(00:00:00) Well, thank you. Dan Wilson. Good afternoon everyone. We're broadcasting live from a house hearing room in the state capitol where the house energy and utilities committee is conducting a hearing into the gasoline Supply situation in Minnesota. The hearing called by chairman dick Wiggly as a result of the number of calls from state representatives receiving complaints from gas station operators that they are out of gasoline the experts that will be hearing from during the next 45 minutes or so included representatives from the Minnesota Energy agency including director. Al Johnson someone from the service station Association the petroleum, wholesalers the Department of Agriculture and and other experts who should be able to give us some idea of the nature of the gasoline shortage right now and what the Outlook is for the coming summer months incidentally Al Johnson was just confirmed this morning as energy agency director by the Energy and housing committee. Let's go to the chairman now and Dick (00:01:04) Wiggly and speeding up. Questioning process after you have all testified. It so too. I'll instruct the secretary take (00:01:17) roll call as the members come in someone want to move the minutes of the previous meeting. This is a 24 member committee 12 independent Republicans 12 dfl members representing the agreement that was worked out at the start of the session between the 6070 a Fellers 67 IRS in the house. The energy and utilities committee is a new panel created just this session. It really is an outgrowth of an ad hoc committee that had been in existence earlier and now here is the director of the Minnesota Energy agency. Al Johnson who will lead off this hearing and of the gasoline Supply situation in the state of Minnesota. This is what you saw previously the drawings. We're going to talk a little bit about what's happening from our projections. Those were projections. I think we gave those were in January when the yeah I think the critical thing on we'd like to address. First of all is just what is the state set aside or what is our role in fuel allocation? And that's covered in the in the cover letter, but I think I'd like to read portions of it. First of all, the agency is certified by the department of energy to carry out the state's responsibility under the emergency allocation petroleum allocation Act of 73 and the Federal Energy Administration Act of 1974. The main responsibility is to administer the state set-aside program, which under the federal mandatory allocation program is designed to alleviate temporary hardships on a monthly basis. Do consumers of motor gasoline and heating oils now want to point out? This is a federal program not a state program and it's designed to alleviate temporary hardships on a monthly (00:03:04) basis. (00:03:07) Now all all companies serving Minnesota are required to set aside three percent of their gasoline and 4% of their diesel. There are other heating oil supplies the state then allocates this fuel on a temporary hardship basis not present the agency fuel emergency Outfield allocation program consists of Dixie deal with fuel allocation officer one full-time energy specialist at beam and one part-time secretary six other agency staff members are being used to supplement the permanent staff and we've had to pull people away from ongoing conservation programs for instance data analysis. The very people who should be tracking the supply situation are being over here trying to allocate fuel which gives us a little bit of problems and trying to get some hard figures and exactly what our supply is because we don't have the people there anymore. They're over helping Dixie. The fuel allocation program has the assistance of County and Municipal fuel coordinators throughout the state and these are volunteers. These are volunteers these fuel coordinators make the initial contact with anyone undergoing a fuel problem system and filling out the forms. And they make an initial investigation of the circumstances and they also assist the agency from then on in when needed by providing information. When a client is in need of a permanent as opposed to temporary relief the agency tries to assist by the assignment of suppliers or by adjustments or increases to the base period volumes. No, the base period is another source of problems to us at the present time because the base period was recently changed. And now we have under we've been led to believe that they're going to change it again. And any time the base period has changed as seems like there's an automatic one month to six week period where none of the majors will do anything as you want to find out the impact of those changes. And this is all impacting at a very critical time for us as far as we're concerned because our main shortage right now is in diesel. We're looking at a late spring. We've got everything compressing in about the same time frame as I've said before the extension service. The seed corn dealers have done an excellent job in educating Farmers about such things as soil temperature planting depth and planting date and they're all very much aware. They've all got a Target date for their own particular need their own particular soil type is to what's the latest date they can plant corn and not start suffering real losses. And in most cases it's in that first second week of May and they start getting nervous. But we're very concerned with the 41 and a half percent reduction in supplies and all that's again keep in mind. That's merely a measurement that we do on a on a weekly basis of certain proprietary information. Okay, that tells us where we are at that particular point now I'd like to before we address questions. Maybe we could have Dixie come in up and explain exactly what's going on in the allocation (00:06:32) portion. I (00:06:34) would hope that the committee members would jot down (00:06:37) questions. You have your minds and ask them after those that are (00:06:40) presenting that was the initial statement by l Johnson energy agency director going into some of the details of the state's fuel allocation process fourth sheet here and V sheet on this hand down do a are very critical what we've found out what show them the show's let us say that the legislative districts the how inventories have been going up and down over the past year or so. I've shown show I'm out of fuel Alec are decline in Supply is this point? Yeah. This is for from 31 from the 1st of March through the 23rd of April and the number of gallons on that's combined gallons of both gas and Diesel and the number of cases and you can see it's pretty well distributed throughout the state (00:07:23) Dixie allocations division of the Minnesota Energy agency. Thank you. Mr. Chairman. I guess I would really like to address my remarks really to this map and to talk about some of the things which are happening around the state of Minnesota. You're all aware that Minnesota is really served by two product pipelines those being the Wayans brothers pipeline system and the Amoco system, which only handles standard oil or Amoco products are other products, of course come from the area refiners the for area refiners. One of our problems in the distribution of product within the state of Minnesota. This year has been a lack of product by various oil companies at the various terminals in the state at different times. I don't know how to really explain this other than to say that we have 26 major suppliers of product in the state and at one particular point in time, which is about two weeks ago fifteen of those suppliers were on what is called in transit time. That means that they cannot any of their customers cannot draw from the pipeline and less the product is physically there and some of our oil suppliers have not had product namely number one number two heating oils and Diesel fuels at some of these terminals particularly and I'll name them Alexandria Grand Forks and the Fargo terminals for up to two months and this has caused quite a dislocation of product and so forth throughout the state we have not let anybody go cold. I'm sure that there are some Farm book tanks that are quite not quite full yet. I'm very concerned about what's going to happen from here on out when we need that second and third fill for the farmers. I also will tell you that it's pretty difficult. When you look at the Unicom area on that map which shows about half of the population in the state of Minnesota. We allocated far more fuel outside of the metropolitan area than we did in the metropolitan area the majority of that which it was allocated within the metropolitan area did happen to be however the distillates which number one number two, heating oils and diesels because we were helping many many Industries in this are within the metropolitan area. This just doesn't represent gas stations and jobbers out in the field when the oil companies decide to allocate the allocate everybody on the equal basis. And without further Ado. I want to direct your attention to this page was says, Minnesota gasoline allocation fractions. it doesn't look too good and We will know probably about the first of the month what the weighted average will be for the state, but it looks probably like it'll come in around 83 to 85 percent on gasoline and the distillate is probably going to be a little bit lower than that and with demand up for supplies and so forth. It will be it's going to be very very tight and somebody's going to have to suffer this afternoon. I wanted to point to (00:11:01) a chart that shows the names of the various dealers major oil companies and the amount of fuel that they have allocated to them. And as she says the average would probably be somewhere around 83 to 85 percent over what was available previously. (00:11:20) Thank you. (00:11:22) Once again, l Johnson stepping up to the podium. (00:11:26) I'm just going to put dress (00:11:28) couple more comments here. The reason for the hand out of one that you've already received. If you notice there's some hatch Marks here on drawing one and on drawing three that reflects what we think will probably happen as a result of cutback in Refinery production, but from time primarily cope because of of Canadian cutbacks and also because of lack of Alaska fuel, they're not they're not being able to get ahold of Alaska and fuel one of the things we have talked about doing we may end up having to do because we just physically can't do it handle it completely is to turn the whole gasoline allocation back to the to the companies and just take care of diesel. If we continue we've got 10 people working right now today understand in the fuel allocation in the office. We can't continue to gut our agency by taking people away from ongoing legislative mandated programs to handle allocation. I did call Bill Watts in Indiana who is Chairman of the Midwest Governor's conference advisory staff and energy and he's what is he says running his trapline today. He's calling all the other states the 15 states to determine where there they are and we'll probably have a conference call tomorrow and we'll have a pretty good indication of how widespread this problem is. We know that Iowa's got problem. We know the Indiana has problems with gasoline, but not so much with diesel right now because of the truck strike they managed to build up some stocks. I think one of the things we've got to look at is we're not building stocks at the present time diesel fuel stocks, which is reflected in these in these drawings as we normally do we start building stocks. If we don't get the stocks built back up we can probably look for a mandatory. Switching the refineries a lot earlier than we usually do to start building. Those fuel oil stocks may be August maybe even in July and of course that'll impact very dramatically in the amount of gasoline we have because once that ration for that fraction is Switched in favor of fuel oil production out of that barrel of crude, then there's less gasoline produced. Your questions now or later later L (00:13:46) reiterate again, write your questions down that you want to ask these particular gentleman that are appearing here today. Next up here (00:13:53) is Brian tennis ball to the Minnesota service station (00:13:57) Association. Welcome Brian committee. (00:14:04) Thank you. Mr. Chairman. Mr. Chairman members of the committee. My name is Brian. It is full and I'm the executive director of the Minnesota service station Association. We represent about 600 service station dealers throughout the state of Minnesota. Those dealers are comprised of both branded full service and branded self-service and some unbranded dealers. We are extremely concerned with our fuel supply problem at this time part of the function of our association is to secure if possible Surplus gasoline product for dealers who are on allocation and are running short of product. Most of our dealers have been on allocation for the past three months some of them longer up until the present time. We have been able to secure some Surplus gasoline for those dealers that are running out. However at this time that market has virtually dried up mainly during the past week to 10 days. We're going to have a lot of dealers running out of product and we're going to have a lot of problems. We have problems with allocations. We have problems with the DOI and getting allocations getting allocations updated getting them changed. As Alice said the base period was changed just recently and they are going to change it again as of the 1st of May. We're going to have more problems and more inequities every time we change we get an equities and it's takes six months to nine months to a year to straighten out. Those are inequities. We have pricing problems with the DOA. The service station dealer retail profit. Margin has been frozen by the deal. We for the last five years. President Carter has said he's going to d control oil. And that's all he is D controlling. His oil is not the D controlling the price and gasoline. Coupled with this Frozen margin on gasoline for the service station dealers and the lack of fuel is going to put a lot of those service station dealers out of business within the next six months to a year. The profit margin is frozen and the cost of inventory. The cost of gasoline is increasing dramatically the dealer just cannot generate enough profit to survive and exist. So with the Frozen margins and the shortage of Supply, you're going to see a lot more service stations disappear, which will create hardships on the consumers. So I would urge you to do anything in all possible. Not only to secure fuel, but help the service station dealers out. Thank (00:16:46) you. Next to appears. Mr. (00:16:50) Kirk Watson of the Department of Economic (00:16:53) Development. (00:16:58) Mr. Chairman, my name is Kirk Watson. I'm director of research for the Department of Economic Development. I'm here on behalf of mr. Henry Todd who is director of Tourism for the state of Minnesota was unable to be here today. I've a few brief comments. I'd like to read to you regarding the tourist travel industry in the state and the importance of fuel and fuel allocation to that industry which was travel industry is an important part of Minnesota's economy last year generated approximately 1.6 billion dollars in receipts for tourism-related businesses in the state accounted for employment of about a hundred and fifty thousand minnesotans. It was also responsible for the generation of about 115 million dollars in state tax revenues Minnesota served as host to more than 8 million visitors last year and a recent report by the US Department of energy entitled emergency weekend gasoline restrictions. Minnesota is declared to be one of 10 states. Most economically dependent. Upon tourism the entire state drives economic benefit from the tourism industry that provides jobs and incomes for people in every County. However, a few counties are especially dependent on the tourist traveler their 16 counties in the state that derive at least 3 million dollars each year in lodging receipts. Well, though they are minority of the counties in the state. They generate approximately 55% of the receipts in the lodging industry in the entire State. I'd like to read those counties off to you so that you understand where these counties are that provide the bulk of the tourist travel lodging in the state in the metropolitan area. We have Dakota Hennepin Washington and Ramsey County's last year. Those States generated approximately a hundred and thirty million dollars in receipts and they represented 45 percent of the state's total lodging receipts the northern part of the states. We have cook Itasca koochiching St. Louis clay Ottertail Cass Crow Wing and Stearns County's those counties generated approximately 65 million dollars in lodging receipts and accounted for approximately twenty two and a half percent of the state's total lodging receipts in the Southeast corner of the state. We have Olmstead in our County with approximately 32 million dollars in lodging receipts and 11 percent of the state's total lodging. Recent National Studies have shown that tourists and travelers in the United States are 80 to 90 percent dependent upon the automobile for recreational travel the statistic clearly points out the importance of auto travel to the tourist travel industry in Minnesota. The dependence on auto travel is compounded by the fact that most tourist destinations in the state are not accessible by scheduled air or bus routes State's economic dependence on the tourist travel industry combined with a tourist travel Industries dependence on automobile transportation makes issue of fuel allocation important topic clearly any government or non-government actions that impact upon the allocation or availability of gasoline is of great importance to the tourist travel industry in the state into the 16 counties just mentioned in particular the tourist travel industry could easily be disrupted or even devastated by a Nikka inequitable fuel allocation policy. Most individuals in the industry are aware of the current energy problem in are anxious to deal with it in an equitable fashion. They're willing to work out a solution to the problem that will both minimize the economic impacts of gasoline allocations. And at the same time fall within energy conservation guidelines, the Minnesota tourist travel industry successfully overcame fuel shortages 1974 1975, but working together with fuel wholesalers retailers in the state's tourism division the joint effort among these groups produced a voluntary plan that allowed participating gas stations too close for one or two days during the week in lieu of closing for one or two days over the weekend the tourism division participated by informing the public of when and where gasoline stations would be open to resort areas. The net result of this effort was a tourists and travelers were able to get to and return from vacations with a minimum of inconvenience this plan also minimize the economic harm done to members of the industry in the future the Department of Economic Development, and I believe the tourist travel Mystery would like to address fuel allocation in a similar manner that is to jointly develop a solution that is Equitable to all parties and to avoid weekend closings. If at all possible is interesting to note that it is not only the industry that would like to avoid we can closings but also the consumer in February survey of 12,400 Americans around the United States, you lead some interesting results more than 78 percent of those surveyed indicated. They would prefer having stations closed during the week to having them close during the weekends only 19% of those people surveyed preferred weekend closings. Thank you. (00:21:52) Thank you Kurt. (00:21:53) Next up here is Jerry ever to the petroleum wholesalers? Mr. Chairman members of the committee. My name is Jerry Albert, and I'm the executive director of the Northwest petroleum Association. We represent over 800 members of the petroleum distribution system commonly called the jabber each of our members own their own trucks in their plants and their equipment in there all small businessman in addition to their wholesale function each owns at least one service station in some as high as 20 or more. They deliver the largest percentage of the products to Farmers and probably over 90% of the heating oils used for homes of Small industry. We were asked before the committee to give our viewers in four areas product expectations future costs the problem and how this committee can help. Let's take them one at a time. From where we set the product picture is very Bleak at least to the spring of 1980. Not that anything earth-shaking is on the horizon past that period but predicting that far in the future is impossible. We seem to slip backwards a little each year or it would be better to say we slip back a little each change of (00:23:06) of Seasons (00:23:08) gasoline problems started to plague us as early as March of last year. That's 1978 March spot shortages continued until we had several serious periods particularly in July and September of last year due to the heavy driving season and the good weather staying so late last fall gasoline demanded continued extremely heavy well into the fuel oil season this meant that the refinery's did not get maximized to the normal time. We considered normal in the fall. And we had problems getting changed over and now we seem to have a reverse of that position this spring cold weather stayed late in the spring the prevented getting maximized to gasoline at the times. We would like to a Mac gasoline and Diesel as early as possible. We were precariously low of number one and number two along about the middle of February. But once again is we've done two or three times so far. We looked at rule. We can see nothing but problems ahead for the state. I don't have to tell you about the stations that have been closing and now we're on allocations that are considerably more below what we actually need this is going to result in more service station closing this summer and I think it's going to be come a force a habit and we don't expect that. There will be serious problems with long lines, but we do expect it for the rest of the driving season. You may have to go to several stations to find gasoline because All of them at one time or another going to be closed. The number two question that I've been asked is to analyze the problem and that it takes some kind of a crystal ball to give all those answers. We see it as a series of conditions that have happened. Number one in everybody's book of course is all the help and the Federal Regulations were getting from the Department of energy and fellow of several other federal agencies lack of refining capacity is very serious. We believe that it is an indictment against the powerful Nation when it allows itself to get into our present can of worms are not enough refineries to go around when a fire in an explosion or a breakdown at or three refineries can cause US problems and refined shortage. Then we have a problem. We better start doing something about Crude Supply contributes greatly not going to repeat all the problems about Iran. You've all read them. You've all heard them and you know what, they've caused. We've continued to have crude problems from several other areas. Here we sit with for local refineries supplying about 60% of our refined product, but they don't get enough crude. The Canadians warned us years ago what they intended and when the cutoff would be completed and yet not one inch of new line has been laid. We have yet to even decide in which line comes first and having had much experience with a desk align the planning in the political problems. We get very discouraged as to whether or not we'll ever get our pipelines problems resolved but visualizes this for the state of Minnesota if we had a crude line carrying Prudhoe Bay crude a secure Source not depending on the outside outside and instability of foreign countries. We probably would have are refining capacity doubled we would then be at the head of a pipeline instead of the tail. We would be exporting instead of importing. Now I've been asked to talk about what I see for prices for future cost. The best way to predict is up up up. Nobody knows whether it will be a dollar a dollar and a half or two dollars. So I don't see a very pretty picture of bought the whole problem. I see the chairman waving at me. So I'll be available for questions. Gee I had some great things to say Dudek. Thank you. You probably get a chance to say I'm later on Jerry. (00:27:17) Next is Peter foul. Shove the (00:27:18) division director of the Minnesota Department of (00:27:20) Transportation. Welcome Peter. Thank you. Mr. Chairman. (00:27:27) My name is Peter Fowler. I'm the division director of the transportation Development Division in the department of transportation and I'm representing commissioner Braun today with me today is Jim Wright sitting over here who's available to help answer questions who is our energy person in our office of policy development? We see our role in the department of transportation is working closely with the energy agency. And if you will looking at both the supply and the demand side of the problem, we see our role primarily on the demand side that doesn't mean that we're not interested in the supply because we represent major users of petroleum energy in terms of the programs that we administer we see the supply side is essentially the role of the energy agency. Our biggest role is looking with them at the demand side and how to achieve efficiencies here. We've had a number of activities ongoing in our department and I just like to highlight the four of them. Of all as some of you know, we put together a State Transportation plan that were trying to wind up now in terms of administrative hearings, but as part of that we had an energy task force that mr. Wright chaired and we worked with the energy agency and the MTC here in the Twin Cities and NSP and the Metropolitan Council in the petroleum Industry Council and our regional task force throughout the state and tried to look at things that could be done in terms of energy. I guess three examples of the kinds of things we came up with is ride-sharing enforcing the 55 mile an hour speed limit and park-and-ride kind of opportunities. There were a number of recommendations in those activities since that time we've been working with the energy agency. Jim Wright has been working with Mark Munson and their staff. We probably should be doing a lot more. We all have problems similar that mr. Johnson mentioned in terms of Human Resources. One of the other things that we're doing in our office of environmental Affairs is the US Department of energy has said that by November 1st, they would like us to be able to address the energy impacts of Transportation projects Highway projects in terms of the energy requirements. So we're developing a mathematical model right now where we hope to be able to predict both in terms of construction and use the energy implications of Alternatives that we evaluate in our environmental impact statement process. The last thing I'll mention is our current internal energy Task Force at about the same time the governor cui made his presentation on energy. We put together a task force. We had was already underway at the direction of our commissioner to see what we would do if there was a severe crisis and we've looked at a number of things and this is task force in our department is looking at things such as the potential for using gasohol within our department for our own Fleet. Cutting down travel within our department by using telecommunications having conference call type meetings in the central office rather than bringing people in from our districts. We're looking at developing a Highway Maintenance contingency plan. What we would do in terms of our department if there was a severe cutback and then to increase the ride-sharing efforts within our department as well as strengthening our role and in coordination with the energy agency, I guess as we look at the whole issue of reducing the use of petroleum energy, I think the biggest bang as far as we're concerned is ride-sharing getting people to get more people in one car or one vehicle both in terms of buses and vanpools and cars. But I think that in terms of efficiency is where the real bang is, but unfortunately, we're talking about changing some some very basic behavioral patterns of people and things they like to do and I think that's a major Challenge and it isn't an easy area, but that's The areas that we're targeting on I'd be happy to (00:31:19) try and answer any questions you have. Thank you. Peter for appearing (00:31:24) next is Rollin Dennis town with the Minnesota Department of (00:31:27) Agriculture. Welcome Raleigh. (00:31:38) Mr. Chairman members of committee Rollin Denniston Deputy, Commissioner, Minnesota Department of Agriculture We don't have a prepared statement, but we wouldn't like to make a few comments about the importance of Agriculture to the state of Minnesota and to the economy. Sure. All of you are well aware of it that it is one of the major income producing industries of the state generating some 40 to 45 percent of the economy energy-wise. I expect we use minimal amount compared with many other areas of some probably three to four percent of the total energy, but it is important to the industry because it is needed at specific times as director Johnson indicated. We're going to have a late season. We're going to have a heavy demand for a short period of time. But much of the work was done last fall and agriculture, but we have flood conditions in much of the state that's going to change some of the farming practices and perhaps increase the need for fuel consumption. I think the cost in the supply will change some farming practices a minimal amount but because of the season the plans that are already been made in the equipment that individuals have there's not going to be a great deal of change in this area. We have a allocation suggestion by the companies rather than by the energy agency. I guess that not having given it too much thought but just very quick Concern about that when we get requests for needs from agricultural producers or processors throughout the state and the past we have found it's been much more helpful to be able to go to One Source or one Department rather than to try to contact other a many other companies or agencies to get some assistance for those individuals. So recognize the needs of the various agencies, we have the same problems in our agency, but we would certainly suggest that this be given consideration by the committee as well as they look at the future. We are working with the energy agency in many areas. We would hope to continue to coordinate our efforts with those people down there because this is a joint effort state of Minnesota is made up of many people. It's also made up of many Industries and agriculture is an important part of the total economy of the state of Minnesota. I'll try to answer questions later on mr. (00:34:19) Chairman. Thank you, Ron. (00:34:22) Next is mr. Van shipper president of Minnesota Wheat Growers (00:34:26) Association. Welcome bam. Thank you. Mr. Chairman, mr. (00:34:36) Chairman members of committee and guess energy described by Webster as power and a capacity of Performing work is the foundation of a problem has been in the making for years and a position that will have to be resolved by people individually and collectively our parents here. Today is very important. However, we do expect a voice a situation as we have found throughout this great wheat producing areas of Minnesota. We hope you take time to listen to our comments, wait them against the known factors and put them in the proper perspective to be utilize an unknown becomes known simply Staton feel is not as plentiful as it once was Well, we are thoroughly convinced that the shortest petroleum actually exist. We are convinced that there are problems and recognize the fact that a problem power struggle is currently underway between major petroleum companies intermediate companies and independent firms. It may be that in the Northwest area of Minnesota is one of the first farming areas nine states the field as Supply Crunch and all of all of us experience that some Farmers reporting that there are unable to fill their tanks with diesel especially in the startup of this Spring's work throughout this fourth largest Agriculture state in this great nation of ours many farmers are reporting that they are unable to get delivery of diesel fuel this spring but suppliers are reporting that they will have some fuel whenever farmers will get into the field one Farm had reported to us that they have ordered Fuel and when they came there was only delivered 100 gallon gallons rather than 3,000 because the supplier said that he was taking care of a construction job that was consistent of many Gil. Which was two thousand gallons of diesel fuel delivered to him per day that same display reported that field would be available within two weeks to the farmer. Agriculture has been promised number one, but nobody has said agriculture would have adequate fuel for the plant the crop to cultivate this crop and then Harvest his crop this year being number one means nothing if the supplier cannot have this fuel the survey has indicated that farmers are required from seven point five to ten gallons of diesel fuel per acre and depending upon the crop which he puts in in northern Minnesota and North Dakota farm storage is small while in the hard written with red winter wheat States most of the states utilize tournament elevators a large majority of this grain from this country elevator is shipped in by trucks and unless the trucks cannot have sufficient feel the problem is compounded. Therefore. We urge the clothes content attention to be given to the trucking industry moving products from the farm to different tournaments were rare will service is not available. We have been told by the officials the Minnesota Department of G that the To co-op suppliers are short and crude because they refuse to pay twenty dollars twenty six dollars per 42 gallon barrel while which relates back to fuel at something above the dollar gallon figure. We have now noticed a supply of raw material and the supply of the finished product is adequate and immediate available. If we pay the price one farmer has produced records that he can show that he paid fifty nine point six cents per gallon of diesel fuel last week and just four months ago. You only paid forty seven cents when we mentioned Supply in the price situation to the Minnesota Department of energy. We were told not to be too concerned about the price if the product is available. It seems somewhat inconsistent that everyone except farmers are allowed income increases of 7% or even higher in some instance. Wheat Farmers had not been allowed any increase in their we diesel prices have jumped 25% in the last four months and probably have additional increases before spring we get in the field this whole energy sting is surely a mess and we certainly don't envy you people who are charged with his untangle mess. All I can say is I'm wishing you good luck at this point. There has been a notice shortage of gasoline for agriculture problems have been sighted on numerous occasions and regular prices as increased seem like a long way of life looking at the overall picture and a long range of situation is evident that the situation will be worse before it is any better. And while on the energy situation, let me inject one additional thought and that concerns alcohol gasohol. The Minnesota weeks console is been doing extensive research on the use of gas law for the past 18 months here and we'll meet today is to other farmers will help with any questions and I thank you. Mr. Chairman for the opportunity. (00:39:20) Thank you for appearing van. (00:39:22) Next is mr. Jeff Knutson of the Minnesota Farmers Union. Welcome Jeff. Thank you very much. Mr. Chairman, mr. Chairman and members of the committee. My name is Jeff Knutson. I represent the Minnesota Farmers Union. I guess I'm going to stay on the same vein of thought and discuss needs instead of supply. Agriculture is an energy intensive industry producers of our nation's agricultural products know all too. Well that there's an energy crisis and we use the term crisis rather than shortage nitrogen fertilizers gasoline and diesel fuel are critical to say the least to agricultural production. At a large quantities must be available for short periods of time due to harvesting and planting Seasons the problem of providing. These inputs is compounded even more with the policy of some major oil companies to withdraw from the most profitable markets while neglecting the rural areas. We realize that there are no easy answers for the crisis and we strongly recommend and support two concepts number one conservation and number two the development of alternative energy resources. In reference to agriculture without the intention of being selfish or reluctant to cooperate on it and conservation efforts. There is very honestly comparatively little potential for Waste avoidance since farmers are already moving to the more efficient approaches farmers are well along for instance in the shift to diesel powered tractors. Hopefully this conversion will be more or less complete by the early 1980s. At the same time while we are making improvements in fuel efficiency in certain areas. There are other aspects of agricultural production, which are forcing greater fuel use the economic pressures of increased productivity of caused a greater Reliance on irrigation fertilizer and crop drying and perhaps this is a chance to point out that we can't always control our project our production methods for instance a cold and a wet fall could increase crop drying needs to the extent of raising the overall energy consumption by 10% So even the best intentions fuel needs could rise. I think it's important to keep in mind a few statistics. And again, I don't wish to sound too parochial or self-serving in this but I think they'll help formulate the picture agriculture operations in the United States currently use about three percent of the nation's supplies. The last figures I found regarding Minnesota and these are old figures. It was a 1975 number showed that the amount of gasoline and diesel fuel used in fieldwork amounted to one point two percent of the state's energy output. Yet Agriculture and its related business partners last year accounted for Forty-Eight percent of Minnesota's economic output. We feel that a strong case can be made for agriculture is amount of return in relation to its energy needs and uses. Farmers are not wasters. They will do what they can to conserve energy. And we feel that the government regardless of the policy be that of allocation or whatever must understand the economic pressures on Farmers to produce and must be aware of the differences between urban and rural energy needs. Programs which may fit the needs of urban centers may be counterproductive in the rural areas. Real residents are not seeking favored treatment. But only that the problem will be discussed in an equitable manner. As I stated earlier, mr. Chairman agriculture is an energy intensive system. And we feel that it is necessary that agriculture requirements comes second only to those essential domestic (00:43:27) needs. Thank you. You've been listening to (00:43:31) a live hearing by the house energy and utilities committee on the gasoline and fuel supply situation Minnesota heard from a number of state agency officials on the fuel allocation procedure some of the Cooperative Arrangements that the agencies have between them and some predictions from the people in the industry by an asphalt from the service station Association saying that many dealers will be running out of gasoline and Diesel supplies within a short time and a prediction that some in fact will be going actually out of business in the next six months to a year Gerald Everett for the Northwest petroleum Association representing the jobbers. Distributors of gasoline and fuel oil saying that there's nothing but problems ahead in this area predicting that service station closings will be fairly common that people this summer probably won't fix a long lines at the gas pumps. They may very well have to go from Station to Station to find some fuel available prices. Send Everett up up up. Nobody knows a dollar dollar and a half two dollars a gallon. He couldn't say the technical direction for this broadcast provided by Linda Marie and Lynn Cruz funds for this broadcast made possible by the Minneapolis Star Bob Hunter speaking and now back to Danielson in st. Paul.