ECONOMIC

percent from 1973. The cost of petroleum imports has risen from $7.5 billionin 1973 to $32 billion in 1976. Imports currently represent 41 percent of U.S.oil consumption, compared with 29 percent in 1972. Although countries ofthe Western Hemisphere, primarily Venezuela and Canada, supplied abouttwo-thirds of U.S. imports of petroleum in 1973, less than half came fromthe Western Hemisphere in 1976.The 1976 increase in imports was concentrated in crude oil rather thanrefined products. Since 1973 total petroleum imports have increased from6.3 million barrels a day to approximately 7.2 million; but imports of petroleumproducts have declined from 3 million barrels a day to less than 2 million.This substitution is a result of expansion in refining capacity andimplementation of the Federal Energy Administration's (FEA) entitlementprograms, which provide substantial price protection to U.S. refineries.PRICESThe increase in energy prices, which had exceeded 10 percent per yearduring 1974 and 1975, slowed significantly during 1976. Contributingto this moderation was the Energy Policy and Conservation Act,which was passed by the Congress in December 1975 and became effectivein February 1976. This act caused an initial reduction of 8.8 percentin the price of crude oil produced within the United States and prescribedthat the rate of increase of crude oil prices would equal the rate ofinflation as measured by the GNP deflator plus up to 3 percent, as a productionincentive until the act expired in 1979. In its attempts to comply withthe provisions of the act, FEA froze the price of crude oil at the June 1976level as of July. Consequently, U.S. crude oil prices have fallen even fartherbelow the price of imports.Prices charged to consumers did not reflect the decline in domestic crudeoil prices last year (Table 24). The average price of crude oil entering refineries,including imported crude oil, increased during the last year, althoughthe price of domestic crude production fell 7 percent. The prices offuel oil and gasoline had surpassed the December 1975 levels by mid-1976.During 1976 price controls were removed from distillate fuel oils, residualfuel oils, and miscellaneous products. Gasoline, commercial jet fuels, propane,and certain other products remained under controls. Consumer pricesof products that were no longer under price controls rose no faster thanprices of those products still under control.The average price of natural gas continued to increase during 1976; butat about 54 cents per thousand cubic feet (mcf) it remained well below theprice of the nearest substitute, oil, owing to the effects of the continued regulationby the Federal Power Commission (FPC) of gas sold for resale ininterstate markets. Prices of domestic gas entering the regulated interstatepipelines rose from 30 cents per mcf for the 12 months ending June 1975 to39 cents for the 12 months ending June 1976. In mid-1976, prices for im-224-250 O - 77 - 793