning anything that he didn't know before?

MR. NESSEN: Well, he learned, for instance, from Rog, that factories were moving to Texas and taking jobs to Texas.

(END OF PAGE 8)

Q That was not my question. MR. NESSEN: A factor. Rog said there is going to be more and more of that.

Q But from the President's point of view, much of what you have told us comes as no surprise because we have heard it all before; we have heard Frank Zarb say these things.

Is there anything new produced out of a Cabinet meeting like this, or is it just a pep rally to reconfirm everybody is still playing the same line to get an energy package through on Capitol Hill?

MR. NESSEN: It is not actually a pep rally at all, Ann. The President has restored the Cabinet meetings to working sessions, and holds them regularly. Other people did pop- up with other ideas, which I will go on with in a moment.

The repetition or continual exploration or discussion of an idea, you know, is not unuseful, it seems to me,

Q Ron, did you finish?

MR. NESSEN: No, I didn't.

Q Why don't you finish.

MR. NESSEN: Frank showed a chart on electric power and said that some of the electric power -- a chart on electric power use -- which showed an increase in use, and said some of us are worried about a coming shortage of electric power down around 1980.

Then he showed a second related chart which showed delays in the planned completion of nuclear electric power plants. The President said that argues for the Labor-Management Committee proposals, which you recall from a few weeks ago, of aiding the electric utilities in a way that would enable them to restore some of the cancellation and stretch-out they have done on their nuclear power plants.

The final chart dealt with coal production. It showed basically that coal production is not increasing greatly and that while prices did go up in the pre-strike period they are now back down again.

(END OF PAGE 9)

Frank concluded by saying, as we increase our imports--this is back to the subject of oil -- the consumers will pay the bill. If we don't take a tough stance now -- that is, a tough stance in pushing the President's entire program on energy -- the consumers will pay more and more as we approach the end of the century.

Then, picking up on that point, Rog Morton said that he feels that Congress has forgotten one important part of the President's program, which was to give a refund--or he referred to it as a reimbursement--to consumers to make up for their higher energy costs. He said it must be driven home to the consumers; that the President wants to give them a refund -- or a reimbursement, as he referred to it -- for higher energy costs, and that Congress is blocking the way.

There was some discussion of that. Greenspan said that Congress seems to be trying to make believe that that is not one of the President's proposals, because there has been no action or attention paid to it on the Hill, and Frank discussed that a little further.

There was a further discussion of the President's proposal to refund, through permanent tax cuts, the higher cost of energy, and a feeling that Congress ought to be reminded and that the public ought to be reminded that the President had proposed that but that Congress had not taken it up at all.

That was the end of the meeting.

(END OF PAGE 10)

Q Ron, could I ask a question on the refund aspect?

MR. NESSEN: Yes.

Q At the special briefing after Monday at the FEA, Eric Zausner said that the original refund and windfall profits proposals of the President's were now dated because of subsequent events, including the change in the depletion rules.

Has the White House come up with any new proposal for windfall profits and refunds since the old ones are no longer usable?

MR. NESSEN: No. Here is what Eric meant by that. The original proposal, which was to give back $30 billion, this was proposed as you know, as part of the President's original program. It was $30 billion, and it was going to be divided up to consumers, people who had to pay more for gasoline or home heating oil or natural gas for their homes, some of this to factories and so forth, which had to pay higher costs for their fuel and to the State and local Governments and to the Federal Government, and the whole pie was $30 billion.

The revenue for that $30 billion was going to come from the tariff on imports, the excise tax on domestic oil, and the windfall profits tax that the oil companies would be socked with to take away any windfalls from deregulation.

The whole pie amounted to $30 billion -- $30 billion of extra revenue to the Government and $30 billion to be given back.

Since then, the windfall profits tax proposal has been modified somewhat to have a plowback provision in it. This would change your total pie to give back, and for that reason, the refund will have to be modified.

The basic proposal remains the same, and that is to give each element of the society which pays higher costs those higher costs back. Now, what the specific numbers are has not been redrafted yet.

Q The basic pie, have you got a figure on that?

MR. NESSEN: No, but I am told they are running it through the FEA computers.

Q It won't be anywhere near $30 billion?

(END OF PAGE 11)

MR NESSEN: Really, the only element that is going to change would be the amount you get from windfall profits because you would have to subtract from that whatever was --

Q But that would be a substantial part of the pie.

MR. NESSEN: I don't have any idea what the figure is.

Q Will the President come through with a specific new proposal with the figures, or does he want Congress to do it?

MR. NESSEN: I will need to check on that. You know, it is normal not to send tax legislation in written form to Congress. I suspect that if Congress ever gets around to remembering that the President wants to give this money back to people and begins to deal with the legislation that in testimony Frank and Bill Simon and so forth would spell it out because that is the normal way of dealing with tax legislation.

The Congress seems to have forgotten about that proposal for some reason, forgotten that the President recommended it and has not done anything about it.

Q Ron, has a formula for the plowback been spelled out yet? There is some discussion on the Hill that a 100 percent plowback would simply be legitimizing the windfall profit and is, in effect, a rip-off for the oil companies in favor of the oil companies. Are you aware of the plowback, specifically?

MR. NESSEN: I am not aware of it because one other factor that has changed, incidentally, Phil, is that when the original plan was drafted, it was assumed that the oil companies would have their depletion allowance to help them pay for new drilling and now that that is being phased out, there might have to be some jiggering in the other parts of the program.

The idea is not to take everything away from the oil companies that gives them money to drill new wells with or at the same time not to leave them with everything, so that element has changed the depreciation of that.

Q But you don't have a firm formula?

MR. NESSEN: I don't.

(END OF PAGE 12)

Q Ron, I was wondering, did Secretary Schlesinger bring up the General's recommendations of the screening of Jewish servicemen?

MR. NESSEN: That wasn't on the agenda today.

Q I was just wondering. The ADL, the Anti-Defamation League, has asked that it be implemented. Will it be implemented or not?

MR. NESSEN: I think you have to check the Pentagon on that, Les.

Q Ron, what time will you give us the documents that are going to the Hill with the covering letter?

MR. NESSEN: I don't know that there are going to be any more documents unless you want a copy of the legislation. There may be a covering letter from the President.

Q What time do you expect it will go?

MR. NESSEN: Five o'clock was the time the President told the Cabinet. I will check, or you should check here late afternoon.

Q Will you take questions on other subjects?

MR. NESSEN: Are we finished with the Cabinet meeting?

Dick?

Q Was there any discussion of foreign affairs in the Cabinet meeting -- the Middle East, the Egyptian decision not to renew the mandate of the U.N.?

MR. NESSEN: No. Henry was still out of town, so there was no discussion of the Middle East.

Q What about Turkish aid?

MR. NESSEN: No discussion of Turkish aid.

Q Wheat?

MR. NESSEN: No discussion of wheat.

Q Railroads?

MR. NESSEN: No discussion of railroads.

(END OF PAGE 13)

Q Can you add anything to that today?

Q Could I pursue my question? Just a point of curiosity. Who is advancing the idea that the weather in Fort Chaffee, Arkansas, in the winter is good? (Laughter) I am serious.

MR. NESSEN: That does not sound right to me either, Tom. It seems to me that California or Florida would have better weather.

Let me check that and make sure that that is the right camp.

Q If your figures are right, they would all be out in three months.

MR. NESSEN: 750 a day would get them out in three months. I guess maybe it is October they are concerned about. How is the weather in Arkansas in October? I will check that. That is a good question.

Q Ron, did Helsinki come up today?

MR. NESSEN: It did not, no.

Q Ron, what really has changed between Monday and today that made the President decide to send this up today? Has there really been any change?

MR. NESSEN: The original reason advanced for delaying it a day or so was to give it a little more chance for public understanding. Of course, the President expressed hope in his statement that there would not be a hasty decision made, that it would get the consideration justified by its importance. I think there has been a public discussion.

Q You say hasty. It has to be five days, Ron. What does he mean by hasty?

MR. NESSEN: There was some talk of ten minutes, frankly.

Q Is it any less complicated?

MR. NESSEN: No, but there has been a chance to explain it a bit. As I say, Frank has been up there testifying and I have talked a little here about it, and others have, FEA had a news conference and so forth. It has been written about.

(END OF PAGE 14)

Q Any plans for the President to make a speech on television or anything?

MR. NESSEN: No.

Q Ron, the original thing was not so much public understanding, if I remember correctly, as public discussion. Most of the discussion has come out of these briefings; that is, your briefing. Zarb testified on the Hill once.

MR. NESSEN: He has been up there five times in five days.

Q Five times in five days?

MR. NESSEN: That is what he said.

Q There has been no real appeal to the American people to understand the question as was indicated?

MR. NESSEN: I think there has. You have all been writing about it.

Q The President has not been speaking directly to them. Does this public discussion, does this appeal for public understanding simply boil down to a threat of a veto?

MR. NESSEN: You mean a threat of a veto on the extension?

Q As the President suggested in his statement here in the press room on Monday.

MR. NESSEN: I mean, he made that statement on Monday, so it would not affect the timing of sending it up there.

Q Ron, the rail strike deadline, I think, is Monday. Is he going to allow a nationwide rail strike or will he ask Congress --

MR. NESSEN: I think it is still in the collective bargaining process, Walt, and we just won't say anything until we see how it goes.

Q Would you say he did or did not talk about Turkish aid?

MR. NESSEN: That did not come up today.

(END OF PAGE 15)

Q Are there any plans to replace Arthur Sampson at GSA?

MR. NESSEN: If there is anything to announce on personnel changes, we will announce them.

Q Take a question on natural gas. Is that to say that there is something?

MR. NESSEN: That is to say what I said. Fran?

Q What are the weekend plans for the President?

MR. NESSEN: There are no plans to go out of town or to have any big events on Saturday or Sunday.

Q Or any at Camp David or anything like that?

MR. NESSEN: No.

Q Stay in the White House?

MR. NESSEN: As far as I know. Cliff? Q I would like to ask you two questions, one pursuing what Ann said that the meetings on energy seem to sort of being one-dimensional. I wonder if you could find out for us -- there was a time when we were told that there could be a shortage of natural gas and so American countries entered into agreements with Algeria, and seven super, supertankers were built.

We never hear about the foreign sources for natural gas.

MR. NESSEN: I checked that after we talked here the last time, and I think John told me it was 4 percent or 7 percent. Natural gas.

MR. CARLSON: We use about 22 trillion cubic feet a year, and we import. about two trillion cubic feet.

MR. NESSEN: That is about 10 percent.

Q I was asking about the two trillion cubic feet.

MR. NESSEN: What about it?

(END OF PAGE 16)

Q What about it?

MR. NESSEN: It is there. It was gaseous.

Q Let's be serious about it. Are foreign sources delivering natural gas? If they are, is it having any impact on the deregulation programs? Is it having any impact on shortages?

Mr. NESSEN: As John said, 22 trillion cubic feet a year is total consumption, and of that two--

MR. CARLSON: 1 to 2.

MR. NESSEN: I remember 4 to 7 percent as being the figure so it does not have a major impact on meeting the shortage.

Q An unrelated question. I came to the briefing late. Did you give us a report, as you said you would, on discussions between the President and the Vice President, topics that they discussed?

MR. NESSEN: Yes. Somebody asked me that a while back, and I guess I didn't have a chance to relay the answer.

The fact is, as you know, the Vice President has a number of duties in the Administration, and also he has the duty of presiding over the Senate. He did have the special duty of heading up the Rockefeller Commission, and he has a special involvement in the Domestic Council and so forth.

The subject of their discussions has been basically the Vice President reporting on and discussing with the President things that come up in the course of carrying out these various duties.

For instance, he might discuss legislation in his role as presiding officer of the Senate. He might have discussed from time to time the workings of the Rockefeller Commission or the Domestic Council. He served on the Murphy Commission. That is what they talk about.

Q Ron, the natural gas thing again is as bad as predicted this winter. Is the figure half a million men laid off? Losing their jobs?

MR. NESSEN: John, have we got a figure?

(END OF PAGE 17)

Q Do You have any statistics on companies that are moving because of natural gas?

MR. NESSEN: I think the FEA or Interior could probably give you that.

Q I would like to ask you about wheat. Is the President being kept informed about

(END OF PAGE 18)

Q Ron, do you have anything on the Continental Oil Company?

MR. NESSEN: John, what is the figure for jobs lost this coming winter through a natural gas shortage?

MR. CARLSON: I will check it. I think that is tough. We are talking about a 10 percent shortage, 9.7 percent shortage of natural gas last year, and 15 percent shortage this year.

Q Fifty?

MR. CARLSON: Fifteen.

MR. NESSEN: Zarb pointed out that in some of these cases the shortage of natural gas can be made up by conversion to other fuels, but that is not the case with every factory.

Incidentally, it was also pointed out at the meeting, by Rog Morton, that the deregulation of natural gas will have an effect not only of encouraging natural gas producers to drill for more natural gas, but it will have the effect of encouraging utilities which sometimes pay as little as seven, eight or nine cents a thousand cubic feet under very old contracts to switch over to other fuels which will then increase the supply of natural gas for other users.

Q Isn't that shortage, though, by your own explanation of it, a contrived shortage?

MR. NESSEN: Walt, I think I would have to go back to what I said to you before, that there is no way that anybody can make you go to work for a newspaper at $50 a week. Does that mean that there is a contrived shortage of reporters willing to work for $50 a week?

Q If we are going to pursue this line, then you have to say that the President is willing to let half a million men lose their jobs.

MR. NESSEN: The President is out there beating the bushes for all he is worth, trying to turn this shortage around and get more natural gas produced.

Q Well, why can't he do something besides just ---

MR. NESSEN: Because we live in a democracy and not a dictatorship.

(END OF PAGE 19)

Q But you know, a President has infinite power. I mean, you are talking about ---

MR. NESSEN: Walt, you can't order people to sell something when it is unprofitable for them to drill for ---

Q That is overly-simplistic right there. We had allocation plans ---

MR. NESSEN: Who said that?

Q Ron, you can order them.

THE PRESS: Thank you, Ron.

END (AT 1:05 P.M. EDT)

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