The reason I say that is that you can almost imagine that the situation is out of control by that time-by the time I put my military forces in there. If there were a fence, it probably would have been breached by that time.

Senator HATCH. Has such a call ever been made upon you or your predecessors?

General MCAULIFFE. Not in the time that I have been here. Of course, the well-known riots of 1964 brought the military into control of the Canal Zone for law and order and protection of the Canal Zone.

Senator HATCH. That is all, Mr. Chairman.

Senator ALLEN. Thank you very much, General McAuliffe and Colonel Thornton. You have been most helpful to the subcommittee and we appreciate the time and trouble that you have gone through to appear before this committee. You have been most candid and articulate and forthcoming, and we appreciate the testimony you have given us. Thank you very much.

General MCAULIFFE. Mr. Chairman, thank you very much and thank you very much for your courtesies this morning.

Senator ALLEN. Senator Gravel, we appreciate your coming before the subcommittee to give us the benefit of your views. We apologize for the delay in reaching you, but you have seen what problems we have had in that regard.

We do look forward to hearing your testimony, and you may proceed as you see fit.

TESTIMONY OF HON. MIKE GRAVEL, A U.S. SENATOR, FROM THE STATE OF ALASKA

Senator GRAVEL. Thank you, Mr. Chairman. I am very sympathetic, because I think you can recall the recent testimony you had before me with your delegation. Sometimes you lose control over what can be accomplished in a given time frame.

I have two facets to my testimony, Mr. Chairman. One-I would like to compliment you and the committee on looking into this areais the constitutional prerogatives issue that exists in treatymaking powers of the Executive, the Senate, and the property disposal problems and fiscal problems or rather, not problems, but prerogativesand constitutional obligations or duties of the House.

I think that basically we can say that when there are fundamental constitutional disagreements about all of these prerogatives, they are in a confrontational political mode. I say that in the highest tone, because I think that that is desirable in a democracy. That is how we resolve many, many of our problems.

I would like, Mr. Chairman, with your permission, to insert my statement in the record as if read and merely summarize by saying this: that we could start with George Washington's differences with Thomas Jefferson. They existed, and our Founding Fathers were very vocal about those differences.

George Washington in dealing with the Congress, and other of our Founding Fathers, in debate on this issue, were adamant about these treatymaking powers and what went with them.

I could come from that period up to today. However, what I would like to do is not read that, but place it in the record.

I would like to say that it really comes down to the following situation. I take recourse to a political cliche, and that is: It depends on whose ox is being gored.

Those forces that would like to see the Panamanian treaty thwarted in the Congress, or to maintain the status quo, would take the point of view that the House has got to get fully involved, and hopefully that the House might be able to stop the treaty if it cannot be stopped in the Senate.

That is well and good as a tactic. I certainly would not fault them in that regard. If I had a similar view I might take a similar position. I think when you talk of a controversy you must start with the facts as they exist. I think when we agree on the facts many times we can dispel any disagreement on principles, because there is no reason to go out and fight the principle if facts can solve our dilemma.

I would now like to jump from the constitutional discussion, which is more fully explored in my statement in the record.

I would like to focus on an issue of fact. That is: What does the Panama Canal mean to us today? I think what certainly all of us want to do is dispel the emotional aura surrounding this issue and focus on what it means to the American people. Is it worth exercising ourselves deeply about the canal? Is it worth hanging onto? Or, are there new things that have happened in society that might cause us to reflect differently on that situation?

It was a great surprise to me when I went to Panama and read many of the studies that the Panama Canal Company commissioned with a California firm. I was absolutely thunderstruck to find out that the Panama Canal, in 1972 dollars, was worth only about $30 million to the American people. That is not much money in relative terms. In today's situation in government it is not much money even in positive terms.

Our gross national product in this country is about $1.3 trillion in 1972 dollars. The value of the canal is $30 million. That really means that sabotage of the canal that there is great concern about-if they blew the canal up tomorrow there would be few citizens in America. that would even feel it economically.

One of the bones of contention, of course, is that the Panamanians feel very strongly about this and that many of the nations of South America and the Third World have identified with it. Those in the Third World who do not feel kindly toward us use this as a cause celebre to really pin our ears back about American colonialism.

Thereby, in my mind, we jeopardize our economic intercourse with that part of the world.

Therefore, when you measure that $30 million benefit-which it is worth to the American consumer-you have to measure that against what our world exports are. Last year they were in excess of $120 billion. To South America alone those exports were on the nature of $12 billion to $15 billion for this year. For the Third World our exports were $38 billion.

When we are talking about the American taxpayer's pocketbookMr. Citizen out there, the money in his pocket-what we are talking about is fighting for $30 million, which if it were not there would not be perceived in the economy. And we are placing in jeopardy $38 billion in exports and jobs that go with that to the Third World, and $12 billion to $15 billion for the Latin American countries.

I think that when you place it in economic perspective like that, the present canal, as we understand it in economic terms, is not all that vital. That is in economic terms.

As far as military terms, we have heard testimony that it has had great value. It has. I think the best example you can use for that is that the canal is an orifice through which supplies pass. Therefore, when you declare war or you are involved in immediate war, you have an emergency, you can move supplies to various parts of the world. In our case, when we have a war in the Pacific, we need to move supplies from the heartland of our industrial might-the Ohio area. We need to move those supplies to the west coast. The only way you can do that is with railroads, and then move it out of the west coast ports. When you have an emergency you do not have the time to take 3 years to double your railroad system or to double your port capacities. In point of fact, when you are dealing with munitions in a war, we only have one west coast port that can handle munitions.

What do we do? In the Second World War, the Korean war, and the Vietnam war we rapidly opened the orifice of the Panama Canal. We were very fortunate during those wars because the canal is very subject to sabotage. It is almost impossible to protect totally against sabotage.

We were able to use that orifice effectively. Hopefully we could use that orifice in the future.

However, there has been a limitation from the military point of view. That is, of course, the limitation on the structural size of the canal. That has impeded our ability to move our aircraft carriers. What we have to do when we have a crisis is to send the aircraft carrier task force through the canal except for the aircraft carrier, and that we have to jeopardize the carrier by sending it around Cape Horn to get it into the Pacific.

The rest of the task force, in which we have a sizable investment, lies idle until the aircraft carrier catches up with it. Then they all march out to do their duty in the Pacific.

Obviously, that is not a very sound situation. It has caused us to work a two-ocean fleet type of situation.

Let me summarize: One, the canal can be easily sabotaged: two, it is not all that valuable to us economically; and three, in point of fact, when we do turn it over to the Panamanians, if we do, at the year 2000 we will essentially be giving them an obsolete canal. Not only will the size of it have aggravated its situation, but there is a cap limit on what you can flush through the Panama Canal. Every time. you open a lock you flush out, with the vessel in question, 52,000,000 gallons of water. The limitation on how much you can flush through the Canal is the amount of rainfall over the nation of Panama. Therefore, there is an upper limit.

In my visit to the canal with the Canal Company officials and economists, what I was unusually struck by was their interest in me as a Senator from the State of Alaska. They asked me about the oil that is going to be coming through the Panama Canal.

In fact, that is the biggest thing economically that is going on in the Panama Canal. It is going to be the oil that is going to be coming out of the Alaska pipeline that is going to be forced through the Panama Canal because we are not going to permit any swaps to take place with Japan. Therefore, it is going to be forced through the

Panama Canal. It is going to get to the American consumers on the gulf coast, primarily, and to some degree on the east coast of the United States, at an exorbitant cost for the very simple reason that you come down with tankers to Balboa, you unload the tanker at Balboa and put it into a 65,000 dead-weight ton tanker and run that tanker through the Panama Canal, and then run that tanker up to the east coast of the United States or into the gulf coast of the United States.

That is, of all the possibilities of moving oil from Alaska, one of the more expensive ways of getting that oil to the consumer.

Obviously, when these people in the Panama Canal Company were talking to me about the importance of the canal for moving Alaskan oil, I was because of my knowledge of what is going on in Alaskaone step ahead of them. We are drilling in the Gulf of Alaska right now. The sedimentary basin in the Gulf of Alaska is almost the size of the entire Middle East put together.

If we were to be fortunate enough to find some oil in the Gulf of Alaska, that is oil that would not have to go through the Alaska pipeline. That is oil that would be at tidewater.

If we look at the chart over here, if I could just step to it, you come to one very important perception of what the situation is that exists in this country. This is a chart put out by the Commerce Committee of every single pipeline in the United States-gas lines and oil lines. What you can see is that it is essentially a structure like this. It runs from the Mid-South up to the Eastern part of the United States.

The reason for it is very simple. This is where oil and gas was discovered historically in the United States. That oil and gas was moved to the industrial heartland of the United States as energy.

That has shifted with the pipeline in Alaska and with the discoveries in Alaska. That new area is up here. So you have got a very simple choice. What do you do? Do you bring the oil to the west coast of the United States and build a new infrastructure system going across the United States where one does not exist, and to some degree render obsolete the infrastructural system down in Texas, Louisiana, Alabama, Mississippi, and Florida, and the infrastructure system that goes across Tennessee, Arkansas, and all those areas? Is that what we do?

That is a question that is before the Nation today. Do we rebuild this infrastructure coming this way?

We will use some of this, because we will sort of backwash the stuff in.

Let me show you on this chart here. You have the Alaska pipeline here. You have this yellow line here, which is a pipeline that is in existence today. It is called the transmountain pipeline. There is a proposal by Arco-Atlantic Richfield-that they would move oil through that pipeline.

Presently, the oil flows this way, through Canada, coming from Canada. Their proposal is to move oil from there to Edmonton in the existing system that would go to the northern tier refineries.

The capacity of that line would be enough to satisfy all of these northern tier refineries, so there would be no need to build new infrastructures, because if they get Government permits to do this they can satisfy the needs without building any more pipelines.

There is another application for a pipe system to move oil to market. That is the pipeline system that Sohio has applied for which would bring Alaskan oil into Long Beach. The oil would move from Long Beach in a new constructed pipeline-which is about 300 miles of construction all told-into the Redlands; into Redlands, Calif. There they have two gas lines that are owned by El Paso.

Each one of these gas lines has a capacity of 500,000 barrels a day, meaning a total capacity of a million barrels a day.

If Sohio were to get approval of that--and they have already spent $20 million doing their homework in this regard-they could move oil-a million barrels a day, potentially-from Long Beach to Midland, Tex., which would put it into existing pipeline systems and would get it as high up as Chicago and into the Mississippi area.

This means that you could bring oil from Alaska down into this system and get it to Chicago cheaper than you could have had you built a pipeline across Canada, which of course was a tactical consideration at the time that we approved the Alaska pipeline.

What I have here-incidentally, this pipeline is in deep jeopardy, because there is new discovery of gas and oil down by the Yucatan in Mexico. There have been meetings between the President of Mexico and the Governor of California. They have talked of trying to sell gas to the Los Angeles market, which is very important to Los Angeles because they have a clean air problem.

They have delayed approval of this Sohio project because of that. If that is the case, then it means that you would bring oil up through Mexico or rather, gas-into Texas. It would come across the existing system into Los Angeles. You would step down to Mexico again, and Mexico could move its gas from Yucatan into the northern Baja area at a very economic cost. They could probably sell natural gas to southern California cheaper than they could buy Alaskan natural gas. Therefore, we would be at a loss to fault them if the State of California chose this alternative. However, if they do choose that alternative it will mean that we still will have to find a way to get our oil to market.

If you will notice this blue line here, it represents the capacity of the Alaska pipeline at this first stage, which is 1,200,000 barrels a day. You will notice that some of it goes to the west coast and some of it goes to the Panama Canal. This squiggly line here through the canal means inefficiency. It is not a good price.

The red line represents the discovery in 2 to 5 years of an additional 2 million barrels a day. The white line represents the discovery in 5 to 10 years of yet another 2 million barrels a day.

What I am supposing-and I think it is a very conservative assumption is that we would have, in 10 years, 5 million plus barrels a day coming out of Alaska, with no infrastructural system to get it to the central part of the United States, where it is needed. Then we have the question of how we will get it there.

When I cam back from Panama I studied the commission studies about the various alternatives for a sea level canal. I came upon, fortunately, a study made by the State of California in relationship to that Sohio project. They had contracted with Arthur D. Little to determine the cost of moving oil across the United States.