I am delighted to have this opportunity to discuss energy problems with you in a governmental context. The subject has become a best seller these days, and everyone, in government and out finds a ready market for his views, if he has either knowledge or responsibility in the field. In this respect I, suppose I am no exception.
In this connection, I think I should make clear my role as Special Assistant to the Director of the Office of Emergency Preparedness. Essentially, I am an advisor and a counselor, but I do not make decisions. Therefore, you should understand that I am not necessarily expressing the views of the Director or of the Oil Policy Committee.
Forecasts of future supply and demand for all forms of energy fuels are plentiful. Some are patently optimistic, others are patently pessimistic. One factor they all have in common -- there is a storm on the horizon. The differences 1ie only in whether that storm will be a cyclone -- or, on the other hand, a "gully washer", as we Westerners use the term.
One principal function of the Office of Emergency Preparedness is to coordinate Federal actions when natural disasters strike. For several years now, we have participated in "Operation Foresight", a coordinated Federal, state and local program to identify probable flood areas each spring and to prepare for them in advance. I suggest to you that industry and government alike need an Operation Foresight if our market system for energy is to sustain our economy and our way of life in the years to come. In fact, I even venture to say that we are late now and would be far better off if such an operation had been organized and implemented ten years ago.
These are changing times for all of us, and the energy picture is only one part of a broad panorama. change, of course, is the most obvious characteristic of life itself. Our most difficult problems occur when we fail to recognize an acceleration in the rate of change until it is upon us. Then we humans are often caught without the lead times necessary to accomplish orderly change. When we find ourselves in this situation, change often means dislocations and substantial increases in economic and social costs.
Oftentimes change necessarily means higher costs for some element of society. But disorderly change almost inevitably causes waste and costs that could have been avoided.
As businessmen, you have a responsibility to prevent disorderly change which penalizes your stockholders and your customers. If you forget your customers' interests, you obviously cannot survive in the marketplace.
Increasingly, through Federal, state and local regulation you are also directed to minimize or eliminate external costs, i.e., those imposed on any element of society which have not been included in your costs in the past. This is the essence of the environmental control programs as they affect American business, and the fuel industries are no exception. Economists speak of this process of imposing additional costs of this kind as "internalizing the externalities".