Economist Says Energy Crisis Blame Lies Mostly With Market Malfunctions

The current energy crisis is partly a product of a variety of unrelated market malfunctions and only partially due to the recent war in the Middle East, a Harvard economist said here last night.

Marc N. Roberts '64, associate professor of Economics, said the oil shortage is due both to an insufficient domestic refining capacity, and to recent decisions by European nations not to ship oil to the United States as a result of the war.

The oil industry, Roberts told a group of about 50 people at Kirkland House, forecasted the shortage four years ago but failed to begin construction of necessary refineries for one of three possible reasons.

Three Hypotheses

The first hypothesis Roberts posed was that the industry was blocked by environmentalists who opposed construction of new refineries.

The second possible cause, he said, was that the government until recently maintained import quotas on crude oil, and the industry feared it would not be allowed to import enough oil to justify building the refineries.

The third reason, he said, was the government's hostile attitude towards the oil industry which encouraged oil companies to postpone new refineries until a more favorable political climate developed. He cited cutbacks in the oil depletion allowance and a moratorium on off-shore drilling as examples of the government's hostile actions.

"There's no question we're short of certain products, especially home heating fuel in New England," Roberts said. "Without the refining capability and with no imports from Europe, there's no good solution to the problem except to live with the temperature in our homes in the mid-60's instead of the mid-70's."

Roberts cautioned that the oil industry will use the crisis "as a club to beat back environmental protection measures." He said he expects to see a "concerted effort" to dismantle pollution control laws.