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I’m not being cute when I say that. There’s an attitude, vindictive attitude toward anyone from a producing state in Washington, D.C. Anyone who says anything related to oil policy who is not a total consumer orientation is treated with complete mistrust. Observer: Do you think it’s a good idea from the point of view of the nation as a whole to have the point of view of a producer state given that much emphasis? O’Rourke: Look, right now natural gas as a commodity, as a natural resource, is being dramatically wasted. Wasted not in an economic sense, which it is, but in a resource use sense. It’s being truly thrown away. The most valuable thing you can do with natural gas is to.use it as, a material in feedstocks, like we have here on the Gulf Coast. It’s not just rhetoric that I use about when people in New York can buy Texas natural gas for 52 cents when you in Austin pay $2.00. In reality, we in Texas are subsidizing a wasteful use of energy. What would happen in New York if they had to pay $2.00 per thousand cubic feet, the market price? Answer is they’d use alternative fuel. They would develop coal, which I see as the next thirty years, the development of coal. They’d use fuel oil, that’s what it’s made for…. The problem occurs in this country when you have to buy natural gas for your stove or when you have to buy other products when you don’t have any ability to bargain. You don’t bargain with Houston Lighting & Power for your electricity. And that’s where the RRC failed to represent the consumers’ interest. Observer: Why do you think that is? O’Rourke: I think it’s the people, simple, the people on the commission. One of the things is that natural gas really has been so cheap in Texas for so long, that’s an institutional problem. Until three or four years ago the gas bill you paid was nothing. Now it’s a significant part of your cost of living. You have to remember, 20 years ago natural gas was a waste product of oil exploration and it was the RRC that forced people to reinject it and not flare it. . . . The FPC has been controlled, is controlled today by what I call non-producing East Coast states. That might be a buzz word to you, like SouthTexasrancherbanker, but East Coast non-producing state is a real word to me, and it represents a whole kind of mind set of people who have an attitude of “screw Texas, to hell with ’em.” And I don’t want to sound like a jingoist when I say this, but I’ve looked at the gas reserves in this state and they’re continually declining and there’s gonna come a time, there just won’t be natural gas in Texas. Observer: Do you think that deregulation of the interstate price would take care of it? O’Rourke: It is the best solution at hand to stop the waste of Texas natural gas, and to return to the state money to reinvest in alternative sources of energy, and to put money into the tax system to try and overcome it. I use the example of Appalachia, because we’re going to become the new Appalachia if we don’t do something to change our gas policies. Not only do New Yorkers pay less for natural gas, we pay about 400 percent more in severance tax than a New Yorker who is consuming the same amount of natural gas because we have a tax based on well-head price. . . . Observer: What about pass-throughs? O’Rourke: That is an example of the most tremendous failure on the part of the Texas Railroad Commission. It is so obviously terrible, it really doesn’t require anything except to say, I’m against it. Then people say, o.k., what are you for? I think that what people object to more than anything else, besides high prices, is the method by which they’re told that prices are going to go up. It’s an arrogant, insensitive thing that comes right in your mail that says, Pay up or we shut your lights off or shut your gas off. Ther6’s no hearing…. The best thing that I can tell you that I can do is I can make sure that you get a fair hearing. That when your gas bill goes up, that the RRC comes to your town and listens to the facts and figures and makes sure that the gas utility company doesn’t get one more cent than they’re supposed to. Observer: Are you satisfied that the RRC Terrence O’Rourke itself has sufficient information from the companies on which to base such deci sions? O’Rourke: No. They’ve been sitting with their feet in concrete on a rate-making formula that comes out of a case called the City of Alvin case. One thing I know about rate-making, most of my experience has been on automobile liability insur ance, there is a science and there is art . an a to rate-making. And what you have to develop is adequate rate of return on capital for the gas utilities. Observer: But how can you even make a formula decision unless you’re sure that you’re getting the right information? O’Rourke: That’s a point, of course that’s true. And the RRC is inadequately staffed. I wouldn’t say there’s really an adversary relationship between the regulator and the regulated. This isn’t to say, I want to make this clear here, that I am not for nationalization or anything else like that. I think that utilities companies deserve a fair rate of return. And I’ve gone to consumer groups and said, by God, they deserve a fair rate of return. If they deserve a price increase, they deserve a price increase, You can err, you can be real super-neat and make sure that someone doesn’t make a profit. And the only people who end up paying in the long run are the consumers, end up like the consumers in Lo-Vaca getting just raped. Observer: We wanted to get, you to talk about what you have seen in running for this office of the diversity in the oil/gas industry. You know, liberals tend to think of this as one great monolithic…. O’Rourke: It’s not. That is the most … one thing you can say about the oil and gas business is .that it is not a monopoly. It’s not even really an oligopoly. There are some tremendous anti-competitive factors going on right now, not the least of which, I’d say the greatest anti-competitive factor right now is FEA regulation. The Federal Energy Administrationif you devised a system to make oil companies bigger and push the small people out of business, you couldn’t devise a better system than having the FEA administer the systematic destruction of the independent oil men. You have to continue to sell at FEA’s price all the oil, you cannot, there’s no market place left. The FEA’s setting the price and the place that you can sell. What this means, typically, an independent sells to a major at their refineries at a price set by the FEA. Some terrible things going on in the business. The diversity is tremendous. People in the oil business though are like any other type of profession, whether doctors or lawyers or anything else, they’re sensitive to attacks from the outside. When you get someone up who talks about nationalizing the oil business or something like that, you get a pretty monolithic response. The oil industry really is seven or eight types of industry. See drilling companies are totally different than major oil companies. Independent oilmen. What is your image besides a guy who drives blondes around in a Cadillac and gets drunk when he hits and plays dice games? The average oil .company, there are 400 oil companies in Houston, Tex., and the ordinary oil company is not as big as the bottom floor of this house. Typically what it has is an older female March 26, 1976 13