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2.

We are losing competitiveness in world coal markets.

Comment: it is incongruous to advocate a Superport on the basis of an alleged domestic energy crisis and then claim as a Superport benefit the increased export of coal.

3. Higher costs of U. S. raw material imports will result from absence of Superport terminals. Comment: No evidence is adduced for this claim. What portion of delivered per ton costs of crude, of iron ore, or of bauxite could made up by freight cost savings under supership technology?

4. Commerical benefits of supership construction in U. S. yards would be lost. Comment: Why can't we sell U. S.-built superships to others? Further, why should the taxpayer, who shares the capital and operating costs of these vessels, see this as a benefit?

5. Raw-material-dependent industries will leave the U. S. Comment: This claim is another way of saying (1) and (3) above. Where is the evidence?

6. Inaction would lose us a large balance of payments credit item in our coal exports. Comment: Where is the evidence?

INCONSISTENT POLICY

The oil industry and its spokesmen have argued for two decades that a low level of dependence on imported oil is essential to U. S. national security. Programs based upon this view have cost the U. S. consumer roughly 4 to 5 billion dollars per day (Hay, 1971; Adelman, 1963) in recent years. A lengthy and tiresome litany of asserted disadvantages of high import dependence could be recited. Yet, today the nation is urged by the same voices to support the use of technology which would help raise our dependence on foreign oil to staggering levels - all within a few years.

Are the arguments against heavy import dependence no longer valid? If so, why? If they remain valid, how are they consistent with policies aimed at increasing import dependence through supership technology?

Oil demand with and without Superport.

Studies of superport economics always assume a fixed projected import level which must be moved. They never assess the possibility that in the absence of Superports, less oil would be imported. making this plausible include the following:

Forces

...high congestion in existing ports and high capital costs of expansion could mean that the import level would reach a ceiling at the throughput capacity of existing facilities.

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...higher transport costs in conventional shipping would tend to depress demand for crude. While short-run crude demand is inelastic, long-term demand is more elastic. This factor could assume major proportions over the time horizon to the year 2000 used in the K-G study.

...superports could broaden the world crude market and expand demand in other nations, enabling OPEC to exact further price increases from all customers. ADVANTAGES OF FOREGOING SUPERPORT DEVELOPMENT

In line with the above reasoning, it is clear that reliance on existing crude oil transportation technology has significant advantages for the United States. These are:

...concerted efforts by OPEC could force oil importers to bargain away the supership cost savings in the form of higher royalties on oil production. This could destabilize the world oil market and lead to years of uncertainty as the participants fight over division of the gains.

...inability to handle large imports of crude oil will have three economic effects. First, it will moderate growth in U.S. demand for Middle Eastern oil, thus reducing OPEC's leverage for extracting price increases from the importing nations. Second, it may lead to higher domestic energy prices which will promote long-run measures of energy conservation and demand reduction. Third, reduced imports of crude will moderate adverse balance-ofpayments flows.

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REFERENCES

Adelman, M. 1964. Efficiency of resource use in the crude petroleum industry. Southern Economic Journal, XXXI (2): 101-122. October.

Akins, J. E. 1973. New directions in energy policy. Financial
Analysts Journal, Jan.-Feb. p. 29ff.

Anon. 1972. International Petroleum Encyclopedia - 1971. Tulsa:
Petroleum Publishing Co.

Anon. 1972. Louisiana Superport Studies #1. Preliminary recommendations and data analysis. Baton Rouge: LSU Center for Wetland Resources.

Anon. 1970. Role of petroleum and natural gas from the outer continental shelf in the national supply of petroleum and natural gas. Washington: BLM Technical Bulletin #5

Bragg, D. M. and J. R. Bradley. 1972. The economic impact of a deepwater terminal in Texas. College Station: Texas Engineering Experiment Station, Texas A & M University. (The TAM Study). Dittenhafer, 8. D. 1973. Energy and the economy: a view from the Southeast. Federal Reserve Bank of Atlanta, Monthly Review, June. Gagliano, S. M. & J. W. Day. 1972. Environmental aspects of a

Superport off Louisiana's Coast. In Superport Studies #1 (above). Gulf South Research Institute. 1966. A market analysis of purchases by Louisiana manufacturing firms. For Louisiana Science Foundation. Report ES-102.

Jones, L. B. and G. R. Rice. 1972. An economic base study of Coastal Louisiana. Baton Rouge: Center for Wetland Resources.

Hay,

G. A. 1971. Import controls on oreign oil: tariff or quota?
American Economic Review, LXI: 688-691. Sept.

Holcomb, R. W. 1969.

Hoult, D. P. 1969.

Howe, C. W. 1971.
Washington:

Johnson, D. 1972.

Benefit-cost analysis for water system planning.
American Geophysical Union. 144 pp.

Preliminary economic considerations of a Louisiana Superport. in Superport Studies #1, pp. 147-280.

Kaiser Engineers, Gulf South Research Institute.
Impact of a Louisiana Offshore Oil Port.

1973. The Economic Baton Rouge.

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McKie, J. W. 1963. The southern industrial fuel economy.
Southern Economic Journal, XXIX (4):

269-278.

National Water Commission. 1973. Water policies for the future. Washington: GPO. 570 pp.

Shell Oil Co. 1972. The National Energy Position: for the petrochemical industry.

Houston.

Implications

Steimel, Edward J. 1972. Declining Louisiana revenues and the
Superport. Speech at LSUNO seminar on Superport, Inter-
national Trade, and Louisiana Revenues. October 3, 1972.
New Orleans, La.

Stone, J. R. 1972. Preliminary assessment of the environmental
impact of a superport on the southeastern coastal area of
Louisiana. Superport Studies #2. LSU Center for Wetland
Resources.

Superport Task Force. 1972. A superport for Louisiana.
New Orleans.

St. Amant, L. 1971. Impact of oil on the gulf coast. Transactions, 36th North American Wildlife and Natural Resources Conf. Washington, D. C.

U. S. Army Corps of Engineers.

1971a. Preliminary analysis of

ecological aspects of deep port creation and supership
operation. Report to Institute for Water Resources (IWR)
by the Natural Resources Institute of the University of
Maryland.

October.

U. S. Army Corps of Engineers. 1971b. Foreign deepwater port development. IWR Report 71-11. December. (By A. D. Little

Co.).

U. S. Army Corps of Engineers. 1972. U. S. deepwater port study. 5 vols. IWR Report 72-8. (By R. R. Nathan Assoc.).

U. S. Army Corps of Engineers. 1973. Announcement public meeting. New Orleans District.

handouts for

U. S. Congress, Senate. 1972. Deepwater port policy issues.
Hearings pursuant to S. Res. 45. 92nd Cong. 2d Sess.
Serial #92-26. April 25, 1972. Committee on Interior
and Insular Affairs.

U. S. Congress. Senate. 1962. Policies, standards and procedures... for use and development of water and

related land resources. 85th Cong. 2d Session. S. Doc. 97.

U. S. Department of Commerce.

terminals. Washington:

1972. Economics of deepwater GPD. 64 pp.

U. S. Department of Interior. Bureau of Land Management.
1972. Final environmental statement proposed 1972
OCS oil and gas general lease sale of offshore Louisiana.
Washington.

U. S. Department of Interior; Department of Transportation. 1968. Oil pollution - a report to the president. GPO.

Washington:

U. S. Water Resources Council. 1971. Proposed principles and standards for planning water and related land resources. Federal Register, 36 #245, p. 24144-24194.

Wall Street Journal. Dil and Money. January 23, 1973. p. 1.

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