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DOCU.ENT RESUME f' e
03064 - [A2153250] (Restricted)2
[Assessment of Cost Estimates Associated with H.R. 1037. a Cargo
Preference Bill]. PAD-77-74; B-95832. Jujy 29, 1977. 4 pp.
Report to Rep. John M. Murphy, Chairman, House Committee on
Merchant Marine and Fisheries; by Elmer B. Staats, Comptroller
General.
Issue Area: Transportatiou Systems and Policiem: National
Policies and Programs (2406).
Contact: Program Analysis Div.
Budget Function: Commerce and Transportation: Water
Transportation (406).
Organization Concerned: American Maritime Association; American
Petroleum Institute; Department of Commerce; Federal
Maritime Commission; Federation of American Controlled
Shipping; Maritime Administration; Mobil Oil Corp.;
Shipbuilders Council of America.
Congressional hlevance: House Committee cn Merchant Marine and
Fisheries.
Authority: H.R. 1037 (95th Cong.).
The estimates of the difference between the cost of
carrying imported oil on U.S. ships protected by cargo
preference legislation and the cost of carrying oil on
foreign-flag shipsi range from 1.3 cents per gallon (as
determined by the Maritime Administration) to 2.8 cents per
gallon (as determined by the Federation of American Controlled
Shipping). Findings/Conclusions: The differences are due
primarily to disagreement over the capital cost
differential--the cost of building new ships in the United
States and of obtaining ships in the uorld market. The
disagreement among witnesses at hearings conducted by the Hou. e
Committee on Merchant Marine and Fisheries was far greater when
the cost estimates were expressed in cents per gallon of all
imported oil, ranging from 0.4 cents per gallon (Maritime
Administration) to 2.4 cents per gallon. GAO made an estimate of
the cost of cargo preference which indicated that a reasonable
range of cost estimates would be from 0.5 cents to 0.7 cents per
gallon of imported oil. These estimates do not include costs due
to excess profits on the transportation of oil or costs due to
increases in the price of domestically produced oil. For imports
of 8 million barrels per day, the projected figure for 1985,
when the proposed legislation could be fully in effect, ,,ach
)ne-cent increase in the price per gallon means $1.23 billion
annually. The estimate applicable to the recently proposed 9.5%
cargo preference would give a figure of $240 million per year.
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