# Less Power to the People: An Interview With Eugene Guccione Conducted by Frank X. Richter **URL:** **By** Eugene Guccione **Published:** April 1, 1973 --- “Eugene Guccione is the senior editor of McGraw Hill’s \*Engineering and Mining Journal\*.” Eugene Guccione is the senior editor of McGraw Hill’s _Engineering and Mining Journal_. He has lectured and studied industrial and high polymer chemistry at the NYU Graduate School of Engineering; his report on _stereospecific polymerization_ has been used as a text in several graduate schools of chemical engineering. Mr. Guccione has presented papers and conducted seminars for the American Institute of Chemical Engineers, the American Society of Mechanical Engineers, the Research Society of America, the National Association of Manufacturers, the Rocky Mountain Electrical League Association and other professional groups. He has lectured at Columbia University, New York University, Hunter College, CCNY, Brigham Young University and elsewhere on the problems of the engineering and mining profesions. His findings and studies on the pollution and energy crises have been widely reported by local and national media; _The New York Times_ carried a long abstract of his findings on the energy crisis last May. Despite his editorial, investigative and research responsibilities, Mr. Guccione finds time to direct the activities of the Committee for Monetary Research and Education. **Outlook:** We’ve heard a great deal about an “energy crisis” in the last few months. It’s been said that we are not capable of providing the increased electrical power that will be needed to sustain economic growth in the years ahead. We’ve had blackouts, brownouts, and fuel oil shortages. We’ve even heard rumors that our natural gas supplies are dangerously depleted. I guess the first thing our readers would like to know is: Are these predictions exaggerated? **Guccione:** The “energy crisis” is quite real. Just to maintain our present living standards—let’s forget about “progress” or “growth” for a moment—the U.S. electric power industry will have to increase present generating capacity by 500% during the next twenty years. This means that we will have to complete a sizeable number of generating plants, traditional and nuclear, over the objections of some of our well-meaning but misguided environmentalists. This means, as well, that we will have to exploit our natural gas, coal and oil resources far more effectively. And how are we doing on the energy front at the moment? In New York, for example, Con Edison intended to add 1.4 million kilowatts of generating capacity between 1965 and 1970. With repeated blocking of proposed plants, Con Edison has fallen short of that goal by 50%. In New Jersey you’ll have to ante up an extra $750 for gas or electric heat if you plan to build a house; the New Jersey Natural Gas Company can no longer afford to supply gas to new customers, be they homeowners or industries. **Outlook:** What is in store for the nation if we do not secure the power we’ll need—I believe you mentioned a 500% increase in generating capacity over the next two decades. **Guccione:** What’s at stake? Your income, your job, the services you receive, even your life span will be adversely affected by a lack of power. About two years, ago, the Chamber of Commerce of Metropolitan Baltimore estimated that if the two nuclear plants of the Baltimore Gas and Electric Company were not completed on schedule by 1973, Baltimore would not be able to create some 30,000 to 160,000 needed new jobs by 1975. This would mean a $139 to $740 million loss in retail revenues. A $13 to $70 million loss in local tax revenues. A $94 to $502 million loss in service revenues. A total annual loss of up to $1.3 billion for the people of Baltimore. And these figures were based on a most conservative estimate of 3% per year increased demand for power. Parenthetically, those two plants have yet to be built. In every country in the world there is an astonishing direct correlation between▷ per capita energy consumption, per capita income and life expectancy. In Africa, for example, per capita electrical consumption is 186 kilowatt hours per year. In North America, it’s 5,700 kwh. On the “dark” continent, annual income per person is less than $200. Over here, it’s more than $3,000. An African can expect 43 years of life. A North American’s life expectancy is 71 years. **Outlook:** You haven’t painted a very pretty picture of things to come. How did we get ourselves into this situation in the first place? **Guccione:** How we got into this mess is part and parcel of _who_ got us into this mess. But let’s begin with “how.” Our primary sources or power—coal, natural gas and oil—had very similar growth rates from 1850 to 1930. During the Depression years, of course, all three industries took a tailspin. After 1940, natural gas and oil resumed their historic upward growth. But what is significant is that coal did not. Gas and oil have quadrupled or quintupled in the past three decades. Coal has remained an essentially zero-growth industry for the past forty years. **Outlook:** There are those who claim that zero growth is an ecological ideal. **Guccione:** I’d like to remind them of what zero growth has meant in coal producing states: thousands of miners jobless, many small or marginal coal companies bankrupt, hundreds of coal equipment manufacturers against the wall, a proliferating spread of ghost towns and a field day for demagogues of every description. **Outlook:** So coal has been in a slump since the forties. Why? **Guccione:** Now we get to the question of “who” got us into this mess. Some people would try to blame the United Mine Workers. But many industries have had to deal with “tough” unions, and most of these industries are still healthy today. Although very powerful, labor unions couldn’t and wouldn’t plunge coal into a forty-year depression. The one institution powerful enough to do just that was the federal government. How did they do it? By forcing price controls on a competitor of coal— natural gas. Prior to the Depression, coal, gas and oil competed fiercely with each other—and prospered. But in 1938 Congress passed the Natural Gas Act giving the Federal Power Commission authority to regulate the price of transporting natural gas across state lines. Within a few years, that authority was expanded, and until very recently the FPC dictated arbitrarily low prices for natural gas even at the well-head. (Finally, after many years of controls, the FPC is now admitting its errors and speaks of “allowing” higher prices for natural gas.) The real problem is that virtually every legislative act on energy matters passed by the Congress in the past forty years has emphasized the theme of “low cost and abundant energy.” Now, no market can provide anything “cheaply and abundantly” over a long period of time unless forced to do so by government intervention in the pricing mechanism. But when prices are forced below the market level, the result is invariably a shortage, other things being equal. When the FPC imposed artificially low prices on natural gas, they made it impossible for the coal industry to compete. Hence the depression in coal that I’ve already described. **Outlook:** If the FPC’s policies have made it so tough for coal, we were wondering how gas has fared under the price ceiling. **Guccione:** The price clamp is so tight that little if any venture capital, or even debt financing, can be raised by the gas industry for exploration or development. Things have gotten so out of hand that even if new resources are discovered, they can’t be made productive. No one has ever been able to explain why in John Kenneth Galbraith’s name Wall Street should finance any venture that has a profit margin lower than either the inflation rate or the interest rate on low-yield, high-security municipal bonds. So with fewer and fewer new gas fields being explored and developed, the reserves of gas are being depleted. In 1948, for example, the industry had enough reserves to sustain 30 years of production. By 1958, we had 24 years in reserve. 1968? Fifteen years. Today? I would be surprised if the industry had enough reserves to last a decade. **Outlook:** So when people say that we only have enough gas to last another decade, they really are talking about our gas reserves, not our theoretical geological resources. Is that correct? **Guccione:** Yes. We are not suffering a geological energy crisis. The United States has abundant coal reserves, more than adequate oil and uranium, and no proven lack of natural gas. Technologically, we still have a considerable edge over most other countries in the generation and distribution of power. So we are in good shape geologically and technologically. In fact, if we have any justification for optimism, it is in these areas. The cause of the energy crisis is political, and some pessimism is warranted here. For politics now dominates every aspect of our economy. **Outlook:** Some areas of the country seem to be harder hit by gas and oil shortages than others. You’ve touched on some of New Jersey’s problems. We understand that gas and oil is now scarce throughout the entire northeast. Why the geographical discrepancies if the problems are political rather than geological? **Guccione:** The FPC’s price policy has distorted as well as hampered production. You see, intrastate gas sales are not subject to the price ceiling, so producers have concentrated more on intrastate sales than on the interstate sales so vital to the eastern and northern sections of the country. **Outlook:** That explains the gas situation in the northeast. But what about the fuel oil shortages that have developed? **Guccione:** F. Ritter Shumway, president of the National Chamber of Commerce, put his finger on the problem when he noted that residual oil has been forced to reflect the competitive situation that the FPC people created by their natural gas pricing policy. At one time, residual oil was forced to sell for less than the crude oil from which it was refined because it had to compete with the “cheap and abundant” natural gas that the government had conjured, bullied and commanded into existence. Naturally, domestic oil producers said “the hell with it,” cut back on their production of residual oil and switched instead to producing the more profitable light distillates like gasoline, jet and diesel fuel. Faced with a shortage or domestic residual oil and natural gas, the government then decided to remove the east coast import restrictions on residual oil. The result: the entire eastern seaboard is dependent on Middle Eastern residual oil— but we can depend on that source just as long as Cairo (and Moscow) choose to supply it. **Outlook:** What percentage of the east coast’s residual fuel oil comes from abroad? **Guccione:** As of November 1970, 93.7% of the residual oil used in the eastern seaboard states for heating purposes and generation of electricity came from the Middle East. Today, that percentage is closer to 100%. **Outlook:** Protectionism seems to be “in” these days. Surely this Middle Eastern oil business must be making politicians twitch; what, if anything, does the government intend to do about the energy crisis? To alleviate it, that is. **Guccione:** Lots of people are moaning about the energy crisis. President Nixon, for one. His clean energy message of June 4, 1971 emphasized the need for exploring and developing the nation’s sources of clean energy. **Outlook:** What sources do you suppose he has in mind? **Guccione:** Hydroelectric power, natural gas, low-sulfur oil, nuclear power and low-sulfur coal, most probably. **Outlook:** What do you feel are the chances that we’ll be able to use them? **Guccione:** Given the present political realities, the problems are numerous. Take hydroelectric power, for example. You can only put so many dams on a river, and we have only so many rivers in the nation. Although a few more dams could be built, environmentalists are even against that. We’ve already discussed what’s happened to domestic natural gas producers. Hence natural gas will have to be imported from Algeria and Libya, or it will have to come via pipeline from Canada and Alaska. Environmentalists have already demonstrated their ability to block the construction of such a pipeline. Supplies of low-sulfur oil are now insufficient to meet demand—a demand that has been enormously increased by all sorts of industries in their effort to meet unrealistic and arbitrary air pollution standards. If you try to build more refineries to relieve the shortage of low-sulfur fuel, environmentalists will scream that you’re polluting the atmosphere. Nuclear power? A no-no because of the ecologists’ concern for the alleged dangers of radioactivity and thermal pollution. **Outlook:** You also mentioned low-sulfur coal. What _is_ low-sulfur coal, anyway. It may just be a layman’s superstition, but I’ve always thought that coal was inherently “dirty.” Is there really a “clean” coal? **Guccione:** There certainly is. Coal typically supplied to power generating companies has a sulfur content between 1.5% and 3%. The type of coal that I’m talking about has less than 1% sulfur—between 0.5% and 0.6%, to be exact. **Outlook:** How common is this “clean” coal? **Guccione:** There are billions of tons of low-sulfur clean-burning coal in the western states—particularly in Utah. At the current rate of consumption, our coal reserves will last for the next 3,500 years. **Outlook:** Well, with the power shortage in full swing, and ecology in the back of a lot of minds, why aren’t the coal companies leaping at the opportunity? Surely there is a big demand for this “clean” coal. **Guccione:** I agree. There should be a great deal of coal prospecting and mining going on in all the western states. But there isn’t. At the moment, it’s not permitted. **Outlook:** It’s not permitted? **Guccione:** The Department of the Interior’s Bureau of Land Management has not issued any leases or prospecting permits for coal since February of 1971. No coal permits have been issued for more than two years. **Outlook:** You’re saying that the government forbids the industry to mine the very coal that the President demands we develop? **Guccione:** Precisely. The facts are easy to ascertain; the reasons are a bit more difficult to grasp. Maybe the Department of the Interior is holding out to get higher rental fees. Maybe they are bowing to the pressures of the conservationists. Perhaps they want to head off widespread speculation. These are a few plausible explanations. There is another possibility. In _The New York Times Magazine_ of March 19 last year, Dr. Pinkney Walker, a Federal Power Commissioner, raised the suggestion—and I quote—“Is it not conceivable that the federal government might decide to take control of large portions of the private energy industry in order to protect the public interest?” To answer his rhetorical question, I think it’s quite conceivable—and I also think that this is the reason the coal industry has been forbidden to exploit the western deposits. Bureaucrats thrive on crises. If need be, they’ll manufacture them to make themselves indispensable. After all, the Department of Health, Education and Welfare will be necessary only as long as it keeps enough Americans sick, dumb and poor. I think that Dr. Walker’s plea for nationalization is obscene, but then we should take its source into account: the Federal Power Commission. That’s the agency that caused the energy crisis in the first place. **Outlook:** Do you have an alternative to nationalization, Mr. Guccione? **Guccione:** If you understand how we got into this crisis, the way out virtually suggests itself. We must abandon our “low cost and abundant’ energy policy and replace it with an adequate-source concept. We must rescind the FPC’s authority to set the prices of natural gas at the wellhead and elsewhere, their authority to set the rates of transporting natural gas across state lines, their authority to set the wholesale prices of energy. Best of all, we should eliminate the FPC; it has outlived its alleged usefulness. We must also abolish the federal government’s authority to set prices of crude oil and its derivatives. We must open up public lands to mineral exploration and development, either by selling lands outright or facilitating the issuance of federal leases and prospecting permits. We should put an end to the government’s policy of withdrawing public lands from use without public hearings in the states affected. Such withdrawals should be strictly limited as to time and acreage. We should certainly put an immediate end to the Department of the Interior’s moratorium on coal permits. A rational energy policy would promote the use of strip mining: a far cheaper and safer method of extracting coal than underground mining. Before the conservationists scream, let me remind you that less than 0.14% of the total land of the United States has been disturbed by stripping. Half of that land has already been restored, and the rest is in the process of restoration. We should promote the use of nuclear stimulation of natural gas deposits, originally developed under the Atomic Energy Commission’s Plowshare program. Underground nuclear detonations are extremely effective in releasing gas from tight natural formations. The government ought to avoid interfering with off-shore drilling operations. Nearly 80% of all potential and proven oil reserves are underneath the territory comprising the coastal plain, the continental shelf and the continental slope. With these facts in mind, we ought to establish exclusive jurisdiction over the mineral resources of the entire submerged portion of the continent, down to the abysmal ocean floor. And we must resist any move by the United Nations to internationalize ocean areas beyond a depth of 200 meters. **Outlook:** If we were to ask you to express the principle behind that myriad of proposals, what would you say? **Guccione:** I would say that we need two things: adequate energy sources, and the freedom to put them to use. **Outlook:** More power to you, Mr. Guccione. **Guccione:** More power to us all.