ML19340E897
| ML19340E897 | |
| Person / Time | |
|---|---|
| Issue date: | 11/16/1979 |
| From: | Rathburn D NRC OFFICE OF POLICY EVALUATIONS (OPE) |
| To: | Hanrahan E NRC OFFICE OF POLICY EVALUATIONS (OPE) |
| Shared Package | |
| ML19340E885 | List: |
| References | |
| NUDOCS 8101160153 | |
| Download: ML19340E897 (15) | |
Text
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((7 #
UNITED STATES
)
NUCLEAR REGULATORY COMMISSION E
WASW NCTON. D. C. 20!!!
s.
j November 16, 1979 MEMORANDUM FOR:
Ed Hanrahan FROM:
Dennis Rathbun
SUBJECT:
MEETING ON DOMESTIC INITIATIVES TO RESPOND TO POTENTIAL OIL SHORTAGES A meeting'opment of Federal emergency planning for responding to a was held on Wednesday, November 14 at DOE (Forrestal Building) on the devel Jim Beckerley and I attended.
John Sawhill chaired the meeting.
No list of attendees was made although Sawhill's secretary did note the names of the non-DOE participants. To my knowledge, no minutes were taken.
A number of the participants were those listed on the " Points of Contact" note Carlyle Hystad sent to Comissioner Ahearne earlier this month (Enclosure 1).
A thick packet of " Briefing Material" was distributed to all attendees. This included a " Summary Report" (Enclosure 2), presumably prepared by DOE and a set of the working group papers from the various agencies (including the paper supplied by NRC which I sent to the Comission for information last Tuesday, Novembe. 13).
You will recall that NRC's paper outlined in some detail options for start / restart of reactors and maximizing nuclear plant capability.
The paper underscored the potential policy and le for NRC to take actions to increase the use of nuclear power. gal problems While our analysis revealed a significant potential for additional nuclear energy generation, neither the briefing material nor the discussion at the meeting indicated that DOE's Economic Regulatory Agency had examined the degree to which nuclear generated electrical energy could be substituted for electrical energy from oil-fired power plants -- which is the really crucial factor.
The chairman outlined briefly the scope of the effort and comented on various items in the Summ ry Report.
He noted that the purpose was to develop and complete within aix to eight weeks a coordinated set of contingency plans to be used in the event of an interruption in the supply of it. ported oil.
He then discussed briefly the basic initiatives that were available and those which had been proposed but were not considered tp have significant positive effect on oil supplies.
(See "Sumary Report," Enclosure 2.)
There was scme discussion of the abandonment of the option to change or waive environ-mental requirements, particularly regarding the potential benefits of waiving environmental restraints on the use of heavy oil frcm Venezuela.
The chairman commented that the list-of options to be considered was not final and that everyone should feel free to propose additional options or to restore any that had been eliminated.
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' Ed Hanrahan Mr. Sawhill then discussed the assignment of lead and support agencies fo'r 1
There were 11 specific pro-draf ting papers on specific proposals or plans.
posals to be drafted:'
1.
Emergency excise tax and rebate proposal F
Lead:
Treasury Support:
Demand restraint actions by States and Federal government (including 2.
oirect Feoeral acticns).
Lead:
Support-HEW, Labor, DOT, USDA, Commerce, D0D, GSA 3.
Limit demand for high priced oil on world market Lead:
State l
Support:
DOE, Treasury 8
4.
Increase use of nuclear power Lead:
NRC Support:
DOE 5.
Oil stock management Lead:
Support:
State, Commerce Gasoline allocation and simplified rationing 6.
Lead:
Support:
7.
Full scale gasoline' rationing Lead:
Support:
DOT, USDA, HEW 8.
Allocation of other products Lead:
~
Support: DOT, Commerce, HEW, 000, USDA 9.
Crisis response checklist Lead:
Support: Treasury, State, DOT
Ed Hanrahan.
- 10. Emercency response manacement structure Lead:
FEMA Support:
- 11. Imoroved data systems Lead:
DOE (EIA)
Support:
Treasury, OMS, Commerce NRC was proposed as lead agency for the fifth task.
I spoke to Mr. Sawhill immediately after the meeting and suggested that DOE's Economic Regulatory Administration now assume the lead agency role for this task with NRC backup.
In my view, the critical remaining question is the degree to which nuclear power can actually substitute for power generated by oil-fired plants -- and that logically should be answered by DOE. Most of the oil substitution
, question depe-ds upon analysis of fuel consumption within individual electric subregions, as well as capacity of transmission interties.
Of course, there is the broader question of substitutability of foreign crude oil from one source (e.g. Venezuela) for another (e.g. Iran) where, again, ERA possesses-the relevant agency expertise.
The DOE participants agreed with this reassign-ment.
NRC would, of course, participate as a support agency -- and supply needed reactor operational data, etc.
I have asked Jerry Pfeffer to supply NRC with drafts of their work for NRC's review and comment.
(Note:
I understand that ERA is preparing a regional oil impact analysis which will highlight
" priority start-restartup" nuclear plants. Their preliminary results suggest the Pacific Northwest as a critical area due to hydro shortage --and an increased need for the Trojan and Diablo Canyon units.)
Five longer-term studies were also identified:
1.
Postmortem of Iranian interruption L
Lead:
[
Support:
State, 00T, USDA 2.
Analyze imoacts of interruptions Lead:
Support:
CEA 3.
Oil field repair Lead':
D0D Support:
State, DOE 4.
Monetary and fiscal policy response Lead':
Treasury /0MB
' Support:
CEA l
'Ed Hanrahan 5.
Comorehensive response olans Lead:
Support:
All agencies
.)
None of these involves NRC.
The, detailed proposals were to address, in addition to discussing the initiative, its implementation, estimates of benefits and costs, and pros and cons, the following:
Needed legislation or other Congressional action; Actions to be taken directly by the Executive Branch; Actions by the States at the request of the President, and Actions by private firms and individuals.
Enclosures:
As stated cc:
Jim Beckerley 1
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As follow up to the Friday meeting in Mr. Sawhill's office, attached is a list of the contacts in each.
agency on the cc :r.ittoc.
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P'oints of Contact for Dome.stic Initiatives to Respond to Potential Oil Shortages-Department of. Energy:
Bill Fischer, ' Acting Assistant Secretary for Policy and Eval-uation.
252-5318 Les Goldman, Principal Deputy Assistant Secretary for Inter-national Affairs.
252-5858 Carlyle Hystad, Director, Office of Emergency Response Planning, Policy and E~ valuation.
252-2458 Bart House, Deputy Administrator for Operations and Emergency' Management, Economic Regulatory Administration.,
254-7227 F
Council Of Economic Advisors:
George Eads.
395-5046 Office of Management and Budget:
Eliot Cutler, Associate Director Natural Resources, Energy, and Science.
395-5044 1
Domestic Policy Council:
Kitty Schirmer, Associate Director for Energy & Natural Resources.
456-6722 Department of Transportation:
Bill Johnston, Assistant Secretary for Policy.
426-4544 State Department:
Julius Katz, Assistant Secretary for Economic and Business Affairs.
632-0396 Huclear Regulatory Commission:
John Ahearne, Commissioner.
634-3323 O
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Department of Treasury:
Randy Kau, Executive Assis-tant to Secretary Miller..
566-5901 Bob Carswell, Deputy Secretary 566-2801 Department of Defense:
Bill Shsrl:ey, Director of Energy Policy.
697-5981 George Marienthal, Deputy Assistant Secretary for Energy.. Environment and Safety.~ 695-0221 Willis Nordlund Executive Department of Labor:
Assistant to the Under Secretary.
523-8225 Environmental Protection Roy Ganse, Deputy Assistant Agency:
Administrator for Planning and Evaluation.
755-2920 National Security Councii:
Edward Fried.
395-5732 Realth, Education and Michael Barth, Deputy Assis-Welfare:
tant Secretary for Income Security Policy, Office of Policy and Ev'aluation.
245-6591 Department of Commerce:
1.u'cy Fal cone, Assi stant Secretary for Policy.
377-4885 e
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- Enciassre 2 Summary Report to the SCC on Domestic Inlitiatives to Respond to Oil Interruptions is based on the work of the SCC inter-The following report agency group assigned to consider domestic initiatives to:
Reduce the upward pressure on world oil pric'es; o
and Improve our readiness to respond to another oil o
interruption.
i This report discusses potential initiatives to respond to oil interruptions.
It discusses:
types of actions which now appear to be worth o
pursuing to (1) reduce denand for oil; (2) use oil stocks; (3) improve the distribution of available supplies to users; and (4 ) improve government management of an energy crisis; possible initiatives which do not appear to o
be worth pursuing now; and proposals for next steps to reach decisions on o
initiatives to be implemented.
1 Initiatives to Improve Readiness I.
to Respond to Oil Interruptions Based on the initial analysis reports, the following proposals appear to be worth pursuing further.
i A. Reducing Oil Demand i
Propose an Excise Tax on Petroleum l
1.
, Products During an Oil Interruption I
The experience with government efforts to reduce oil demand in an emergency without price increases is not encouraging, and l
this latest review of demand restraint identify any new attractive options did not actions to quickly and significantly reduce oil demand (and particularly demand for gaso-line) without price increases.
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I
Decontrolling gasoline prices by itself is unlikely to be effective because of other constraints on oil companies which prevent
'increasing prices enough to significantly reduce demand.
A standby excise tax could be put in pla'ce (or increased) quickly at the outset of an inter-ruption to reduce demand before the shortage reaches the consumers.
The revenues could be rebated to consumers to reduce the overall economic impact of the interruption (as well as the concern about oil company profits).
2.
Imolement the Demand Restraint Recuirements of S.
1030 i
S.1030 authorizes the President to set oil consumption reduction targets for the States during an energy emergency, and to impose a Federal demand restraint plan if the States fail to act effectively.
The Federal government is to provide guidance to the. States regarding potential emergency demand restraint plans.
Based on past studies of potential demand restraint, it appears that -
employer based ef forts to increase carpooling and vanpooling and reduce energy use at the employment location on an emergency basis have the greatest potential for real reductions in demand; but the time required to implement the plans during an emergency is a concern.
States also may act to reduce, oil consumption by limiting access to supply (such as restricting days of sale of gasoline).
The Federal government must develop a demand
~
restraint plan within 90 days, to be used if the States fail to meet their reduction targets or fail to develop acceptable plans.
No attractive options for a Federal plan have i
l been identified.
3.
Limit Demand for Hich Priced Oil on'World Market The initial analyis indicates a need to explore i
options for controlling demand by the U.S. and other consuming nations for high priced oil during an interruption.. Options include import I
_3_
quotas, ceilings on prices which could be paid by importers, and revisions of domestic price controls to provide stronger disincen-tives to high spot market purchases.
Such actions need to be taken on a concerted basis by all major consuming nations if they are to.
be effective.
4.
Increase Use of Nuclear Power The preliminary analysis indicates some poten-tial to increase use of nuclear power plants
- to reduce oil use for electricity generation during an emergency.
This warrants further study.
B.
Make More Ef fective Use of Private and Government Oil Stocks It is estimated that private oil stocks at the primary level in the U.S.
could be drawn down by 100 to 150 MMS during an emergency to help reduce the impact of an interruption.
Private and government safety stocks in other major consuming nations, particularly Germany, France, and Japan are significant, and could help offset a shortage.
We cannot rely on private firms or foreign governments using their safety stocks during an emergency; there are strong pressures to increase stocks during energencies.
If a stock drawdown plan is to be most effective it should be an international plan, so that stock reductions in one country are j
not offset by stock increases elsewhere.
The potential impact of stock changes on supplies and prices warrants a major effort to determine the feasibility of government management of pri-vate stock use and a concerted international stockImanagement plan.
C.
More Effective Distribution / Control of Supplies to Users
- 1. Gasoline allocation and rationing If demand for gasoline exceeds supply because prices are constrained, there will be some form of allocation of supply.
Under current regulations there would be allocation to dealers
. based on' his.torical' use and allocation to
' motorists based on willingness to sit in the lines.
This allocation system results in substantial unnecessary economic impact and inconvenience.
Because of the high probability that price will not be used to allocate gasoline supplies in an interruption, efforts should be made to improve the current method of gasoline allocation and to develop systems to ration gasoline to motorists.
In addition to a full scale, complex rationing system for severe long term shortages, we should explore the feasibility of developing a simplified ~ rationing system that could be implemented more quickly and which may be use-ful for smaller shortages which do not warrant a full-scale rationing program.
2.
Allocation of other Products The preliminary analysis indicates a need to reexamine plans for allocation of other products to determine whether there are opportunities for improvement.
This should include analysis of the trade-offs among products, including the potential for reduc-ing jet fuel and petrochemical feedstocks use, as well as plans to meet specific needs, such as DOD requirements.
D.
Improved Crisis Manacement 1.
Crisis Resoonse Plannine The, initial analysis indicates the desirabi-lity of developing a " crisis checklist" of actions that may be appropriate in the early l
phases of an interruption.
This should in-clude plans for interactions with other l
l countries, Congress, governors, financial institutions, oil companies, and the press.
l 2.
Emeroency Resconse Manacement Structure The recent experience with the Iranian inter-ruption confirms the need for an improved This emergency response management structure.
should provide for the integration of domestic e
9
d and international responses, as well as speci-
' fying national, regional, state, and local au.thorities, responsibilities and ecmmunication ch annels.
This effort should include establish-ment of operations centers, and plans for detail-ing personnel,to the emergency response effort as i
~
needed.
3.
Imoroved Data Systems j
The intitial review confirms the desirability of an accelerated ef fort to develop improved data systems to permit a better understanding of the magnitude of a shortage problem and.more informed management 6teisions.
It is proposed that top priority be given to improved data to track the movement of oil from country of origin to U.G.
l refineries, on an ownership basis.
E. Desirable Additional Longer Term Studies / Planning 1.
Conduct a Postmortem of the Iranian Interr'uption 2
Analyze the Economic and Other Impacts of oil Interruptions 3.
Studv Desirability of Developing a Capabili*y l
to Assist in Repair of Oil Production and Transportation Facilities i
4.
Analyze Alternative Macro Monetary and Fiscal Policy Responses to Interruptions
'5.
Develop Alternative Comprehensive Response Plans for a Range of Interrupticn Conditions II.
Suggested Inititarives Not Warranting Further Action Now The initial review indicates that the following potential actions do not warrent further effort now as interruption response measures:
[
A. Changes or Waivers of Environmental Requirements This review indicates there would be very little benefit from changes in environmental regulations l
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. during an emergency, except possibly for waivers under section 110(f) of the Clean Air Act which can be made by the President under current authority.
B.
Changes in Trucking and Airline Regulations Changes in these regulations would be useful to reduce energy use over the long term, but there does not appear to be a need for new standby authority for changes in an emergency.
C.
Decontrol of Gasoline Prices Decontrol of gasoline prices during an inter-ruption is not likely to be effective because of continued pressure on oil companies to hold down prices.
D.
Power Wheeling Rising prices of oil has made it economically attractive to use available non-oil generating '
capacity whenever possible.
There is very little potential for additional reduction in oil use due to mandatory power wheeling require-ments.
E.
Low Income Assistant' HEW believes that existing mechanisms are adequate to assist low income individuals if adequate funds are appropriated.
i
(
l III.
Next Steps to Develop Specific Pronosals or Plans A.
Establish Interacency Workinc Groues to l
Develop Detailed Proposals in the Following Areas It is proposed that full time interagency working groups be established immediately to develop detailed proposals in the follow-ing areas during the next two months.
The working groups should define:
Needed legislation or other Congressional o
~
action; o
Actions to be taken directly by the Executive Branch; 1
7-o Actions by the States at the recuest of the President, and o
Actions by private firms and individuals.
It is proposed that each agency listed assign at least one person to the working group.
1.
Emergencv excise tax and' rebate proposal Lead:
Treasury Support:
Demand restraint actions by States and Federal government, (including direct Federal actions).
Lead:
Support:
HEW, Labor, DOT, USDA, Commerce, DOD, GSA 3.
Limit demand for high criced oil on world market Lead:
State Support:
DOE, Treasury 4.
Increase Use of Nuclear Power Lead:
NRC Support:
DOE 5.
Oil stock management Lead:
Support:
State, Co'mmerce 6.
Gasoline allocation and simplified rationing Lead:
Support:
Full scale gasoline rationing Lead:
Supocrt:
DOT, USDA, HEW
- 'i 8-8.
Allocation of other products Lead:
~
Support:
DOT, Commerce, HER, DOD, USDA 9.
Crisis response checklist Lead:
Support:
Treasury, State, DOT 10.
Emergency resconse,, management structure Lead:
FEMA Support:
- 11. Improved Data Systems Lead:
DOE (EIA)
Support:
Treasury, OMB, Commerce B.
Longer Term Studies The following studies would be undertaken by the assigned lead agencies, with review by the support agencies.
1.
Postmortem of Iranian Interruption Lead:
Support:
State, DOT, USDA 2.
Analyze Impacts of Interruptions i
Lead:
Support:
CEA 3.
011 field repair
~
Lead:
DOD Suoport:
State, DOE 4.
Monetary and fiscal policy response Lead:
Treasury /OMB Support:
CEA 5.
Comprehensive response plans Lead:
Support:
All agencies e
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