Semerjian:
Ladies and gentlemen, may I have your
attention, please.
Announcer:
Moderator Evan Semerjian has just called
tonight's meeting to order.
Semerjian:
Good evening, and welcome to The Advocates.
Tonight we present the final program in our series of three debates dealing
with the energy crisis. Our question examines whether a major industrialized
nation such as ours should rely entirely on private industry to meet its
crucial energy needs, or whether government should play an active role in
energy production. Specifically our question is this: Should Congress create
a federal oil and gas corporation to compete with private industry? Advocate
Fred Harris says, "yes."
Harris:
Oil and gas shortages and high prices and high profits have
gone hand in hand with too little competition. Here with us tonight to say
what can be done about it are Senator Adlai Stevenson of Illinois and Mr.
Lee White, former Chairman of the Federal Power Commission.
Semerjian:
Thank you. Advocate Charls Walker says,
"no."
Walker:
What we need most today to solve our energy problems is
greater supply and soon. A federal oil and gas company can neither produce
nor encourage that supply. Private industry can. And to prove this tonight,
I have with me as witnesses Mr. C. Jackson Grayson, Dean of the School of
Business at Southern Methodist University, Mr. John Swearingen, Chairman of
the Board, Standard Oil, Indiana.
Semerjian:
Thank you. First, I'd like to welcome back our
two advocates. Fred Harris is an author and former United States Senator
from Oklahoma. And Charls Walker was Deputy Secretary of the Treasury in the
first Nixon administration and is now a Washington consultant. We'll begin
our debate in just a moment, but first a word of background on tonight's
issue.
The proposal for a federal oil and gas company to develop
energy resources on public lands was first made in 1969 by Lee White, the
outgoing Chairman of the Federal Power Commission. It took the form of
legislation last fall in a Senate bill sponsored by Adlai Stevenson, III of
Illinois. In the intervening years Americans have begun to experience fuel
shortages for the first time since World War II. Some blame the problem on
over-regulation by government, while others blame the oil companies on a
lack of government involvement. In the words of its sponsors, a federal oil
and gas company would 'secure adequate supplies at reasonable costs to the
consumer" and provide a "yardstick" against which the public could measure
the costs of private oil production. The government would be empowered to
develop up to 20 percent of the gas and oil on public lands. These include
roughly 700 million acres in the West and one billion acres offshore on the
Continental Shelf. The rest of the public lands could be leased to private
companies who would compete with the government-run company. And now to the
cases. Senator Harris, why should Congress create a federal oil and gas
corporation to compete with private industry?
Harris:
Thank you, Mr. Semerjian. The free enterprise idea is the
basic strength of the American economy, but today in the oil industry free
enterprise and competition don't operate freely because the oil companies,
the big oil companies, have too much control. They work together in
production and refining and in marketing. Many Americans today—probably most
Americans— are having trouble buying heating fuel, filling up their cars
with gasoline and paying for it if they can. But oil company profits are up,
they fight environmental measures, and they enjoy all sorts of special tax
privileges. They get away with this because you and I allow it to be done
even though we own our public lands, own the vast majority of the still
remaining oil and gas reserves. It's like it used to be with electricity.
That was a monopoly. What did we do in that case? We did just the kind of
thing that we propose tonight. We want to set up a federal oil and gas
corporation to develop and manage up to 20 percent of the public lands, to
buy competitively in the world crude oil market, and to sell to independent
refineries, who are now being, as you know, squeezed out of business. That's
nowhere near a total answer, but it's one essential step. America can have a
competitive and pluralistic oil and gas system, and here to tell us how that
can be done is Senator Adlai Stevenson of Illinois.
Semerjian:
Senator Stevenson, welcome to The
Advocates.
Harris:
Senator Stevenson has been holding hearings on oil and gas
policy. Senator, why is the oil and gas industry different from other
industries in America, and why do we need your federal oil and gas
corporation?
Stevenson:
It's the nation's largest industry. It's a
heavily concentrated industry. The major oil companies within this industry
control the production of oil, they control the production of gas, they
control the refining, they control the pipelines, they control now
increasingly the marketing of petroleum products, having taken advantage of
the shortage to cut off supplies to the remaining competition in the
industry, the independent marketers. It's concentrated, it's vertically
integrated, it acts through joint ventures, through exchange agreements,
through interlocking boards of directorates, it acts in league with foreign
governments, but what makes the . . .
Harris:
May I just say on that: with that kind of control—I
believe over 50 percent of the crude oil production is controlled by eight
companies, over 50 percent of marketing of gas controlled by eight . .
.
Stevenson:
Oh, it's much more than that. 93 percent of oil
production is controlled by the twenty largest oil companies. The largest
eight companies control 69 percent of the nation's uncommitted gas
reserves.
Harris:
Now, you were about to say, then, something about this
unique quality in addition to that . . .
Stevenson:
Well, you see degrees of concentration in
various industries, but there is no industry more vital than this industry.
It's the commodity of this industry that makes it unique. That commodity is
essential to every farm, every home, every business, every public service,
even the nation's defense. I think that, more than anything else, the
essentiality of that commodity, energy, and in these times of short supply,
when a heavily concentrated industry can extort most any price
Harris:
Well, are they profiteering from this kind of
non-competitive control?
Stevenson:
Well, we estimate in the Senate Commerce
Committee that income is flowing from consumers to producers and marketers
of oil at an annualized rate of about $25 billion in 1973. That's a very
conservative estimate. Now, Mr. Swearingen has been asked and said that the
price of gasoline in the United States will rise 10 cents or 15 cents in
1974. For every penny, for every one cent that this industry increases the
price of gasoline, the cost to the consumer goes up by one billion dollars:
10 cents to 15 cents, ten billion, fifteen billions, and that's just for
gasoline, just one of many commodities marketed by this industry.
Harris:
Well, what do you propose, then, tonight that we do about
that?
Stevenson:
I want to preserve the free enterprise system,
but any nation with its sanity would recognize at this point that it cannot
leave itself to the whims of one industry. No other nation in the world does
so, only this nation. This is also the nation's most pampered industry; it
enjoys tax credits against royalties that it pays to foreign governments, it
enjoys a depletion allowance, it has until recently enjoyed import quotas,
and in spite of it, in spite of all of the incentives and benefits this
pampered industry has received from its government, it has left the country
in a lurch, it has left us without sufficient refining capacity, without
sufficient domestic production, and now with very, very high prices, as well
as the shortages. Now, a federal oil and gas corporation would serve several
purposes. It, one, would...
Semerjian:
Make this very brief. Senator.
Stevenson:
... go into the public domain to develop the
public oil and gas resources, and that's where most of them are. In the
naval petroleum reserves alone it was estimated just this week by the Deputy
Director of the Office of Naval Petroleum Reserves there is 240 billion
dollars worth of oil. I want to see that oil developed for the benefit of
the public, the owners of that oil, and not for the benefit of companies
which are fattening on a crisis that they helped create. And I also want to
see a free enterprise system that, maintained in this corporation, would
bring competition to this industry and head off the days when
nationalization, or regulation of the industry come about.
Semerjian:
All right. Senator, let's go to Mr. Walker now,
who I think is eager to ask you some questions.
Walker:
Senator Stevenson, you would agree, would you not, that as
far as domestic energy is concerned, the number one problem, the number one
goal of public policy is to get an adequate supply of fuel flowing to the
people who need it at the lowest reasonable price as soon as possible. Is
that correct?
Stevenson:
Yes, plus of course conservation measures and
other ... That's certainly important.
Walker:
All right, now we will get back a little bit later to your
allegations about monopoly and concentration in the industry—they are
allegations. I regret that you didn't get to describe your bill a little bit
more because I want to talk to you about the bill and what it would do with
respect to this problem that confronts the American people. But one of its
central provisions, is it not, is to provide authority for what I will call,
instead of the federal oil and gas company, FOGCO, if you don't mind. It
provides authority for that corporation to pre-empt the most promising 20
percent of federal petroleum leases, leases on federal lands. Now, the
experts tell us that the recoverable oil on such tracts is probably within
that 20 percent limit, and the other 80 percent may well be worthless.
Now, isn't it quite clear that this authority for your national oil company
is, in effect, to take the cream off the top, and as a result be a
tremendous disincentive for private petroleum companies to bid for and
develop that remaining 80 percent that's not all that good?
Stevenson:
Judging from the profits of the industry, there
are going to be plenty of incentives in the future to bid on public
properties, and the price could come down if we adopted what we call royalty
bidding— I'm sure you're familiar with it—instead of the present cash bonus
system. There will be plenty of incentives, and besides, why shouldn't the
cream of the crop, the best leases, be developed for the benefit of their
owners?
Walker:
What would the incentive for Mr. Swearingen's firm come
from to bid on attractive land in which the probability is there's no
petroleum? I mean the federal oil and gas company would have it all by
itself?
Semerjian:
When you're referring to Mr. Swearingen's firm,
what are you referring to?
Walker:
Standard Indiana.
Stevenson:
Well, you've put your finger on one of the
problems. The oil and gas industry knows far more about what the government
owns in the way of oil and gas resources than the government does. Like most
everything else, it controls the facts in this industry. This corporation
would give the government a means of going into the public domain and
finding out what is there before it's leased out or given away to the oil
and gas industry.
Walker:
Senator, I hate to press this point, but I'm trying to
find out, if not, doesn't this 20 percent off the top skimming of the cream
mean that competition for public lands will be reduced. And if that is
indeed the case, which seems obvious to me, doesn't it mean that FOGCO will
have the lands, it will take it over five years to get going, and what will
it do? Just sit on the oil for that five years while the people need
it?
Stevenson:
Mr. Walker, somewhere between 60 percent and 70
percent of the nation's oil and gas resources are in the public domain. Of
that enormous resource only now about 2 percent is leased out. There's
going to be plenty of oil and gas resources in the public domain for this
corporation and for private industry.
Walker:
And you and I know why that hasn't been leased out. In
other words, the federal government over the years, the past ten or twenty
years, has been very, very slow indeed in putting these lands up for
auction, these offshore lands.
Stevenson:
Well, that's . . .
Walker:
The oil companies have been eager to do it, but Uncle Sam
hasn't been willing to put it out there.
Stevenson:
No, and I think we should move faster, and in
this case not for the benefit exclusively of the oil companies, but for the
benefit also of the American public.
Walker:
We agree that we should move faster. Now, FOGCO gets this
20 percent. They don't have the facilities, they don't have the geologists,
they don't have the necessary wherewithal to develop it. They either sit on
it for a period of several years till they develop, or it seems to me, while
unemployment is rising, the economy is getting worse off, or they hire the
private firms to come in and do the job for them, correct?
Stevenson:
Yes, there will be plenty of public resources
available for exploration by the industry, and to the extent the public
corporation developed, it would, to start with at least, do it under
contract with private companies.
Walker:
But these are the firms that you say are in a highly
concentrated, monopolistic, conglusive industry that engages in joint
ventures and exchange agreements, and by the nature of the case, they would
be the ones that are developing this. Now, your colleagues in the Senate . .
.
Stevenson:
No, sir. I'm talking about drilling companies,
the geological services. I'm not talking necessarily about . . .
Walker:
Right. It all enters.
Stevenson:
It could enter into joint ventures with Exxon,
but services would be granted in most cases by other companies, drilling
companies...
Walker:
In other words, you recognize the value of a joint venture
in your bill and say it's okay...
Walker:
But it's not okay if it's done on the outside...
Semerjian:
Well, let's go back to Mr. Harris for a
question.
Harris:
Senator Stevenson, isn't it one of the points that this
federal oil and gas corporation could sit on known reserves, while a company
would have to produce them, and that we could use up foreign oil when we
could get it and save ours?
Stevenson:
It would become a supplier of last resort in a
sense. It wouldn't sit on them. It would go in and develop these properties,
drill the wells so that they were available when they were needed. As it is
now, the oil companies, in some cases, go in and drill them, and they sit on
them waiting for higher prices. This company would make oil and gas
available for the public whenever it was needed, including for the nation's
defense.
Semerjian:
Okay, Mr. Walker, back to you.
Walker:
Well, I say we need those wells now. Senator. But we've
heard charges tonight from you about excessive profits, manipulative
shortages, monopolistic practices. What provisions of the FOGCO bill
restrict profits of the oil companies, or make interlocking directorates
illegal and so on?
Stevenson:
No, it is not addressed to the illegality of
interlocking directorates. They are already made illegal by the Clayton Act,
and I have sought enforcement of that law by the Justice Department, and I
have not attained it so far.
Walker:
And it's not addressed to the here and now.
Stevenson:
It could in addition to creating competition in
the production of oil also go into the refining. If it was necessary to go
into the refining of oil in order to supply independent marketers in
competition with the majors, it could do that. It could create competition
at the production, at the refining, and also at the marketing
level.
Walker:
And maybe ten, fifteen, twenty years down the road we
would begin to see some benefits for the poor consumer who can't fill up his
car now or heat his home now, today, this year.
Stevenson:
Maybe two or three.
Semerjian:
All right, thank you, Mr. Walker. Senator, I
want to thank you very much for being with us tonight.
Harris:
Senator Stevenson has pointed out the kind of lack of
competition there is in oil and gas, but it goes even further than this.
Major oil companies also have special relationships with the big banks, like
Chase Manhattan. These big banks and big oil companies, such as Standard Oil
of Indiana, interlock and intertwine almost like spider webs. You, as the
consumer, have very little chance against that kind of cooperation, rather
than the kind of competition that we believe in, and our next witness in
that regard is Mr. Lee White.
Semerjian:
Mr. White, welcome to The Advocates.
Harris:
Mr. White is former Chairman of the Federal Power
Commission and now Chairman of the Energy Task Force of the Consumer
Federation of America. Mr. White, we used to think that America was oil
rich; are we now oil poor?
White:
No, we've got an awful lot of oil and gas in the
United States. The oil is somewhere on the order of 500 billion barrels, and
we use less than 50 billion a year. We have somewhere around 2,400 trillion
cubic feet of natural gas, and last year we used about 22 trillion. So you
see we do have plenty of oil and gas; our trick is to find it and to get it
out and to the people.
Harris:
What portion of those vast reserves are on the public
lands, our lands?
White:
Well, we don't know for sure, but the figure is
certainly over 50 percent, probably close to 75 percent.
Harris:
Who is the authority for that?
White:
These are government figures, the Coast and Geodetic
Survey, and I think there is no serious dispute. There are a range of
estimates, but that's—we can accept that, I believe.
Harris:
Well now, if we have these kinds of vast reserves right
here in America, a big part of most of which you and I own, the public owns,
why haven't they tapped natural gas, for example? Why haven't those reserves
been developed and delivered?
White:
Well, there is more than one reason. I can give you
a couple of very important reasons in my view. One of them has already been
alluded to, and that is a very poor job of leasing of the federal property.
The managers, the government holding it for the people who own it, have
simply not been good at it. And secondly, our tax policy has made it very,
very attractive for the multi-national corporations, the big ones, the
giants—Exxon, Gulf, Texaco—to go abroad. So you see, we have drilling in the
Middle East, Indonesia, off the coast of Ecuador, the North Sea, but we
really need a lot of drilling in the United States.
Harris:
What about the idea which you've proposed and is our
proposition tonight, the federal oil and gas corporation? Is that a radical
or new idea, where you've got this lack of competition in an energy
field?
White:
There may be some people who think it's radical, but
I've got to tell you it's fairly old.
Harris:
Would that be primarily the oil companies?
White:
If I were in the oil business, I might think it was
kind of radical. Forty years ago TVA came into being, and it has done an
excellent job. It was born in controversy, and it's not free of controversy
now, but it's very efficient. We've got 3,000 municipally owned electric
systems across the United States. The people own the system, the people buy
the electricity from it. We've got a thousand that are owned rurally by
cooperatives in those most sparsely settled areas of the United States, and
I don't think there's anything startling about it. In fact, we know full
well that if the federal government hadn't assisted the people in rural
areas with electric cooperatives back in the 1930's, it would have taken
decades before they would have been fully electrified as they are now. So
there's nothing really terribly innovative or startling about it. Moreover,
it's being done in almost every major country of the world.
Harris:
That gave us a pluralistic system in electricity. They've
got a small portion of it and some competition. That's what we're talking
about here.
White:
A lot of competition, and I think it has benefited
everybody.
Harris:
Well, what about what the other side says: it would take
too long to get this federal oil and gas corporation going and to develop
new oil. What about that?
White:
Well, I think Mr. Walker has got a point. I don't
know how to turn the clock back, and if we'd started four years ago, we'd
only have four years less to get to fruition. I think we ought to get
started right away. It is not a panacea, there is no question about it.
There are many other approaches that also ought to be considered. This is
not mutually exclusive of other ideas.
Harris:
It's not a total answer, but it's one step that you feel
is essential.
White:
I think it's very essential.
Semerjian:
Thanks, Mr. Harris. Mr. Walker, your
witness.
Walker:
Mr. White, of course from old textbook days, we know that
electricity and other utilities are so-called natural monopolies, which is
quite a different thing from the oil business, but we need this oil now.
People are losing jobs and going out of work because we don't have enough
fuel. You've said publicly that this country must be prepared to face an
energy deficit for the next ten years. That varies a little from what you
were saying when you were head of FPC, but you've said that recently.
Obviously you believe this shortage is real. If so, do you agree that prices
will rise in the next ten years because of that shortage even with FOGCO
enacted?
White:
Yes, I think truly they will rise, but I think they
ought to be a controlled rise in the sense that they ought to be related to
the cost of production. The thing that bugs people in the country today is
that the prices have shot through the ceiling, and we don't believe it costs
more to produce that oil that we are using.
Walker:
Well, let's get back to this 20 percent issue that I'm
afraid I didn't get too far with with Senator Stevenson in clarifying just
what the implication of that is in the legislation, and as a matter of fact,
in the hearings in December, Senator Stevenson stated that he might
reconsider the 20 percent skimming of the cream off the top—that's my
phrase, he didn't use that—and it may be a random 20 percent. Let me ask
you this: you are against nationalization of the oil industry?
Walker:
But is it not true, then, with the 20 percent cream of
the top skimming provision, with no private company being able to bid on
public lands, that you have de facto nationalization for development of the
public oil land?
White:
No, I don't think so. I think one of the mistakes
you've made is to assume that a maximum is also the absolute requirement. I
don't know what that corporation will do. It will depend upon who is
operating it, and I don't know that that corporation will necessarily take
the top. It may believe, under some administration...
Walker:
Well, wait a minute now. The legislation says 20 percent
now, and we're debating the bill. Are you backing away?
Walker:
Would you go down to five?
White:
It says "not to exceed."
Walker:
Would you buy random 20 percent?
Walker:
Do you know what I mean by random 20 percent?
White:
Yes, I know what you mean by random. No, I think
what I would prefer to do is leave it to the administrator to determine how
it wants to be done. And don't forget this operation is going to be out in
the public, and we're going to have Congressional committees.
Semerjian:
Excuse me for just one minute. Mr. Walker, would
you explain what you mean by a random 20 percent.
Walker:
A random 20 percent would mean that you would put into a
hat and draw out lots to see who got what between FOGCO and the private
companies. That's the way I would interpret a random 20 percent. I'm just
trying . . .
Semerjian:
Is that how you understood it, Mr. White?
White:
That's the way I understood it, right.
Walker:
And you're saying, then, that this bureaucrat-and believe
me, they're good people, they worked hard, but you're willing to delegate
this decision to the head of FOGCO, a $42,500 a year man, to say whether it
is 20 percent, 19 percent, 18 percent, or 1?
White:
No, I think I'd let the Congress in on it too. This
is going to be a public operation, this is going to be in a goldfish bowl,
and I don't think that if this organization comes into being that it's going
to kind of just float and that decisions will be made in the dark. One of
the benefits of this operation is that it will be public. We will know what
it costs to produce this oil and gas, and that's what we're striving
for.
Walker:
Can you give just one man...
Semerjian:
Excuse me for just one second. Let me ask you
something to clarify your position, Mr. White. You're in favor of the
federal oil and gas corporation, I take it, because you don't think there's
enough competition in the oil and gas industry, is that right?
White:
Well, that's one of the reasons. There are others.
Yes.
Semerjian:
Is that the primary reason?
White:
It used to be the primary reason. I think the way
that things are going today there is one that is rivaling it, and that is
the need to have a government agency which will take reserves and have them
available so that when King Faisal turns off the spigot, I'd like to have
somebody available to turn on a spigot. We ought to be willing to have a
government agency, not a private corporation like Mr. Swearingen’s, but a
government agency that will find our reserves that the people of this
country own and hold them for a time when we need them.
Semerjian:
But this proposal involves competition by a
government organ against private companies, isn't that right?
Walker:
Exactly, and we're trying to argue that it's unfair
competition, de facto nationalization, and what it's boiled down to is that
some bureaucrat that heads up this agency will have the power of life and
death as to whether it's de facto nationalization. That's what I gather from
your testimony.
White:
Is that your question?
Walker:
That's what I gather from your testimony. Am I
correct?
White:
Not quite. You're wrong.
Walker:
Not quite. I'm wrong. Okay, tell me where I'm
wrong.
Semerjian:
All right, let's go to Mr. Harris.
Harris:
Well, the present situation is a few corporate executives
make that decision purely for private profit, don't they?
White:
That's right, and there's nothing wrong with that.
That's the way it's supposed to be.
Harris:
Sure, but we think there ought to be a public interest
involved here as well, don't we?
White:
Somebody ought to be looking for oil and gas
because we need it, not to maximize profit.
Semerjian:
All right, let's go back to you, Mr.
Walker.
Walker:
Mr. White, I repeat a question I gave to Senator
Stevenson. It's awfully important, the allegations there. We've heard
charges tonight about excessive profits, manipulations, shortages,
monopolistic practices. Does FOGCO directly in any way in the draft that I
have seen and you have seen, correct these practices?
Walker:
Yes, thank you very much.
Semerjian:
You have another question if you want it, Mr.
Walker.
Walker:
No, I'm perfectly satisfied.
Semerjian:
All right, well, thanks very much, Mr. White,
for being with us tonight. Mr. Harris is right here. Go ahead.
Harris:
I wish the other side would tell us how you nationalize
public property. These reserves are ours already. The rich, giant oil
companies, like Standard Oil of Indiana and others, they fight enforcement
or strengthening of the anti-trust laws, they fight measures to protect the
environment, they fight efforts to make them pay their fair share of taxes,
they want more and more profits, less and less taxes, while they gobble up
more and more of this property that's already ours, these public lands with
these vast oil and gas reserves. That belongs to us, and you and I ought not
to let them get away with it.
Semerjian:
Thank you. For those of you in our audience who
may have joined us late. Senator Harris and his witnesses have just
presented the case in favor of Congress creating a federal oil and gas
corporation to compete with private industry. And now for the case against,
Mr. Walker, the floor is yours.
Walker:
Thank you very much, Mr. Moderator. FOGCO is suggested as
a "yardstick" to measure the performance of private oil companies, but it
will be years before it can do that job, and even then, it will distort the
picture, while in fact discouraging development of our valuable resources.
The federal government had a lot to do with getting us into this mess in the
first place, and FOGCO can not only not solve these problems, it will make
them worse. Our U.S. private oil companies, on the other hand, have a
long-term record that is unmatched in the world for bringing this nation
plentiful energy at low prices, so much that we became wastrels of energy.
They can produce what we need now to protect your job and your standard of
living; this proposed national oil company cannot. Now, make no mistake
about it: the stakes are very high. They involve no less than your job, the
value of the dollars in your pocket, your standard of living, whether you
can get oil for your car, fuel to heat your home. To help prove this case
tonight, I call as my first witness Mr. C. Jackson Grayson.
Semerjian:
Dean Grayson, nice to have you with us
tonight.
Walker:
Mr. Grayson is Dean of the School of Business at Southern
Methodist University and former Chairman of the Price Commission in Phase
II. Dean Grayson, the proponents of the Stevenson bill argue that the public
owns the petroleum resources on public land, and therefore it is only common
sense that the public, through the government, should develop and market
those resources. Why shouldn't we rely on private industry to do the job, or
why should we rely on private industry to do the job?
Grayson:
Well, the question really is, does the public
have an interest. Certainly the public has an interest. The public has an
interest in all public and private corporations. All private corporations
have public charters. The question that we're concerned with tonight is
what's the best way to get these oil and gas reserves, the quickest and the
cheapest, and the private enterprise system, I think, has proven that's the
best way.
Walker:
Well, that's all very good if the private industry is
truly competitive. But we've heard a great deal tonight to the effect that
the petroleum industry is so concentrated that it almost deserves the
description of being a monopoly. What do you think about that?
Grayson:
Well, (1) concentration doesn't equal monopoly.
We have a lot of concentrated industries in this nation. We have
automobiles, we have steel, we have rubber tires, we have coal, meat
packing, a number of concentration, and concentration doesn't mean that we
have monopoly. Now, we looked at this in the Price Commission when I was
Chairman, and we found that the price increases in the nation were the
lowest for the concentrated industries and were higher for the
unconcentrated industries. The thing to look at is performance, what are the
profits. That will tell you whether there's a monopoly; if there's a
monopoly, you'll have monopoly profits. The profit record of the oil
industry is lower than all manufacturing industries combined in the country
for the last ten years, bordering on 7 percent return in 1972.
Walker:
7 percent on capital. Well, let's be specific. Although
Senator Stevenson would allow joint ventures in his bill, he severely
criticized joint ventures in exchange agreements in private industry. Would
you comment on that?
Grayson:
Well, joint ventures are a natural way for the
industry to conduct operations.
Walker:
What is a joint venture?
Grayson:
Joint venture is where several companies join
together to go into a very risky venture, such as the pipeline, or very
high-risk lease or anything else. It is a natural way to do business, and I
think the Stevenson bill would even say, let's do that also in this
company.
Walker:
The proponents of FOGCO argue that on the one hand the
private petroleum companies are understandably and profitably motivated to
make a profit for their stockholders, but that FOGCO would be solely
motivated to serve the public. Is making a profit inconsistent with serving
the public interest?
Grayson:
I hope not, or our system will have changed from
free enterprise to one of national socialism. Profits serve the public
interest. The profits are there to help drive the system. That's free
enterprise. Profits encourage risk-taking, they encourage efficiency, and I
think that they will get the capital that's necessary. If we don't have
profits, you don't have the money to go out and find the oil and gas, which
is what we desperately need.
Walker:
Mr. Grayson, you're testifying as a general expert
tonight on the business system in economics, and you have your Washington
background also, but you've studied this bill and heard the views presented.
Do you agree that FOGCO can do the job depicted?
Grayson:
I don't think it can do the job that it has been
represented to do. I think it's going to have a difficult time operating in
the goldfish bowl that was described. They're going to be subject to all
kinds of political pressures. I know because I was in Washington. People are
going to be at them as to where to locate this refinery, on the East or the
West or the South. Think about the man who has to make the decision in this
corporation to drill a ten million dollar, perhaps dry hole. He's going to
have risk-avoidance behavior, and you need risk-taking if you're going to go
out and get the supplies.
Walker:
That's in connection with oil companies as such. What
about the experience abroad? These people have made quite a case about
foreign oil companies. What about the experience abroad with foreign
ownership of business in general?
Grayson:
The record is poor compared to this country. This
nation has the highest gross national product of any nation in the world,
and the private enterprise system helped put it there. We have the highest
standard of living, and private enterprise put it there. Now, in records for
petroleum, take a look at the world and see what the petroleum industries
have done in other nations. Yes, other nations have petroleum industries.
The one in Italy is on the borderline of being bankrupt. The one in France
does not have a good record: $560,000,000 shortfall. Who did the Arabs send
for to come develop their oil? Us. Who did they come—in Russia, Russia sent
over the United States. Why? Because the expertise is generated in this
country. The North Sea is largely developed by the American private
enterprise system.
Semerjian:
All right, thanks very much. Let's go to Mr.
Harris.
Harris:
Well, first of all. Dean Grayson, just on that last
point, you say the American oil companies dominate Russia's and everybody
else's oil business. It seems to me that's exactly our case. We need a
little bit of competition here.
Grayson:
I don't think they dominate Russia's system
yet.
Harris:
You say they've got to come get our expertise. I don't
mean they dominate the system, as you quite well know. I didn't mean that.
You say they've got to come get our expertise, so they're dependent on the
American oil companies?
Grayson:
Because this is where some of the expertise is,
so it's a natural resource.
Harris:
Good. Now, I want to ask you something more serious. You
wrote last month in Harvard Business Review something that I agree with very
strongly, and that is that what we ought to have is more competition and
less government regulation and so, less dependence on that. But you also
said—and I was going to ask you if you had changed your mind on
this—consciously and unconsciously businessmen themselves are adding to the
probability of greater centralization by seeking ways to reduce market
competition. That's true, isn't it?
Grayson:
That's true. Sometimes businessmen themselves are
going to seek too much government protection, and every time the government
gets into an operation, generally speaking it results in higher
prices.
Harris:
Now, you said a while ago too that in the oil industry
you weren't alarmed about the concentration, but you said last month that
you didn't know about that then, and our internal studies did not
provide…Wait, it says this, "It's still unclear." You weren't convinced just
last month. "It's still unclear whether large corporations have sufficient
power to control markets, reduce competition, and administer prices." You
say it's unclear. We think there's evidence. You said, "We did not have
sufficient time to make a full study of this issue."
Grayson:
Of the entire spectrum of all industries in the
U.S. What I've said a minute ago is that I find the general bulk of the
price increases were at the low end on the concentrated industries.
Semerjian:
Well, Dean Grayson, let me ask you a question
to clarify something. I take it you're against the proposal for a federal
oil and gas company as a means of improving competition. Am I right?
Semerjian:
Let’s assume for a moment that there isn't as
much competition in the oil and gas industry as there should be. How would
you improve competition in the industry?
Grayson:
One, I'd get the government as far out of the
industry as you can. I think if you wanted to make a scenario of how you
increase the shortages in this nation, look at what they've done to the
lease sales, as was testified, look what they've done to the environmental
controls . . .
Harris:
Would you stop import quotas?
Harris:
The oil companies have had these import quotas until very
lately. No import quotas, no tariff controls?
Grayson:
No, no. It doesn't mean you wouldn't have any
government regulation. You need some.
Harris:
Would you take away all their tax advantages,
particularly their tax credit, that encourages them to explore abroad?
Grayson:
Well, I think . . .
Harris:
Would you get the government out of that kind of…
Grayson:
I think the whole question of tax credits, or
favors for the industry, need to be examined. I don't say they should be
taken away, but they certainly ought to be . . .
Semerjian:
By tax credit—let's get one thing clear— you're
talking about the dollar for dollar deduction against American taxes of the
tax royalties paid to foreign countries, isn't that right?
Harris:
Well, yes. If you lease from my dad in Oklahoma and you
pay him a royalty, you don't get to credit that against your tax. If you pay
King Faisal for that royalty, that reduces dollar for dollar what you would
otherwise pay in federal tax. Now, do you favor that kind of free market,
free enterprise system?
Grayson:
The Congress is studying right now whether or not
these things should be continued, and I think they should study
them.
Harris:
They certainly should study them.
Grayson:
The gas corporation is not an answer to that
question.
Harris:
So you advocate getting rid of a lot of those kinds of
government special favors, at least taking a look at them. You seem to
advocate them in your article last month. You also advocate vigorous
enforcement of the anti-trust laws which goodness knows we haven't had . .
.
Harris:
You even advocate changing the anti-trust laws perhaps,
making them tougher.
Grayson:
No, I did not . . .
Harris:
Oh, yes, you said ... in that very article.
Grayson:
I said that we ought to take a look at the
anti-trust laws to see if they should be made tougher or not.
Harris:
Okay, a lot of us have already taken a look.
Grayson:
That's a difference.
Harris:
At least you say take a look at them.
Harris:
That's one more change.
Grayson:
That's not a change.
Harris:
Well, that's one more thing you think might ought to be
done. But we're talking about something— that's way off in the future—we're
talking about something right now. This federal oil and gas corporation may
be not the total answer, but a piece of the answer. It could go right out
now in the world market and buy oil and gas and sell it, or crude oil and
sell it, to a refinery that can't buy from a major company. Isn't that so?
That's something that could be done right now, not all these other things
you're talking about.
Grayson:
So can the refineries. So can the private
companies.
Harris:
What if the refinery can't get any gas from the crude
oil, or get any crude oil from the major companies? That's exactly the
finding of the Federal Trade Commission. Do you dispute that?
Grayson:
I don't know what the finding was.
Harris:
The Federal Trade Commission said that one of the big
problems is that majors won't sell to these independents. They can't get any
crude oil. Now, what would you do about that?
Grayson:
Is the federal oil and gas corporation going to
expropriate therefore and deliver to the system? You're certainly going to
have a nationalistic company if that starts to take place.
Harris:
Can you think of anything right now that the federal
government can do to tell an oil company anything? It can beg, it can plead.
It's not involved in the negotiations, is it, in the Middle East? It can't
do anything but plead, but the federal oil and gas corporation—just a little
piece of it, it wouldn't have very much of it—it would be some competition.
Isn't that like the electricity industry?
Grayson:
No, it's not the same as the electricity
industry. The electricity industry is a natural monopoly. This is not.
Semerjian:
All right, let's go back to Mr.
Walker.
Walker:
Dean Grayson, if you feel like I do, sort of a Washington
Irving character watching the late show, and the bodies over here and the
heads over here, the arguments are in this direction and the solution is out
somewhere else, well, you'll understand how mixed up I feel in connecting
their case together. And I hate to keep making their case, but they make the
case that there's a strong argument that this would provide a yardstick to
measure the efficiency of the private oil companies. Is that true in your
judgment?
Grayson:
No, this company, as proposed, would get 20 per
cent of the cream of the leases, it would have a half of a billion dollars,
interest free, it would have its debt guaranteed, unlimited borrowing
capacity. How can you compare that to the private enterprise system?
Semerjian:
All right, let's go back to Mr.
Harris.
Harris:
Generation and transmission of electricity is not a
natural monopoly. Do you agree to that? The distribution is. That's what you
were talking about. Well, would you sell TVA to Con Edison or Bonneville? We
decided that that was kind of a monopolistic situation, and we ought to get
into that.
Grayson:
Yes, Mr. Harris. You know, TVA was built for more
reasons than power generation: flood control, navigation, recreation, social
uplifting. It had a multitude of purposes, not just power
generation.
Harris:
Well, we want to do this for a lot of other reasons too:
protect the environment, preserve and manage our reserves, find them, get
the right information. But the main thing was competition, isn't that
so?
Grayson:
No. You really want to protect the environment,
and you want to have full . . .
Harris:
What about TVA? Do you want to sell that to Con
Edison?
Harris:
Do you want to sell a federal deposit insurance
corporation to Prudential? Do you want to sell the space program to
Lockheed? Are you against those kinds of corporations?
Grayson:
Are we debating whether or not we're going to
have a private enterprise system or FOGCO?
Grayson:
We're debating FOGCO, and FOGCO as such is not
going to do the job as represented.
Harris:
Just like TVA. What's the difference?
Grayson:
No, TVA was not put in just to create
competition.
Harris:
Not just, sure...
Semerjian:
All right, I'm going to have to interrupt. Dean
Grayson, I want to thank you very much for being with us tonight.
Semerjian:
Okay, Mr. Walker.
Walker:
I call as my next witness Mr. John Swearingen.
Semerjian:
Mr. Swearingen, I want to welcome you to The
Advocates.
Walker:
Mr. Swearingen is Chairman of the Board, Standard Oil
Company, Indiana. Mr. Swearingen, do we have an oil shortage?
Swearingen:
It's a combination of a very rapid and
unexpected increase in demand as a result of a resurgent of industrial
activity, of new regulations that have consumed energy in the power plants
and the automotive pollution field. It has occurred because of the delay of
the Alaskan pipeline, which nobody expected to be for five years it has
existed, it has occurred because the federal government has refused to
accelerate the leasing of the offshore lands. And finally, since we now
import one third of the oil that we use in this country, a most recent and
most dramatic thing was the embargo imposed by the Arab states on the export
of oil to the United States.
Walker:
Mr. Swearingen, I'm sure you're aware of the emotional
state of the people. You watch the television and read the papers. You know
the charges. What do you say about the charges that this shortage has been
deliberately brought on by the oil companies so that they can make more
money?
Swearingen:
This is absolutely false. Absolutely.
Nonsense, utter nonsense.
Walker:
What, for example, if I go down to the corner to Amoco—I
believe is the brand that you market—if I go down to the corner to buy some
Amoco gasoline in Chicago, say, what will that cost me per gallon?
Swearingen:
It will cost you about 50 cents a gallon. Of
that 50 cents a gallon, about 4 cents a gallon is federal tax, about another
8 cents a gallon is state and local taxes, and on that gallon of gasoline
our own company would make, after taxes, a little less than 3 cents a
gallon.
Walker:
It sounds to me like Uncle Sam and the states are
profiteering a little bit more off of this than you are.
Swearingen:
Well, there's some reason to believe that.
Certainly their take is much higher than ours.
Walker:
Can the private oil companies solve the problem?
Can you really give us more supplies?
Swearingen:
Yes, I think we can, but the unfortunate thing
is that it's going to take a higher price in order to do this. In the
existing fields we don't recover anything like the oil that's present in the
ground. It's like trying to wring a towel dry with your hands; there's no
way to wring all the water out. So we have to inject water, we have to
inject gas, we have to inject chemicals in order to get this oil out. It's a
very expensive proposition, and it's going to take a higher price in order
to pay for this kind of an activity. In addition, if the federal government
will accelerate the leasing of the acreage offshore—and to date they've only
leased about 3 percent of the acreage held by the federal
government—there's no question in my mind that the oil industry can develop,
in fairly short order, some very substantial additional supplies of oil and
gas.
Walker:
Why—as the proponents argue— why can't the
government do as good, or better, a job than private industry?
Swearingen:
Well, I don't believe the government has been
very good at doing any kind of a job they undertake to do, and we can talk
about the post office, or we can talk about Amtrak, or we can even talk
about TVA. I think anybody who has ever tried to use a telephone abroad; as
an example, will have a pretty good idea of how well the government operates
things. And I don't believe that they could proceed rapidly enough to do a
satisfactory job. This particular bill—if I may just take a minute—this
particular bill provides $50,000,000 a year. $50,000,000 sounds like a lot
of money. Our own company, our own individual company, is going to spend
over a billion dollars in 1974 in looking for new sources of oil and gas,
and we only produce 5 percent of the oil that's produced in the United
States. To spend $50,000,000 a year on this proposed federal corporation is
not going to make any difference whatever in the next ten or fifteen years
in the supply of oil to the public of the United States.
Walker:
Mr. Swearingen, Dean Grayson gave us an idea of
some foreign operations abroad. You're obviously more familiar with foreign
oil company operation, national companies. What are your comments on their
efficiency and results?
Swearingen:
I think most of them have been very poor, and
their ability to find oil—as a matter of fact, I don't know of a single oil
company owned by a foreign government who's found a major oil field in its
entire existence, and this, I mean, a field that contains, say, a billion
barrels.
Semerjian:
All right, thanks, Mr. Walker. Let's go to Mr.
Harris.
Harris:
Well now, Mr. Swearingen, you can't have it both ways.
You can't say that this federal oil and gas corporation, which is going to
have a rather small part of the whole business, is going to just run the oil
companies out of business and take it over, and at the same time say they're
so small that they can't make much of a dent. Now, which way is it? Are they
going to be too powerful or not powerful enough?
Swearingen:
Well, in my opinion, Mr. Harris, what they're
going to do is pre-empt all of the prospective acreage offshore and sit on
it because they don't have the money, they don't have the people, they don't
have the incentive to develop the new oil and gas that can be produced from
those lands.
Harris:
But isn't a bigger problem about producing what we have
right here at home, something else? I believe your company, according to
Standard and Poor, Standard Oil of Indiana has 32 percent increase in
profits this year over last, and a lot of companies were much higher than
that, and isn't it true that the main reason why you've been putting your
money into foreign oil, rather than into developing what we have here at
home, is that you get a lot better tax break under the tax credit?
Swearingen:
Absolutely not. You don't know what you're
talking about.
Harris:
The major oil companies, according to the Federal Trade
Commission...
Swearingen:
You don't know what you're talking about. Do
you want me to answer your question, Mr. Harris?
Harris:
Sure. But do you disagree that most of the companies have
been putting more than 60 percent of their investment and development in
foreign development?
Swearingen:
Why. The question is why.
Swearingen:
It's not for any tax breaks. It's because the
federal government wouldn't put up for lease any acreage offshore
California, offshore Louisiana, Florida, the East coast of the United
States. There was no place to drill here, to spend that kind of money, and
our own company is an example. We got outside the United States trying to
find some additional sources of oil and gas that we could bring into this
country, and we've been successful in this in the North Sea and in Trinidad
and in other places and are bringing this oil here to the United States
today.
Semerjian:
Well, let me ask you a question to clear one
thing up. Which is cheaper, Mr. Swearingen - is it cheaper to spend money
abroad to find new wells, or is it cheaper to exhaust the remaining supplies
and wells already dug here?
Swearingen:
Well, I don't quite understand your question,
Mr. Semerjian.
Semerjian:
Well, I take it there are . . .
Swearingen:
After all, a ten thousand foot well, drilled
in five hundred feet of water is going to cost about the same amount whether
it's drilled in the North Sea or drilled in the Gulf of Mexico.
Semerjian:
No, no, no. Perhaps you don't understand. There
are . . .
Swearingen:
That's exactly what I said to you: I didn't
understand.
Semerjian:
All right, let me make it clear. There are
wells, are there not, in the United States which have been dug but not
exhausted because it would be more expensive to take out the remaining
two-thirds of the oil. Is that right or not?
Swearingen:
No, that's not correct.
Semerjian:
That's not correct.
Swearingen:
All of these wells are being produced at the
maximum rates now, but you can produce them without bringing in coning of
water and losing some of the ultimate recovery from the field.
Semerjian:
All right. Well, perhaps I'm mistaken on that.
Go ahead, Mr. Harris.
Harris:
On the tax credit quickly, you will agree, surely you
will agree, this is true: that if you pay a royalty payment to the landowner
in Oklahoma, you don't get to credit that against your federal tax. If you
pay a royalty in Saudi Arabia, that is a dollar for dollar reduction in your
federal tax, isn't that so now?
Swearingen:
No, sir, that's not right.
Harris:
Why is that not so? You disagree with every expert I've
heard.
Swearingen:
Because . . . Well, Mr. Harris, I don't think
you studied your lesson. I don't think you know what you're talking about.
After all, the federal government has tax treaties with almost all of the
countries in the world with the purpose of avoiding double taxation. Any
taxes paid to Saudi Arabia, or to France, or to England on business done in
those countries are credited against taxes due on that income and that
income only.
Harris:
I said royalty, not tax.
Swearingen:
Now, just a minute. I'm trying to explain this
to you, and I hope you'll listen.
Swearingen:
Because I'm trying to educate you here. The
royalties are not creditable against taxes otherwise due here. The taxes are
creditable against taxes otherwise payable, but there is no way to offset
taxes payable on income earned abroad, against income earned here.
Harris:
Well, that's a different question than I asked you,
but…
Swearingen:
Well, I hope that you understand what I've
said to you.
Harris:
No, I don't. I used to serve on the Finance Committee
that wrote these laws, and I know that the oil companies got a special
ruling on that royalty, to treat it as a foreign tax rather than as a
royalty. Now, that's true, isn't it?
Swearingen:
No, not to my knowledge.
Harris:
All right, let's go on to this. Did you oppose—we're
talking about shortages. How did we get shortages? And you say something,
but the Federal Trade Commission and others say one of the reasons was that
you oil companies opposed relaxing import quotas to let in foreign oil after
along about the fifties until it was relaxed last year. Did your company
oppose import quotas being relaxed?
Semerjian:
Make this a very brief answer.
Swearingen:
We certainly did, and I think you people here
in New England ought to be delighted that we did. Otherwise, you might be
dependent on the Arabs for 75 percent of the oil instead of 35 per
cent.
Semerjian:
All right, let's go to Mr. Walker.
Walker:
I hate to be in the position of going back to
making the opposition's case for him, but I didn't find anything in the bill
about the foreign tax credits. And I want to get back to their arguments
that they're making and ask you the same question I asked Dean Grayson. What
about the idea that FOGCO will serve as a yardstick to measure the
performance of your and other private companies?
Swearingen:
Well, the best way I can answer that is, I
think it would be absolutely useless for this purpose. The Federal Power
Commission, for at least the last twenty years, has tried to measure the
performance of gas-producing companies on a cost basis and finally has given
up as an impossibility, and to have a yardstick of this kind, particularly
with the built-in advantages to this company that are proposed in the bill,
would be absolutely useless in providing any information that would be
helpful to the government or anyone else.
Semerjian:
All right, Mr. Harris, let's come back to
you.
Harris:
Well, is it true now that with crude oil prices rising,
that you have to begin to move to make more profit in sales and refining,
and that your company and a lot of others are carving up territory around
the United States. The Federal Trade Commission says that you're moving out
of some areas, they're moving out of others, so there will be less
competition. That's true, isn't it?
Swearingen:
No, sir, that's not true. Let me correct you
on another statement that was made earlier here. There is no one company in
the oil business that holds as much as 10 percent of the oil production, of
the oil refining, or the marketing of oil products in this country. And to
talk about a situation where there is no one company, and where only as many
as eight companies have only about 60 percent is no monopoly the way 1 look
at it. There's plenty of competition in this business, and there always has
been for my thirty-five years of experience in it. You talk about the Trade
Commission hearings; these are charges and they are completely
unsubstantiated, and they're before the Federal Trade Commission now for
hearing, they have not been adjudicated.
Semerjian:
All right, Mr. Swearingen, I want to thank you
very much for being with us tonight.
Semerjian:
Thank you, gentlemen. That completes the cases,
and now it's time for each of you to present your closing arguments, Mr.
Walker, could we have yours, please.
Walker:
Ladies and gentlemen, one thing the proponents
talked about tonight, to the extent they talked about their proposal,
they're right about. And this is that the public lands and offshore tracts
we've been talking about are just that: they are public. They belong to you
and roe. And there's a lot of oil and gas to be taken out of there. The
question is: who do you want to develop those resources? Who finally will
give you and me the best deal? Who will increase our supply of fuel at the
most reasonable price at the quickest pace? The record is clear. Private
enterprise has done it and can do it. Our government can't do it. It can't
do it efficiently, it can't do it imaginatively, it cannot do it vigorously.
Great Britain knows this; they hired Mr. Swearingen's private company to
help explore and develop the North Sea gas fields. The Soviet Union knows
this; they've invited several of our private oil companies to develop their
vast Siberian reserves. And we should know it. Moreover, there is nothing in
this bill to deal with the alleged abuses such as interlocking directorates,
so graphically described to you tonight. A federal oil and gas company
cannot solve our current shortages. In fact, its proponents don't even claim
that it will. Moreover, it cannot do it efficiently in the long run either.
This is an old idea whose time has never come, and for good reason. Let's
hope it does never come. Vote "no" on the proposition tonight.
Semerjian:
Thank you. Mr. Harris, could we have your
argument.
Harris:
We do claim that a federal oil and gas corporation can
have a great deal of impact on oil and gas supplies. The main thing to
remember is that we, you and I, the public, already own most of the
remaining oil and gas reserves in this country. Most of it is on our lands,
the public lands. But at the present time we are completely at the mercy of
the giant oil corporations for the development of these public resources
which we own. We're at their mercy on the world oil and gas supply and on
the price we pay. We're even at their mercy on the facts, as you saw with
Mr. Swearingen; he disagrees with the Federal Trade Commission, he disagrees
with the Federal Power Commission. We can get the facts. We can begin to
change not only getting the facts but, more importantly, we can begin to
have some free enterprise competition in the oil and gas industry. We've
done this sort of thing many times before. We did it with the electric
industry, which was also non-competitive. You and I, as taxpayers in that
instance, and as consumers, were the winners when we got some competition
going in the electric industry. You and I, with the federal oil and gas
corporation, will be the winners again with some competition going there for
the first time.
Semerjian:
Thank you, gentlemen. Now it's time for you in
our audience to participate in the program. What do you think about
tonight's question? Should Congress create a federal oil and gas corporation
to compete with private industry? Send us your "yes" or "no" vote on a
letter or postcard to The Advocates, Box 1974, Boston 02134. We'll tabulate
your votes and make your opinion known to members of Congress and to the
Federal Power Commission. Your opinion is important, so let us know what you
think. Now, remember that address: The Advocates, Box 1974, Boston
02134.
Now, tonight there's some hopeful news in our continuing
attempts to keep The Advocates from disappearing from the airwaves late next
month. I'm pleased to announce that we've just received a challenge grant
for $100,000 from The Arthur Vining Davis Foundations. The Foundations are
making the grant with the hope that the money will be matched by two more
grants of $100,000 each so that the program can stay on the air until late
in May. Needless to say, we're pursuing corporations and other foundations
for the additional money we need.
Now, recently The Advocates debated the question, "Should
the United States press for Israeli withdrawal from occupied territories and
offer to guarantee Israel's security?" Of the more than 5,000 viewers who
sent in their votes, only 10 percent said yes, that the proposal would be
an effective instrument in the search for a secure peace in the Middle East,
and a whopping 90 percent said no, the United States should not interfere
in the bargaining process and should let Israel defend itself as in the
past.
Now, The Advocates will not be seen in the last week of
January but will return in the first week of February to its regular time
slot, so let's look ahead to that program.
Announcer:
[Promotional Message]
Semerjian:
And now, with thanks to our advocates and their able and
distinguished witnesses, we conclude tonight's debate.