Americans have grown so accustomed to the fabulous Bounty of their Farms that it is difficult to realize that agriculture is entering a new and along with other aspects of the economy a challenging error. This disturbing fact is that the technologies that made the United States agriculture a miracle of productivity are beginning to reach natural limits and new Solutions need to be found two problems that are arising.Over the next few years to be sure we can undoubtedly rest some additional increase in farm productivity from wider application of existing technology and conventional techniques. But the cost in terms of energy May well be high as you already are getting to know. Let me just look at some of these costs and what has happened in the area of energy fertilizer. It has more than tripled in the last 3 years from $80 to $265 a tough protein propane more than doubled in the last 3 years from $0.18 to $0.40 a gallon diesel almost doubled in price.Going from $0.20 to $0.39 a gallon gasoline about one and a half times as expensive in the last 3 years from about $0.37 to about $0.57 a gallon. These are General figures that may vary some from locality to locality. These are the direct energy cost which you pay but we must remember they hire in direct energy cost you're paying for all so when you purchase tractors tires combined seed Machinery parts and everything else that is needed to produce a crop.The set the theme for my talk today. I want to reiterate to you a Russian proverb and give you some information on where we may be looking for some of the answers to Minnesota's energy problems. It seems a Russian peasant was walking down the road and saw a canary flying in the same direction. The canary wasn't watching where it was going and ran smack into a tree and fell stunned the grout. The person picked up the canary and looked at it wondering what to do. Let me spied some fresh cow dung nearby. I'm hoping that it was warm and rejuvena TV place the canary on the cowdog and it worked you're not soon the warmth revive the canary and it set up and and it started to chirp. Average time a large Tom cat came out of the bushes and lock the canary avocado dog and killed it. Now I am most Russian Proverbs. There are three morals here. First of this annoys your enemies that put you in it. And second. It isn't always your friends you take you out of it. And third what you're up to your neck in it, don't chirp. The story illustrates some truce in the energy crisis. It wasn't our enemies who put us into it. The energy crisis was forming long before the air of embargo the Arabs. In fact called our attention to problems a little bit earlier than we might have placed them earlier. And our friends won't take us out of it. That is the crisis does not involve the kind of clash between different interest groups that have traditionally been the nature of of the problems in the past. We are all in a cooperatively you might say if we don't solve our energy problems the consumer as well as the farmer are in trouble labor and management are both in problems City people and real people are all together. And third there's been quite enough tripping already. It's time to get to some more serious sounds in terms of just where we're at. Any useful discussion must first include a definition of terms and at the outset we should Define the energy crisis. It is merely the sudden realization that passed assumptions about the abundance and low price of energy were ill-founded energy is more scarce and expensive than we believed. It would be we have to pay more for it and plan to find ways to get along with less of it or get better use out of what we use. The crisis is not one of short supply but short-sightedness the problem involves two factors diminishing supplies and compulsory consumption and the growing Gap that we find between them. Comparisons among states are difficult because each state situation is somewhat unique but Minnesota situation illustrates the seriousness and the nature of some of the problems faced by all states. Minnesota obtains about 44% of its energy from petroleum products some 60% of these from the three refineries in the state and a nearby refinery in Superior, Wisconsin. All three of these refineries rely largely about 90% on Canadian crude oil. However, as we all know Canada has announced plans to end all exports to the United States in the early 1980s. This could be by 1979 if some reports coming out of Canada are true. If these curtailments continue the Minnesota and Wisconsin refineries will be forced to close unless they find some Alternate Source of crude oil. This problem is more severe than when we looked at at the even the middle of last month, but I'm sorry and I both testified before Senator Humphries joint economic committee. Since then the Canadians have curtailed their shipments into the us or announced that they intend to do. So at a faster rate than we played at that time. We just received this morning a copy of the latest FDA recommended proposals for giving the US refine the Canadian dependent refineries such as those that we have here preferential treatment. And that will provide some assistance on the short-term but only the short-term. The second largest source of energy for the state is natural gas switch in 1974 30% of Minnesota's needs here to there are Supply problems the Northern Natural Gas Company which provides 90 to 95% of the gas sold in the state has filed statements with the FPC which show steadily declining anticipated supplies. During the next few years Northern Natural has projected about a 5% annual decline in Minnesota deliveries with all large volume at eruptible customers being curtailed by the winner of 1977-78. Northern Natural has projected that even if Alaska natural gas is available in the Upper Midwest by the completion of a trans Canadian Highway trans Canadian pipeline that all in rough table and the largest of the firm industrial customers will have to be curtailed if a pipeline is not completed Northern Natural expects to have to curtail all its customers except residential and small commercial users in 1985. Although natural gas as a fuel is used primarily as part of urban residential and Industrial Systems a natural gas as you all know is a major component of anhydrous ammonia and with these kinds of curtailments there would be a serious interruption or threat of interruption and the natural gas that could be made into fertilizer. The third largest energy source in Minnesota is cold and hear the Outlook is more promising. The state has the advantage of being closer than many other buyers to the Western coal fields of Montana North Dakota and Wyoming Albert use of this resource will be shaped by regulatory decisions in such areas as Transportation air pollution in water use large shift in energy use are expected. It will take Northern Natural a northern states power company. For example, 290 car units each car caring 100 tons of coal. The transport the coal needed to offset the anticipated curtailment of natural gas by 1977. We're seeing here joint stresses on Transportation those caused by the increase in the production of coal that's shipped into the state and also stress here and the increase in the shipments of grain for a long Halls of bulky products trains are far more energy efficient than trucks. So we see an important sector of our transportation railroads, which have been ignored for too long, which must must be strengthened if they're going to be able to provide what is needed here in terms of energy efficient transportation. The remaining energy that we get him the steak comes from nuclear and hydro generating plants were no Supply additions are expected during the next 10 years. From this brief rundown. It is clear that Minnesota faces energy Supply problems, which called for immediate concerted action in the worst possible case the state would lose 60% of its petroleum supplies and 40% of its natural gas even with a comprehensive conservation program and the accelerated use of coal. This would mean large-scale unemployment economic distress for many individuals and businesses and considerable social unrest Let me hasten to add that. This is not likely there are things which can be done to reduce these energy losses. There are things which must be done to use the conservation. We have more efficient. But there should be no underestimate their estimate under estimating of the seriousness of the energy situation its impact has been camouflage by two events. The recession has subdued the normal growth and industries demand for new energy and by the worldwide rate of inflation rate even faster than the US inflation, which is made it possible for the United States to spend 25 billion dollars a year for imported crude oil without a severe imbalance in the balance of payments. However, as a more normal business climate occurs, both nationally and the world economy, the severity of the energy shortfall will be a part upon us with a fury greater than that of any earlier energy crisis. Although there are many uncertainties in this area. There is one certainty. We won't be able to use more energy than we have. There will be an accommodation between supplies and use but how will this accommodation occur? How will we close the growing Gap? How do we determine who will have first call on a desirable fuel such as natural gas who must undertake the costly time demanding process of finding alternate fuels By using broad Strokes. There are three kinds of mechanisms that can be used to answer these questions. There's jawboning the marketplace and legislation. Jawboning, the use of voluntary appeals is everyone's favorite when it will do the job Americans clearly would prefer to do something because they are asked to do it not because they are forced to buy spiralling prices or new laws voluntary responses to energy problems occasionally have been impressive yet few of us will make long-term sacrifices. What do I give an unclear and conflicting signals about the nature and severity of the problem? And unfortunately our national energy leadership has not been as consistent and clear as it might be the marketplace the use of economic incentives and disincentives is the tried-and-true the traditional method of influencing human decisions. The energy shortfall could be met simply by allowing prices to rise until the available energy would be purchased by those who could afford it. This would have a harsh impact. However on low income persons and would dampen efforts at economic recovery. Legislation the intervention by government into the arena has been a frequent recourse when jawboning and price changes were an adequate or would require sacrifices that we're not considered the those that the public should be required to meet. The governmental role may take several forms. It may be informational and there is much that can be achieved by a state energy agency that becomes an accurate credible source of information on energy sources and uses and what can reasonably be expected in the future. I see that as the critical first responsibility of the energy agency. Or the government role may be more indirect through some kind of envious decisions that closely related step to that information gathering staff is what would happen if research this includes economic modeling questions of emergency responses statistical analysis and the simulation of results of different kinds of decisions developments of plans to deal with Energy emergency. It is through this way that we can provide the public industry Agriculture and the other governmental agencies and legislators and what the recourse what the cost would be of different kinds of decisions. If this is done than what effect will that have on the preparation of these policy analysis is also an important responsibility the energy agency A third step is more direct intervention in order to stabilize the situation reduce the waste of an energy product counter the possibility of excessive profits or allocate a scarce resource fairly across the population legislation may have an indirect effect on induce of energy resources. Some examples here would be the Energy Efficiency requirements in building codes that will go a fact into effect in January one 1976. And this Minnesota is the first state to have required Energy Efficiency a new buildings are the certificate of need the process which is being implemented this fall which gives the energy agency the responsibility for deciding whether there is a need for a major new energy facility. Are the energies agencies participation in the effort to get time of day pricing accepted by the Public Service Commission? This would be a rate that would mean that if you were using your energy at the time when the greatest a man was on the energy generating system that you would have to pay for that additional cost of usually at that time higher fuel less efficient. The generating plants are put into operation and these and in such a legislative areas as air conditioning standards and the mandatory installation of residences of title sale, which the age at which the agency is recommending to the legislature. The agency is trying to affect him directly the amount and patterns of energy use A still more direct form of government intervention is and used regulation. That is the direct allocation of energy resources to certain users or classes of users. There are two examples the petroleum allocation program administered by the Federal Energy Administration and to a limited degree by state energy offices dispenses gasoline, middle-level distillates and propane a bill continuing this program. 4:40 months is during final action by Congress and President Ford. He's still leaving some uncertainty over whether he will sign the bill or not. But I think that most people have been watching the national political scene expect that he will sign it. The second and use area is the federal power commission proposed natural gas curtailment priorities and the many variations of curtailments being tried and developed by different gas pipelines and by Distributors, there are some shortcomings in both of these programs as far as I'm concerned in their effect on agriculture provide 100% of agriculture's energy needs but in practice we found that the FDA has been slow to increase allocations to those two service stations that are having a heavy demands placed on them by agricultural uses. The FPC is natural gas priorities do not recognize the special importance of natural gas in a some Dairy food processing and fertilizer production areas. These are matters, which I think the energy agency needs to pursue in support of recognition of the role of agriculture in these areas in the future. Agriculture through the actual production of food and fiber consumes about 3% of the total energy needs of the United States, but agriculture in all its parts manufactured inputs growing processing transporting wholesaling retailing refrigerating and cooking about swear up to 13% of the total us energy requirements. The average American consumes the equivalent of about 2000 gallons of gasoline per year. That is if you take all energy sources in converted into gasoline. It takes the energy equivalent of about 10 gallons of gasoline per year just to run up a black-and-white television set for example. agriculture consumes 100 gallons of gasoline to feed one person in Minnesota agriculture production used 3.8% of a state's energy last year Farm production used 1/3 of the diesel fuel. The state's Farms used large amounts of gasoline LP gas electricity and natural gas in the form of anhydrous ammonia, if production and livestock numbers increase as the US Department of Agriculture has predicted the energy requirements of Minnesota's Firearms could gain by about 50% by the year 1985. Some of these energy resources are expected to be in short supply. This will lead to some increase in prices fertilizer prices are projected by the agency to rise about 10% annually gasoline and fuel prices might decline slightly next year if the energy bill before Congress has passed but then probably will increase at the rate of about 5% of year. LP gas prices are projected to rise 7% of year electricity prices at 6% Agriculture has led the way and Soil and Water Conservation. I now see agriculture leading the way in energy conservation as well in both of these there is a common recognition that the resources that God has given us must be protected must be cherished must be used in such a way that they get the greatest possible benefit. There are many ways energy can be conserved in agriculture The increased use of reduced tillage soil testing to avoid over or under fertilizing the substitution of plant and animal nutrients for chemical fertilizers the band rather than Broadcast application of herbicides the use of soil moisture sensors to avoid over under irrigating the insulation of animal shelters to improve feed efficiency. Their ways the farm families can save energy and I am sure that you've all heard of these items insulate your ceiling 6 inches and you can save 30% of your energy cost 4% on your wall in addition on 8th to 10% And the money expended could be returned in 2 to 5 years depending upon what the building has now and the amount that had been added. Turning down thermostat to in the winter to 68° during the daytime and turning up the thermostats. If you have air conditioning in the summer to 78° will save energy keeping your car engines to a driving skillfully combining trips to town to pick up a part sew shop for groceries at cetera and most particularly when you're going to buy a new vehicle car or truck check the fuel consumption for that particular model. These are the things that every citizen in Minnesota should be doing and they should become a habit along with turning off light switches when you leave a room checking Energy Efficiency all new appliances when we buy in those sorts of things. The next 10 years may see some fascinating changes in agriculture the use of solar energy for carne dry the use of non petroleum products such as peanut oil or corn oil as a carrier for herbicides and pesticides the possibility of future energy Farms, which raise high BTU crops for their fuel energy alone. It's estimated there is enough energy content in the 27 million tons of harvestable residues from Minnesota's major crops to provide about 40% of the state's total yearly energy need. Rural and urban people are going to have to work together to come up with an efficient transportation system for the state. This includes efficient Trail. We must in the next few years address land use planning to avoid urban sprawl and to provide more energy efficient mass transit water sewage and Power Systems. This also would have Mabel Minnesota is Rich Farmland to be kept in production. Agriculture merits a high priority in the competition for energy supplies. We get a good return on that 3.8% of a state's energy used in agriculture 10% of the state's workers are employed on farms cash receipts from farming amount to almost 19% of total personal income in Minnesota. The state's food processing industry, which produces one third of all shipments by manufacturers and employees 15% of all manufacturing workers is heavily dependent on the output from Minnesota's Farms. Get an agriculture as in every other area we need to do a good job of energy conservation to ensure that there is enough energy in the future to go around. Thank you.