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vos t ,I.e* V9 2′”?..t s c ‘l ve c cot 41 1:te. vet s 4so ceS S $0,95. 19,s 9 df Cc 61 fte e vi. t5 1 With divestiture, separate and independent buyers will shop for the best price from separate and independent sellers. All the oil and oil products in the U.S. will be sold under conditions of competition. Companies at each stage will be able to sell for prices which reflect their costs and a reasonable return on their investments. But the companies will not be able to extract the additional profits that come from having monopolistic power. The Petroleum, Industry Competition Act, now moving through the Senate, would provide that a company such as Exxon become three new companies: Exxon Production, Exxon Transportation, and Exxon Refining/Marketing. The existing company would draft its own divestiture proposal, subject to approval by the FTC. Stockholders of the 18 affected companies would most likely receive shares in each of the new companies, which would remain large enough to generate healthy profits and to raise capital. Every one would still be ranked on the Fortune 500. Exxon’s three companies would each be listed in the first twenty. The executives now fighting divestiture would have every possible incentive for a smooth, efficient transition. Some companiesat least Exxon, Sun, Continental, Socalare already organized by function. Divestiture would simply mean tearing along the perforated lines already drawn by the companies themselves. OPEC would confront a revamped industry structure which would finally provide an opportunity for dissolving the fragile unity that has successfully kept artificial price levels which are totally out of proportion to fair returns. Divestiture is the best hope for resisting the upward pressure on prices, the burden of which is ultimately borne by the consumer. Of course, the industry has already done. its best to anticipate even the crumbling of OPEC by getting Secretary of State Kissinger to commit this country to a $7 per barrel floor price under international oil. Operating through his own creation, the International Energy Agency, Kissinger has won acceptance of what he terms the “minimum safeguard price.” By midsummerprobably between the national presidential nominating conventionsthe divestiture bill is expected to clear the Senate. House action then is expected to follow swiftly, with a strong likelihood that President Ford will have a bill on his desk by October. GOP nominee or lame duck, Mr. Ford will confront a real choice between Big Oil and the people. And even though the President professes to be opposed to divestiture, when confronted with a similar alternative between the industry’s and the public’s interests, Mr. Ford decided last fall to reject Big Oil’s pressure and sign a compromise energy bill rolling back some prices. Even its most ardent advocates do not claim divestiture will cure all ills. Few remedies for any social or economic problem in these complex times are really complete. In this case, divestiture is only a component of a broader energy policy that must also cover such critical areas as conservation and responsible development of domestic resources on federally owned lands. To the leaders of the oil industry who are content with the present structure, change like divestiture represents a threatto psychological stability and economic muscle. Yet the company which is truly efficient, as most now claim to be, can be assured of full participation in the marketplace. But only if it operates on the assumption of a fair profit return based on the true costs of doing business. If some want to contend they could not function in this realm of free enterprise, then the burden is on them not only to prove why they can’t but to square their position with their public posture in support of the American economic system. Ten years and forty thousand pages after the Senate subcommittee began its work, the documentation has been laid out. A reasonable and thorough case has been made for divestiture. It is not political vendetta, as the industry is feverishly claiming in hopes of discrediting the concept. Even the oil executive who is not persuaded on the merits of divestiture ought to be working now on plans for implementation. Once divestiture becomes law, the American people will expect much more than petty denunciations and will look to those oil companies which demonstrate good business judgment and genuine public concern by getting on with the job in the new competitive environment. Editorial and Business Offices: The Texas Observer, 600 W. 7th St., Austin, Texas 78701. Telephone 477-0746. 7.30MD.747 EDITOR Kaye Northcott CO-EDITOR Molly Ivins EDITOR AT LARGE Ronnie Dugger Contributing Editors: Steve Barthelme, Bill Brammer, Gary Cartwright, Joe Frantz, Larry Goodwyn, Bill Hamilton, Bill Helmer, Dave Hickey, Franklin Jones, Lyman Jones, Larry L. King, Georgia Earnest Klipple, Larry Lee, Al Melinger, Robert L. Montgomery, Willie Morris, Bill Porterfield, James Presley, Buck Ramsey, John Rogers, Mary Beth Rogers, Roger Shattuck, Edwin Shrake, Dan Strawn, John P. Sullivan, Tom Sutherland. We will serve no group or party but will hew hard to the truth as we find it and the right as we see it. We are dedicated to the whole truth, to human values above all interests, to the rights of humankind as the foundation of democracy; we will take orders from none but our own conscience, and never will we overlook or misrepresent the truth to serve the interests of the powerful or cater to the ignoble in the human spirit. The editor has exclusive control over the editorial policies and contents of the Observer. None of the other people who are associated with the enterprise shares this responsibility with her. Writers are responsible for their own work, but not for anything they have not themselves written, and in publishing them the editor does not necessarily imply that she agrees with them, because this is a journal of free voices. BUSINESS STAFF Joe Espinosa Jr. C. R. Olofson Published by Texas Observer Publishing Co., biweekly except for a three week interval between issues twice a year, in July and January; 25 issues per year. Entered as second-class matter April 26, 1937, at the Post Office at Austin, Texas, under the Act of March 3, 1879. Second class postage paid at Austin, Texas. Single copy \(current or two years, $18; three years, $25. \(These rates include 5% except APO/FPO, $1 additional per year. Airmail, bulk orders, and group rates on request. Microfilmed by Microfilming Corporation of America, 21 Harristown Road, Glen Rock, N.J. 07452. Change of Address: Please give old and new address, including zip codes, and allow two weeks. Postmaster: Send form 3579 to Texas Observer, 600 W. 7th St., Austin, Texas 78701. THE TEXAS OBSERVER The Texas Observer Publishing Co., 1976 Ronnie Dugger, Publisher A window to the South A journal of free voices Vol. LXVIII, No. 11 June 4, 1976 locorporating the State Observer and the East Texas Democrat, which in turn incorporated the Austin ForumAdvocate.