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∂CSL Professor Alvin Alm↓Harvard University↓Kennedy School of Government
↓79 Boylston Street↓Cambridge MA 02138∞

Dear Professor Alm:

	Many thanks for inviting me to
the conference
%2Coping with Energy Supply Interruptions%1.
Here are some comments on some points raised in your
excellent summary.

	1. Energy autarchy may indeed be impossible within the political
limitations presently accepted by the present Administration
and apparently by the economic and political academic community.
However, the interruption of supply contemplated by the conference would
almost certainly remove these limitations.  They include
environmental opposition to various measures for increasing
energy production, but apart from that, there is a substantial
opposition to energy independence itself if that independence
would permit a continuation of what many regard as a bad life style.
Indeed the word "autarchy" seems to be used mainly
as a pejorative synonym for "independence".
Thus %2"We can and should seize upon the energy crisis as a good excuse and
great opportunity for making some very fundamental changes that we
should be making anyhow for other reasons."%1 - Russell Train,
%2Science%1 184 p. 1050, 7 June 1974

	Of course it provokes opposition to even mild production measures
to mention ideological opposition to independence, but achieving
energy security, with or without a cutoff, may require a fight on
this issue.

	Harvey Brooks confirmed to me that the CONAES recommendations
were a compromise taking into account what level of effort on the
various supply options was
judged to be "politically feasible".

	2. The reference emergency for policy studies
might be a permanent cutoff of
oil imports coupled with the necessity of exporting to allies
half our domestic oil and a substantial amount of coal.

	If the cutoff is assumed to be prolonged, then production
increases are important.  Rather than unemployment, one must
consider mobilization of manpower for crash energy production
facility programs.  The World War II conversion of the automobile
and other industries and the mobilization of students must be taken
as models.

	3. The statement that an %2"emergency or risk management system
 ... must not rely on Congress or the President having to make
politically difficult decisions during the crisis"%1 is ambiguous.
Does it refer to decisions that would be difficult now or decisions
that would be difficult in a time of recognized crisis?  I think
that the conference itself showed that decisions that will be necessary
and a matter of course during a crisis can scarcely be discussed in
polite academic and Government company now.

	A risk management organization formed today could do its duty
only by preparing crisis plans some of which cannot be adopted by
Congress or the President today even as contingencies.
Prudence would recommend preparing
a range of plans with the intention of proposing the more extreme
when an actual crisis occurred.

	4. It would improve our bargaining position if the size of
the stockpile were a secret.
The goal of filling the stockpile by 1987 is ridiculously modest.

	5. If we want Saudi co-operation, then we must promise
them something that makes it worth their while.  The only thing
I can see is a guarantee of full military support including troops
in case of a foreign invasion or internal rebellion.  The degree
of secrecy of such a guarantee should be at their convenience not
ours.

	6. Rationing and other non-market forms of allocation
will work for limited periods in an emergency.  The emergency
must be recognized as such by the public, and the Government
must be seen as acting effectively to solve the problem - in
this case to produce the required fuel or import it.  Even with
these conditions, long-term non-market methods are gradually transformed
into simple economic relative advantages.  Thus coupons and allocations
are sold on the black market or businesses or homes fetch prices
depending on their allocations.  Economically the allocations become
assets that gather rent.

	Nevertheless, rationing and allocations can be used in
an emergency.  It is important to study how long different kinds
of allocations might remain effective.  It seems to me that
the partial success of World War II rationing can be repeated.

	I agree that the white market solution isn't worth bothering
with.  It is important to recognize that the incentive to find
an alternative to a long automobile commute to work not be diluted
by the allocation system.  Alternatives available to an
individual include a different job,
a different residence, car-pooling or public transport, and
the incentives shouldn't presume one choice or another.
Rationing might give poor long distance commuters time to
adjust, but rations of low priced gasoline should be temporary.

	I'm sorry that I don't have time to edit these comments
for greater coherence and tact, but I hope they will be helpful.

	Incidentally the letter inviting me to the Aspen
Conference, which was mailed on April 21, just arrived.  I
didn't notice the address, but your May 19 letter was addressed
to Computer Service Department instead of Computer Science Department.

	I'm looking forward to seeing you again at the SE2 conference.

.sgn