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September 06, 1975 - Image 4

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Publication:
Michigan Daily, 1975-09-06

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mie 3fieigan Dui1
Eighty-Five Years of Editorial Freedom
Edited and managed by students at the University of Michigan

Hostage America at oil industry's

mercy

Saturday, September 6, 1975

News Phone: 764-0552

420 Maynard St., Ann Arbor, Mi. 48104

Voter reg reform welcome

By STEVE SCHNEIDER
SAN FRANCISCO, August 25
(PNS)-With price controls ex-
piring August 31, consumers
must again pay prices based
not on the cost of the oil they
use, but on what it costs to pro-
duce the world's most expensive
oil.
The price of U. S. oil that was
profitably produced and sold
for just $3.50 a barrel in 1973 is
expected to climb past $12.00 a
barrel.
This "price - floor" strategy
has been in effect for 50 years.
During the 1930s and '40s it
meant that Middle East oil was
sold anywhere in the world at

ary, "The production, refining
and marketing of oil and gas in
the U. S. in the past 12 months
have shown the highest profits
of any sector of the interna-
tional oil business."
In fact, five large oil compa-
nies whose operations are al-
most entirely in the U.S. re-
ported a 92 per cent combined
profit increase in the year fol-
lowing the OPEC price in-
creases. ,
HISTORICALLY, a combina-
tion of government policy and
monopoly power has enabled
the oil companies to maintain
these price floors. In 1928 the

LTHOUGH politicians frequently
sweep their campaign promises
under the rug after being elected,
there is at least one commitment
which City Council Democrats have
not neglected.
A volunteer door-to-door registra-
tion measure, introduced by Demo-
cratic Mayor Al Wheeler, was passed
6-5 by City Council Tuesday night.
Human Rights Party Councilwoman
Kathy Kozachenko (Second Ward)
joined the five Democrats in support-
ing the measure.
The measure empowers the city
clerk to appoint up to two per cent
of the voters in the last mayoral elec-
tion - about 700 people - as volun-
teer deputy registrars who could set
up registration sites anywhere in the
city or conduct door-to-door registra-
tion.
The Republicans have long opposed
such a measure because it tends to
increase the number of student vot-
ers, who are not as likely to be regis-
tered under the current system. Tra-
ditionally, students have cast far few-
er ballots for Republican candidates
than for Democratic or HRP hopefuls.
TN THE PAST, the city GOP has sup-
ported measures limiting registra-
tion sites in student sectors. Last
year, Council Republicans cancelled
out the Fishbowl and Public Health
library registration sites - leaving
only the Union location to register
student voters the week prior to elec-
tions.

Ironically, it is now the Republicans
who are howling about equal distri-
bution of registrars throughout the
city, fearing that only the student
areas will be blanketed with deputy
registrars.
However, a voter registration drive
in Republican areas would not near-
ly be as productive as a similar ef-
fort near the campus since students
tend to be registered in proportion-
ately smaller numbers than the long-
time city residents in Wards Three
and Five.
City Council also passed a resolu-
tion Tuesday night to bring the door-
to-door plan before the electorate for
an advisory vote in the April elections.
THE REPUBLICANS and Democrat
Liz Keogh (First Ward) supported
this measure, in order to gauge voter
reaction to door-to-door registration.
However, a vote of no confidence
would not automatically overturn
the plan.
What this vote would fail to show,
however, is support for door-to-door
among the people who need it most --
those who have not yet been regis-
tered. And that includes not only stu-
dents but also the invalid and the el-
derly.
It is every person's right to be en-
franchised and any steps taken to
register all eligible voters deserve only
praise. We commend the action taken
by City Council on this issue and urge
that the plan be implemented as
quickly as possible.

S'.r '" . '°n° Q"':ted.'r"^ ! 'r... # ..°.;i ; :: '4
"In fact, five large oil companies whose
operations are almost entirely in the U.S.
reported a 92 per cent combined profit in-
crease in the year following the OPEC price
increases.
r ,'v :r..vts. a :, ': " :v+. : : { . : "{ : ' : : : ; , . ": ;

the price of Texas oil, plus
transportation costs - despite
the fact that Middle East oil
was much cheaper to produce.
To penetrate the European
and Japanese markets after
WWI, the international oil com-
panies decided to lower the
price somewhat. Still in the
1950s and '60s it remained
roughly ten times the cost of
producing the oil.
Now, with imported East oil
pushed by OPEC past $12.00 a
barrel, the oil companies are
using the OPEC standard the
triple the price of U. S. oil -
a price that bears no relation
to its cost of production.
The result for the consumer
has been higher prices.
FOR THE OIL companies, it
has meant enormous profits. In
1970, when cheap Middle East
oil was sold at inflated prices
in Europe and Japan, the U. S.
Department of Commerce esti-
mated that the companies had
a remarkable 79.2 per cent rate
of return on their net assets in
the Middle East and North Af-
rica.
Now, since 40 per cent of do-
mestic oil was decontrolled in
1973, those superprofits are be-
ing taken at home. As the
staff of the Senate subcommit-
tee on multinational corpora-
tions concluded this past Janu-

companies that dominated the
international oil industry -
principally British Petroleum,
Royal Dutch Shell, and Jersey
Standard (now Exxon) - met
in England at the Achnacarry
grouse hunting manor and es-
tablished the Gulf of Mexico
price as the world standard.
The Gulf price was kept high
from 1930 on by production con-
trols initiated -- at the insist-
ence of the oil industry - by
five of the seven major oil-pro-
ducing states. These controls -
backed up by the federal gov-
ernment in 1935 - frequently
limited production to as little
as 40 per cent of capacity.
The major oil companies did
the same in the Middle East,
leaving many oil fields unde-
veloped and continually resist-
ing demands by individual
countries for increased oil pro-
duction. When a country resist-
ed the controls -- as Iran did by
nationalizing its oil in 1951 -
the companies simply boycotted
that country's oil until owner-
ship and control were returned
to the industry.
IT TOOK MONOPOLY power
to control production and prices
this way. In 1950 seven com-
panies -- five of them Ameri-
can - controlled 99 per cent of
all non-North American, non-
communist oil. Each was "ver-

tically integrated" - producing
transporting, refining and mar-
keting their oil.
In the next 20 years other
vertically integrated firms en-
tered the industry - until today
there are 18 such major U.S.
oil companies. But as the Fed-
eral Trade Commission put it
in 1973, "The majors demon-
strate a clear preference for
avoiding competition through
mutual cooperation and the use
of exclusionary practices."
The major oil firms form
joint subsidiaries to produce
and refine oil. They write long-
term contracts among them-
selves to supply each other's
needs and keep up a barrier to
independent competitors. And
they divide markets to keep
competition low.
IN ADDITION, the eight larg-
est American oil companies
own or control over 90 per cent
of the nation's pipelines. Using
this power to dictate the terms
on which independent producers
sell or transport their oil,tas
the FTC report explained, they
"have effectively controlled the
output of many of the indepen-
dent crude producers."
Finally, the top 20 firms re-
fined 87 per cent of the crude
oil in this country in 1970 -
and the percentage is probably
higher today.
This lack of competition re-
suIts in monopoly prices and
profits. The rates of return on
investment of the eight largest
oil companies are usually 10 to
20 per cent higher than the av-
erage for American firms -
and even this, according to the
FTC, is understated. Because
of the number of tax breaks
given these companies, the FTC
concludes, "there is consider-
able reason to believe that the
after-tax profit shown under-
states the true profit of the
companies."
This monopoly, power has
traditionally left the federal
government dependent not an a
stick but on a carrot - high
profits - in dealing with the oil
industry. Thus the industry has
been handed a long series of
tax breaks! To stimulate pro-
duction, the oil depletion allow-
ance was granted. To take the
sting out of higher royalties,
the IRS ruled that oil produc-
ers could reduce their tax pay-.
ments to the U. S. by the
amount of royalties they paid
to foreign governments.
OIL C O M P A N I E S
HAVE ignored government re-

"By holding investment back until superprofits were guaran-
teed, the oil industry forced President Ford's elimination of
price controls, the only remaining barrier to its price-floor
policies for fifty years."

Line 'em up, sign 'em up

commendations that were not
profitable to them. In 1952, for
example, the president's Mater-
ials Policy Commission recom-
mended the development of so-
lar energy and the production
of gas from coal and synthetic
fuels from shale oil. But the
government invested little mon-
ey, and the oil companies -
given their oversupply of Mid-
dle East oil - had no profit
incentive to invest inalternate
energy sources.
President Ford, in lifting the
price controls, is using profit
incentive to lure the industry
into increasing domestic pro-
duction and developing alterna-
tive sources of energy. Thus,
by holding investment back un-
til superprofits were guaran-

teed, the oil industry has forced
the elimination of price controls
-the only remaining barrier to
its price-floor policies in 50
years.
AS WARREN D. DAVIS,
Gulf's Director of Energy Eco-
nomics, put it, "A lot of influ-
ential people in Congress insist
that our 14.6 per cent rate of
return on invested capital last
year was obscene. Sure, it's
substantial. It certainly isn't
niggardly. In fact, it's kind of
high. But that's what we need
to do the job."

AN ASTUTE ALBEIT barely coher-
ent observer of the local pedes-
trian scene recently noted, shortly
before lapsing into terminal befuddle-
ment, "You can always pick out the
freshpeople; they're the ones who en-
joy standing in line." Further heavily
endowed research must be conducted
before such a correlation can be con-
firmed or declared preposterous. For
those of us who've long since recov-
ered from first yearism, line-stand-
ing without exception tops the heap
of 'those banes which darken our ex-
istence.
Anyone who for a moment thought
CRISP would be the critter to quick-
en the queues and get the blood mov-
ing again is the victim of a cruel
Editorial positions represent
consensus of the Daily staff.
TODAY'S STAFF:
NEWS: Gordon Atcheson, Ted Evan-
off, Jay Levin, Jim Tobin, Bill Turque,
EDITORIAL PAGE: Paul Haskins.
ARTS PAGE: David Blomquist.
PHOTO TECHNICIAN: Steve Kagan

hoax. Scattered reports from the Old
Architecture front have it that the
human millipede over there is up to
its knees in ivy and crazed debate is
raging over the month and year.
PEOPLE AROUND HERE have been
lined up, signed up and literally
strung out for so long many actually
believe their time isn't' worth two
tickets to the midnight submarine
races. "Can't buck the computer,"
they rationalize. Or, "Oh Boy, waiting
in line five days for good football
tickets and freezing my ass off is real
neat. Besides Fielding Yost did it 800
years ago. Why shouldn't I?" Why
shouldn't you, indeed.
As for the campus' saner types, the
line game is no parade. If the Uni-
versity doesn't want a major sit-down
on its hands, along with its own be-
hind, it should consider getting out
of the herding racket. Until then,
those mythical folk who actually work
where the lines begin should exercise
great care in handling the perishable
if not perished few who actually buck
the odds and reach their appointed
end.

Steve Schneider writes
larly on energy and the
o(Wy. Copyright Pacific
Service, 1975.

regu-
econ-
News

Letters:, Join f ight against tuition hike

To The Daily:
ON JULY 17 while most of
us were out of town the regents
did it' again. They raised tuition
6 per cent making a total hike
of over 30 per cent in three
years. This hike and the trend
it represents is an out and out
attack on our ability to attend
school and is part of a nation-
wide pattern of tuition hikes
and cutbacks in higher educa-
tion. The increase will most
severely hurt minority students
and working class youth who
already are hard pressed to
meet their educational costs.
Why did this tuition hike
come down? President Fleming
claims in a letter thoughtfully
sent to us after the fact, that
the university is experiencing
budgetary problems, particular-
ly in its general operating fund
which includes both the state
appropriations and student fees.
These problems are part of the
nationwide economic crisis and
the state's fiscal crisis which
has resulted in many increased
costs and a cut, considering in-
flation, in state appropriations.
This is not the question. The
question is: Who is going to pay
for this crisis? We, the stu-
dents and workers? Or them,
the university administration,

state and federal governments,
corporations, etc.?
The University is already im-
plementing cutbacks in student
services and minority pro-
grams, layoffs of campus
workers, and speedups for those
workers still on the job. The ad-
ministration is seeking to put
the burden of their budget cris-
is on us. Their position can be
summed up in one sentence:
Students and workers pay more
for less.
TO fight this tuition hike, to
roll it back we've got to take
a stand and start organizing to-
day. Particularly since we can
only expect. more of the same
kind of attacks in the future.
Last year they tried unsuccess-
fully to raise dorm rates and
eliminate the Pilot Program,
and they are certain to try
again.
The University is stepping up
its campaign to shift the bur-
den of the crisis onto our backs
and we've got to step up our
campaign to stop them. We
should take inspiration from
the GEO strike of last year,
the BAM strike of five years
ago, and from the students at
Brown University who won a
tremendous struggle against
cutbacks last April. Mass ac-

tion can defeat the university
administration - but only if
we get ourselves organized.
That's what the Committee to
Fight the Tutition Hike is do-
ing. A proposal adopted at our
second meeting describes us as:
An association of individ-
uals and organizations formed
to fight the tuition hike. The
committee recognized its sol-
idarity with workers, espe-
cially with the unions that
represent employes of the
University, and pledges to
fight any cutbacks or lay-
offs.
Committee to Fight the
Tuition Hike
September 5
hunting
To The Daily:
A FEW SEASONS ago I re-
ceived my first real taste in the
"sport" of hunting. While
peacefully studying the behav-
iour of a local goldfinch popu-
lation, I heard the crack of a
weapon and soon after, felt the
sting of buckshot. A thorough-
ly pleasurable outing was shat-
tered by a hunter.
After telling him what he had
done, that in reality I was not

a pheasant, and that there was
no hunting on this particular
property anyway, he "apologiz-
ed" by shouting out a mouthful
of profanities.
I am relating this incident
now, as a new hunting season
comes fast upon us and as the
solitude of the outdoors once
a g a i n becomes jeopardized.
Hunting cannot, by any stretch
of the imagination, be called
sport.

If hunters really wish to make
a sport out of killing and
maiming, let them please travel
to some secluded island armed
to the hilt, and in the name of
"management" (overpopulation
of humans) let them all feel
free to blast away at anything
that moves until that one final,
lone hunter has all the trophies
he will ever need or want.
Howard Brickner
September 3

Contact, yoUr

reps-

" "C TOG CTRN C-S S

Sen. Phillip Hart (Dem), Rm 253, Old Senate Bldg., Capitol
Hill, Washington, D.C. 20515.
Sen. Robert Griffin (Rep), Rm 353, Old Senate Bldg., Capitol
Hill, Washington, D.C. 20515.
Rep. Marvin Esch (Rep), Rm. 412, Cannon Bldg., Capitol
Hill, Washington, D.C. 20515.
Sen. Gilbert Bursley (Rep), Senate, State Capitol Bldg.,
Lansing, Mi. 48933.
Rep. Perry Bullard (Dem), House of Representatives, State
Capitol Bldg., Lansing, Mi. 48933.
.a a a e a a a as e mm am

Housing: Doubletalk as a science

By TIM SCHICK
DESPITE DORM over-crowding and the lottery last
spring getting out of a dorm lease is like squeez-
ing water from a rock. As was the case for so many
others a series of confused events resulted in my sign-
ing a dorm lease for this school year. But as the sum-
mer passed I got hooked on the freedom off-campus
housing offers. No quiet hours and rowdy football
players next door. No roommate to lock you out in
favor of an unscheduled companion.
Summer drew to a close and I prepared to give up
my freedom with the opening of the dorms. Then,
two days before I was to move out of my summer
abode, my housemates waltzed up to me saying "We
need a third person for our apartment . . . you don't
really want to go back to the dorm, do you?"
There was no question about it. All I had to do was

"We're taking care of them," I was told.
The only other way out would be to find someone to
buy my lease from me.
"Could I see a copy of the waiting list so I can get
some one to take my lease?"
"I told you we're taking care of them. We can't give
out the list," replied the iron-willed secretary.
Tim Schick is a Daily Night Editor
and a recent dorm escapee.

"But that's stupid, no one wants to live in a triple,"
I exploded "and besides you're going to move him
out any way."
"But that's the rules," came the reply.
My next step was to examine the lease to see if I
could break it. I could always get turned in for smok-
ing grass I thought. I even found an RA who would
turn me in if I requested it, Another way would be to
get caught pulling a fire alarm.
Still another, more realistic way would be to get a
note from Health Service's mental health clinic indicat-
ing I would not be able to cope with dorm living.
I DECIDED ALL these methods would be drastic
and should be shelved until the last minute.
As luck would have it I found a guy who had been
forced out of the dorm last spring by the lottery. He

"But that's stupid!"
"But that's the rules," came the reply
My next step was to find a student who wanted to
taemy room.The houidngofficep has c~reated trinles

m

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