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A publication 01?3th Chemical Combat!)

i i" ill

Emerging techniques for effective corporate response to
public Issues

Shell is apptving administrative techniques such as research. planning.
staffing and coordination to pubtic attairs projects. Page 3.

 

matures at a critical time

This program now provides the communications tools the industry can
use to pubtic support tor reasonabte iagistation in 195?. Page 

Individualism

is there a danger that the individuat is being stifled by the management
structure of iarge corporations? This subject has been debated for
acne years. in this article. Sheit Chemicat's Ktaus Mai presents his
ideas about the need for an innovative. individualistic spirit among
corporate emptovaes. Page to.

Gasohol
Despite many probtems. it n'ia?vr provide short term for our
dependence on ioreign crude. Page 12.

The U.S. Supreme Court?s decision on Benzene

standards
Sheti betieves it could result in more meaningtui deployment of money
and manpower in the tietd at health and satetv by both government and

industry. Page 16.

Chemical teedstocks from synfuels

Shatt's W. W. Flevnotds betieves economic incentives will arrive before
technologyr and ptants can be put in ptace. Page ta.

 

 

 

Volume (5 Number 4 re?t:

TREND minulne in pquIhL-d 
he Shell Chemical! Cnm?anv Ind l- 
tn Il'l'f??l' wishing receive It. 
Ind Ire welmme

Address including requests
for reprinting any uhhr 
tn Edimr. TREND manulne. Shell Chemicel
Comp-am. 122?. One Shell Plan.
Houston. Ten! WW2

Comright 1960 b1! She" ?amlul Corn.
puny, I division {If Shell Oil Cmnpanv

Board;
M. Bower
B. 
. Mai

E. G. Yaw. Jr.

K. Spalding

D. B. 
Edimrisl Direcmr:

E. 1.. Cooper. MDR. Inc.

?amen."

 

 

SHELL WEws- mum; m.
531'

A: one In a senes :31 Shell
tepe-rts uenlmg 10pm: nl
mnmal a SHELL
VIEWS has been 
which the
mum-Ines In: recumng me 
of cancer ?1 me man: Any-awe
mshes ID :e-cene cem- a!
report 'Heducmg me
Hrsl. of Cancer a Goal for me
50': mar renewe- one by 
In Smell D-I Campany. Publn:
Annie-.1. Flu-am 1221'. PEI. Ba:
2153. Heumrn. Ten: nem.

Emerging techniques
for effective
corporate response

 

to public issues.

  
   
  

Most major corporations have had professionallyr
trained communicators on staff or as counselors.
some as far back as the 1920's. Even in the vears
following 1li'li'orld 1'i'i'ilar II. however. cornpani.T com?
munications were generallv not regarded as a
priority function except at the product marketing
level. Most top corporate executives maintained a
low public profile and felt justified in replving ?no
comment" to anv question with unpleasant overtones.
- The arrival of national television. it's abilitar to
dramatue the emotional aspects of public issues
and the activities of special interest groups advo?
eating various control measures. and some unrea-
sonable and costiv legislation and regulations which
have reSulted from this phenomenon. have forced
corporate managers to rethink their stance on

ramp r- Noah-r . rum

Sheii sets priorities, organizes teams
to take action on issues which impact
industry and the pubiio.

 

    

communication. Todav. public issues management
has become a popular subject in corporate circles.

Public issues management simplv means that
companies are beginning to apply the traditional
administrative techniques research. planning.
staffing. supervision. coordination and evaluation
to public affairs problems.

Reactive deScribes the vvav the corporate woricl
has usuallv handled public issues simpiv reacting
to the public and the media. Pro-active is the wav
corporate managers would now prefer to deal with
these problems. becoming active in a positive mode
eatlv in the life of an issue before it reaches the
legislative halls and the comparvg.r is faced with an
investigating committee or a government agency.T
out to enforce new legislative mandates.

Shell?s executives have recently talc EH SEEDS in the
direction of more positive management of public
affairs problems. In 19%. a study team of managers
at the vice presidential level was formed to deter-v
mine how the company EDI-lld apply its resources
on important public issues most effectiveli?i and Ct?
a continuing basis. As a result. Shell's Pilbl":
Affairs organization was restructured and expanded.
and now includes a new management plan which
focuses resources on issues which top management
considers critical to the company?s ability to achieve
its business objectives in harmony with the public
interest.

Under the new system. people from throughout
the Shell organization are encouraged to identify
the issues from various sources and submit them to
Public Affairs. Then a scope paper is developed on
issues felt to be signi?cant. The scope paper
describes the issue and explores which organizer
tions within the company may be affected. Scope
papers are reviewed by Shell?s top managers and
each issue is assigned a priority. issues assigned a
Class priority are simply monitored. A Class II
issue is closely monitored and responsive action is
talcen whenever opportunity presents itself {reac-
tive reaponse}.

Class 1 issues are those which management
believes will seriously affect the company's
ability to operate effectively. They are also
issues which. because of their nature or timing.
management believes can be impacted by a well
planned and coordinated communications program.

"Our criteria are.do we have a story
to tell. can we tell our story convincingly. will it
have a major impact on Shell. and do we have a
reasonable chance of succeeding.? says Don Wood.
Policy Development Specialist, Chemical Products.
?We limit our involvement in this way because
activities on issues outside our expertise might
reduce our effectiveness on issues relevant to those
areas where we do have expertise."

When an issue is given a Class I priority. Shell
management selects someone from senior manage:
ment to form an issue team. A policy development
specialist from Public Affairs is assigned to the
23:3? The? ltitle-:11: and identify other members of the

organization v. ho should be on the team.

Once the team isrformed. responsibilities. duties
we: and 
. posttion on the issue and a

plan for action. This usually involves a great deal of
research to assure that every aspect of the issue is
considered and understood. These plans are ulti-

mately taken to the General Executive Officers for
review and approval.

 

Communications on all Class

Chemical Company are coordina
Ientner. who is manager of Cer-
Shell. The Corporate Studies
search data needed by the issue
on a Class issue may range from speeches on r11:
subject before influential groups to expert tesri-
mony before a Congressional Committee. Ir mar
involve communicating to employees. stockhold-
ers and customers. plus an all-out effort to reach
opinion leaders and legislators. For instance. the
feedstock allocations issue. which Shell Chemical
assigned a number one priority. is also one subject
of a grassroots campaign spearheaded by an inclus-
try association. the Society of the Plastics lndusrry.
Shell executives have offered leadership. manpower
and resources to the effort.
"We are fortunate in this case that we have some
time to launch and carry out a grassroots cam:
paign.? says Ken Spalding. Manager. Plans and
Integrationl Chemical Products. "The Emergency
Petroleum Allocation Act of 19?3 doesn?t expire
until the end of September. 1931. but will be a
major legislative topic throughout the first nine
months of the year. We plan to be proactive
instead of reactive. A great deal of dialogue is
needed to assure that any new legislation passed is
in the public?s best interest. 

"Since Washington is where the legislative Pm?
cess stands in the spotlight. naturally we are drawn
to that light to try to exert some in?uence." Shell
Chemical?s President James E. Henderson said
recently. ?Unfortunately. we forget one thing- Th]:
legislative process has been working long before It
teaches Washington."

?For example. energy policy is formed as PWPIE
talk to legislators. And legislators talk to one
another. At home. Because we fail to become
involved in these early stages, WE 3T3 "ed react
in Washington as policy appeal?
that is not in the nation?s best interest a5 we 53:12 

How effective Shell?s new approach to Pu efi.
issues management is still remains to be 515th"?
At the least. it is full recognition on the part 
Company?s management that toP carpola? ?the
utives must devote serious time and aneoti?i?t? to
P?litical arena. At best. it will allciv-r 5 an
provide leadership which will enable the o1Ia 
chemical industries to create a more av??rhll?
atmosphere for the achievement of 

oals.
3 ?There are times when the Pub-?c mirth-I:
government must act as a containing In?ll?? been
business. but the trend of the last 2.0 year: Bitten?
for the government to intrude into I 

1 issues in She

[Ed by Rene' [l1
porate Studies for
group provides re-
teams. Action talten

?lial?


A

sector bevond the point where it is proper or
beneficial." according to Philip J. Carroll. Vice-
President of Shell?s Public Affairs organization. ?In
times of crisis or emergent-v. some of the constraints
we see today might be proper and necessarv but
not in normal times like todav."

Current champion of the thinking which has led
to more and more government involvement in
business is John Kenneth Galbraith, retired eco-v
nomics professor at Harvard Universitv and author
and public speaker. In a recent boolc. Annals ofan
Abiding Liberal. Galbraith again argues in behalf of
more government control of major corporations.
contending that government is often too passive in
the face of growing power by corporate managers.

Contrary to this line of thinking is the
opinion of many businessmen that in recent
times there appeared to be no effective force
capable of containing our government bureau-
cracv.

"As government involvement in the affairs of
people and institutions has increased to an unprece?
dented degree. each component of the private
sector has become concerned with the qualitv of
government.? Carroll savs. "In fairness. one must
recognize that the process of developing and imple-v
menting regulatorv standards for health. safety. and
environmental protection involves especially,f dif-
ficult problems. Overlapping regulatorv responsi-
bilities have created jurisdictional enforcement
disputes among federal agencies as well as between
state and federal regulators. A particular dilemma is
that while scientific methods now can detect chemi-
cals and radiation with exrraordinarv sensitivitv.
science cannot vet quantify the potential impact of
an alleged effect on humans and thus often cannot
predict hazardous levels and durations of exposure.
In these and other cases. federal agencies have had
no reliable guidelines for assessing the risks. Con-
fronted with Congressional mandates and without
useful scientific criteria. some agencies have issued
inappropriate or unenforceable regulatory standards
that corporate managers feel are inconsistent. un-
necessarv. and inefficient.

"Some critics of government look at those
results and charge regulators with masking miss
directed action under high-rflown principles and
conducting witch-hunts which are made to appear
pureli,r in the public interest.

"While corporate managements must be resolute
in dealing with government officials. executives
should conserve inflammatorv rhetoric and invest
their efforts instead in effective participation in the
public policv process. including dealing with public
officials in wavs that encourage mutual respeCt.

1HEND 'i'ud'm l'I Pull-41.1 a loti-

 

"One well?recognized to help obtain sound
laws and regulations is to participate in their
establishment." Carroll continues. "While corpora
ations have no mandate to set societv's goals. thev
are a legitimate participant in the public process of
formulating laws and regulations relevant to busi-
ness affairs. Governmental representatives need
and expect facts and ideas from all sectors of
societv. On manv subjects. particularlv those involv?
ing technology. thev look to corporations as a
source of knowledge and experience."

"In 1980 we have seen encouraging evidence that

this mistrust or disregard of business bv govern-
ment agencies and the public is changing.? Carroll
continues. ?The EPA has been listening to business.
for instance. and has started considering costs?
benefit factors in its regulations. Congress now
is considering legislation which would encourage or
require regulators to take a more reasonable ap-
proach to regulation of industrv.
?The November election seems to have resulted in
a Congress and an administration where the voice
of business will be more welcome in the dialogue
about future legislation. All that we salt or expect is
to be heard and have our viewpoint considered."

The involvement of top corporate executives in

public issues is not generic to Shell and the
chemical and oil industries. nor is it altogether new.
About three vears ago. Reg Jones. Chairman and
Chief Executive Officer of General Electric Com-
party. had this to say:
?The main problems of business these days are
determined in the arena of public policv. Therefore.
business managers are obliged to become students
of public affairs. They must learn to hold their own
in public debate. and ltnow their wav around in
Washington. 

?It is generallv agreed with the exception of
a few at the extremes of the political spectrum
that business has a legitimate role to plav in
the political process,? savs D. J. Watson.
General Electric's Manager of Public Issues
Research. ?If business did not voluntarily parti-
cipate. it would be asked to. as the business
community has an extensive data base.

?To solve long-term economic problems. only
business has the interest and concern enough to do
something about them.? savs Professor David
Vogel of the Universirv of California Business
School. who notes that starting about 197 $76. the
relative power of business on the political scene
started to increaSe. primarilv becauSc business had
a common stake with the public on manv major
issues. inflation. regulation and bankrupt
liberal policies.

John Dunlop of Harvard Urti?retsit?it has 
businessmen to learn to work together on govern?
ment policy matters. He notes that every western
country except the has some mechanism for
interaction and discussion among government.
business and labor.

Shell executives working on issue teams are
discovering that being non-partisan in their ap-
proach is not a problem. but rather a natural result
ofpeople ofdifferent viewpoints ironingI out their
differences.

"Defining. writing and agreeing on a corpora-
tion?s position on an issue can be an arduous task."
says Wood. "It's difficult to get a group of
executives to agree on all points ofan issue. Under
our previous system we tended to get bogged down.
spending more time trying to resolve conflicts than
was justified by some of the issues. Having top
management available to make quick decisions
between conflicting views lets us react much quicker.
In fact. what we hope to reali:e from the new system
is the ability to develop positions quickly. get input
from top management early in the development of
an issue. give each member ofan issue team a clear
focus of his responsibility and receive strong
functional involvement by managers of segments of
the Shell organization affected by the issue.?

Policy Development Specialist Jerry E. Berger
believes an advantage of the new system is that it
takes most of the element of surprise out of issues
management.  Consequently. executives are more
comfortable with their role.

?Some top executives have Suddenly found

themselves before a Congressional Committee or
the press trying to answer questions that hadn?t
been anticipated.? Berger says. "That can be embarv
rassing for anyone. and business managers partic-
ularly dislike surprises. You can't completely elim-
inate the possibility of this happening. but by being
out front on the issues. you can certainly reduce the
chance of it happening."
. One ofthe keys to success ofShell's new public
issues management system will be its ability to
detect issues as they emerge and define the ways
they may affect the company?s business.

"These things have followed a familiar pattern
through the 60?s and 70's." Carrol] P?ints Out. 1 
monitoring netwurk television. magazines and new:
papers. I think we can anticipate and bacome pro-

active to those which may have major impact on
our business in the 30's and 90?s."

People who were watching 20-20 news
show late September. 1930. were treated to the
typical pattern of a major public issue being

 

3

introduced to the general public in all its Elements;
on prime?time television. Hugh Downs immduced
a 30-minute segment titled. ?Working on The
Railroad."

cameras. with Geraldo Rivera as corn-
mentator. explored the subject in depth. concen.
trating on increasing incidents of derailments and
hazardous material spills. Rivera talked with rail?
road employees who fear for their lives as they
move trains on deteriorated track. He also mpg-[ted
details about several disasterous derailments which
occurred recently.

How has this issue impacted the chemical in-
dustry? it already has had considerable impact in
the form of unfavorable publicity which may result
in costly and restrictive regulations regarding the
shipment of chemicals. Congress recently passed a
railroad deregulation bill which could be the ?rst
step toward revitalization of the railroad industry.
Meanwhile. derailments are likely to continue 
generating more publicity. followed by Congres-
sional investigations. Then legislation is likely to
appear in Congress aimed at establishing regula-
tions and governmental agencies to enforce them.
Some of these may be Others seem
certain to be unnecessary and costly. Their cost will
ultimately be re?ected in the cost of products made
from chemicals.

A Shell issues team has been active on the
railroad problem for several months. The has
been communicating the industry's story on a
broad front. This is just one of several issues which
are ahead? far along and threaten to 
complicate various segments of the chemical in?
dustry. Those which Shell Chemical '5 manag?mmt
have tagged as Class I Issues are listed in a sidebar TO
this story.

How serious is the threat of governm ent domina-
tion of the chemical industry? Some top executives
have recently voiced their fears that corporations
311' in grave danger of losing their individual riglmi
in our government structure. There was a recent
Editorial in the Wall Street journal which stat
that in the 1966's. the government destrolr't'd the
steel industry in the United States: in the 19?0?5 the
gnvernment destroyed the automobile induS?'l'
and in the 1980's it will destroy the oil industry-

In Point of fact. recent developments regard'flg
carcinogeng hazardous material spills. and pi! bli?t?r"
of other chemical related incidents has turned the
PUbliC Spotlight on chemicals more than at any
Pf?'ious time in the industry?s histotr- It 
Seem that the opportunity for constructive Public
issues management programs has never been 
timely. 

i'nl'unrh we" 

Five issues given
Class priority

by Shell Chemicals
management.

Petrochemical feedstocks how should they be
allocated in cases of petroleum shortages?

Water quality in some cases regulations are so
complicated that environmental bene?ts seem very

 

small in comparison with the cost of compliance.

Hazardous waste legislation to establish a fund
for the cleanup of abandoned hazardous dump sites
has been passed. but jusr how a fund can be
administered remains a topic of lively debate.

Air quality regulations are so stringent that
industrial expansion and dearelopment of alternate
sources of energy are being impeded. Is this
necessary?

Rail transportation how can the ef?ciency and
economic viability of ?merican railroads be pro-
moted and restored to their proper place in the
nation?s transportation network? El

 


matures at a critical time

it provides the tools for lndusth to mobilize
public support for reasonable legislation.

in late September. as chemical waste sites were in
the headlines and a Congressional committee was
holding hearings on the subject. a two-page adver?
tisement titled. Managing Chemical Wastes. what the
chemical industry is doing to improve waste-disposal
methods. appeared in many of the nation?s leading
magazines.

The ad. which explains that America?s chemical
industry is committed to the development oFSecure
disposal methods for hazardous materials and has
developed the technology to handle them safely.
was placed by the Chemical Manufacturers Associa-
tion as part of its or Communications
Action Program. It was the latest in a series of
advertisements which address vital public issues
which impact the chemical industry.

a fiverpart communicationsr?ac-
tion plan was conceived and put into motion by
a revitalized EMA. in 1979. Now it has matured to
the operational stage whereby it provides the

TREND Fri-Inc n- Nil-Jill with

Washington legislative representation. advertising
support and collateral materials which member
companies can use to provide factual information
about the industry at the grassroots level.

ChemCAP?s five parts are:

I Telling the industr y?s story through advertise-
ments in magazines and newspapers to opinion
leaders and legislators.

Developing issue booklets which are offered
free in the ads. and which may be used by
CMA lobbyists and member companies to
communicate with legislators. government
officials and other public and private groups.

I Communicating with legislators and federal
of?cials in Washington. D.C.. through 
lobbyists.

I Member companies telling the story to em-
ployees. customers and stockholders through
publi-tions. meetings and bulletin boards.

I A reaching out to opinion leaders through
speeches and special presentations by individ-
uals from the speakers bureaus of member
companies and the CMA organization.

?All needs now to achieve maximum
impact is aggressive supportive action on the part of
member companies, their management and
employees," says Ken Spalding, Manager, Public
hf fairs, Shell Chemical Company, who coordinates
the Shell team which is working to implement the
CMA's effort.
Advertisements and issues have been printed and
distributed on the major issues which involve and
affect the entire industry: worker safety, product
safety, transportation safety, air and water pollu-
tion control and hazardous waste disposal.
In addition, the CMA has:
I produced a speakers resource manual;
I designed a national news service and distribu-
tion system for releases and broadcast scripts;

or organized a science advisory group to serve as
industry spokesmen on nationwide media
tours, and

I prepared a variety of audio!? visual materials.

Reprints of the advertisement, the issues book-
lets and other materials are available to
member companies on an at-cost basis. The ads can
be used in reprint form for placement on company
bulletin boards, distribution to employees, stock
holders and customers at meetings and conventions.
They may also be used in company publications or
for placement in local newspapers and magazines
over the sponsoring group?s own signature, and in
mailings to community thought leaders, educators
and news media.

Issue booklets may be used in the same way as ad
reprints, but on a more selective basis. They cover
the same subjects as the ads, but in more depth and
detail. Since the campaign started in March, 1980,
more than 6.000 booklets have been distributed.

The Speakers Resource Manual is a compilation
of information, facts. speeches and helpful hints for
establishing and taking part in local speakers pro-
grams. Its material is ready to go, and can be
adapted to specific audiences or spiced up with
personal experiences and local examples.

"Perhaps one of the most beneficial features of
the program is that it has produced an
abundance of facts and figures about the chemical
industry which just weren?t available before 
Spalding says. ?With this information, we can til-ll
our story honestly, and effectively."

Shell supports the effort with leader-
ship, resources, manpower and funding. Shell
Chemical Company's President J. E. Henderson is

chairman of the Communications Policy Review
Group which overviews the pfugram
for the Board and Executive Committee of Eh:
CMA. Rene' D. Zentner, Manager, C?rporate
Studies for Shell and a member of the this,
committee, is assisting with research, attitude
studies and providing information on the key
issues. In addition, Shell?s own internalfexternal
program is organized and underway, including
speeches, articles in company magazines, media
response and mailings to various audiences.

The program evolved two years ago
when the task force which sought to revitalize the
organization formed a research subcommittee to
study and define public attitudes toward the
industry.

"Several companies including Shell pooled their
existing research for the study,? Eenmer says.
"What it told us was, the public is well aware ofand
appreciates the benefits of chemicals, but is afraid
the industry is out to poison them through sloppy
and irresponsible operating practices. From this,
we drew the conclusion the industry did not need
more communications on product benefits a
point already well made. The industry needed to
tell the public about its positive efforts in five areas:
air and water pollution, product safety, worker
Sill?CW. transtlortation safety and hazardous waste
disposal. These were the things the political activ-
iStS. government officials and opinion leaders were
most concerned about regarding the chemical inv
dustry. Fortunately, they are also things which the
industry has been concerned about and areas where
We have a good track record. So it became simply
the problem of effectively communicating facts and
information to those concerned."

With this research pointing the way, the task
and formed the current Communi-
cations Committee, which in turn hired an advetr
rising agency and a public relations agency to help
execute a communications program on the five key
issues. Their objective, as stated by the Grisln?l task
force, is to increase recognition that the chemical
industry is committed to doing a responsible job 
Pl'citect the public from health and safet?r' risks for
chemicals.

The program was funded at $3 million by lb:
member companies. To assure maximum imPaEfI
its target audience was de?ned as:

1} Political activists: those who write lent-31'5-
play leadership roles in local 
organitations.

3} Government: administrative, legislative and
regulatory personnel in fEderal and selecti?iT
state and municipal positons.

I 

more L'niu-mr 4

 

 

 
   
 
  

materials now available. and where to get them

 

   
 
  
  

i. 
1m



 
  

 

 
  
       
       
     
       
       
    
    
   
 
  
   
   
   
   

Ad Reprints
Reprints oi the above advertisements. either in two+page maga-
zine size or one page newspaper size. are available by writing to the
Editor. GMA News. Order bv title. The price is 5: tor each ad.

Issues Booklet:
These four issues booklets are available either individ~
"Eliza's-W in Package oi tour with an attractive cover. far
right. For information or to order contact John Alavicit
or Priscilla Perkins at the CMA. Visuals
Films and audiovisual materials being prepared will otter addi-
tional resources tor local communications program. An 15?minute
color slide tilm show. "The Chemical Industry: Meeting the Chat-
Ien ge otChange" be ready tor ge neral distribution bv the time
this is published.
In addition, iive ail-second public service announcements are
being prepared tor placement with teievision and radio stations.
For information about these materials. contact Richard Wilson.
at the Washington oi'iioe.

Speakers Resource Manual

For a com:r oi the Speakers Resource Manual. together
with the latest updates. write to Priscilla Perkins oi the
CMA. Price is 510 per manual.

The CHE: address:
Chemical Manufacturer's Association
1325 Connecticut Aver: ue. NW.
Washington. 0-6. 20009
{202} 3.234%

  

3) Communicators: broadcast media. news:
paper. magazines: reporters. editors. publish:
ers. columnists.

4) Plant concentrations: residents in the eight to
ten areas of major chemical plant concen:
trations.

Educators. primarily at the college level.

6} Companv contracts. including employees.
stockholders. suppliers and customers.

To measure the effectiveness of the program. the

CMA communications committee decided to monia

tees in the areas of chemical plant concentration to
communicate the industrv?s story at the grass roots
level. Sites selected for possible pilot ChemC?P
Communitv Committee programs include Charles-
ton and West Virginia.
Chicago. Houston. New Drleansr?Baton Rouge.
Philadelphia. San Francisco. St. Louis. Delaware.
Michigan. New Jersey and Westchesterr?Fairfield
Counties.

"If like Eddie Childs of the Western Company.
you are mad at the trend toward excessive govern:

tor attitudes among the target audiences toward the
industry before and during 

?We did an benchmark studvr lasr
March and plan to go back to the same audiences
with the same questions in Marchr?April 1931."
Zentner says. ?It will be interesting to see how and
which wav the needle swings.?

A sixth part to the program is now in
the planning stages. This is the organizing of a
number of pilot Communitv Commit:

TREND Voila-at It 4 "fl?

ment intervention in the private sector. there is
plenty;r of room in to vent I,Iroul' frustra-
tion and work toward more sensible legislation."
Spalding savs. ?With the public misconceptions
and attitudes which must be cleared up and swaved.
it will take enthusiastic and sustained effort bv not
only all the members of the CMA. but other trade
associations. the industrv at large and the public to
favorablv impact government policies on these
issues." El

 

A compelling need for individualism

Corporate politics . . . they do exist and they do
in?uence behavior patterns of every person within
an organiration.

So writes Bruce D. Henderson in Boston Con-
sulting lGroup?s Perspectire;

"What matters is what people think of you. No
one is exempt. Therefore. set as your objective to
conform to the corporate culture. Try to do what
others believe to be the most important thing you
can do for the common interest. To belong to an
organization you must sacri?ce your initiative and
independence in many things. Your status in an
organi:ation will be limited by any doubts you
share about values and goals that are part of the
corporate culture . . . Don?t fight it on the way
up."

Reflected in Henderson?s recommendations for
success is a bit of The Organization Mon described
by ?William H. W'hyte. Jr.. some years back. 1 ii'liihyte
claimed that the stress on belonging to a group leads
to a decline in creativity. inventiveness and. there-
fore. innovation. and that man loses his autonomy
by submerging himself in the anonymity of the
corporation.

1: is difficult to measure how much this submer-
gence of the individual affects a large corporation
because the question is. how much more innovative
and competitive would it be if individuality were
encouraged.

The con?icts between the individual and the
organhation. between the member and the team
?the necessary tradeoffs have been discussed
for more than 2.300 years. From Aristotle. who
developed them in the context of the individual and
the state. to Douglas cGregor. late Sloan Profes-
sor of Management at MIT. who wrote about the
manager and the corporation; all have agreed that
to be against all conformity. even as rare people
come together to collaborate. is to be against order
and for chaos.

There is evidence. however. that companies with
an individualistic management style can be no usual-
ly progressive and prosperous. In an interview pub-
lished in the Novem her-December 1930 edition of
Harvard Business Rex-nu. Renn Zaphiropoulos. Pres-
ident and Chief Executive Ufii cer of ?v'ersatec. Inc..
describes a management style whereby the organi?
zation is viewed as a series of concentric circles and

ID

 

 

management is on a ?rst-name basis with em-
ployees at all levels. Individualism and candid
communications among employees are entouragfd
and rewarded.

Versatec. ho. was founded in 1969 by 
poulos and four other engineers. and under their
almost casual style of management. the comp?n'r'
has grown to over 960 employees and outsells all of
its competitors combined. The company ??35 
quired by Xerox Corporation in 19?5 after earning
a reputation for inventiveness in the ?f
electrostatic printers. plotters and dual?hintliiml
printer-plotters for computers.

But can this casual style of be
applied to a really large corporation. Iii-?5P
asking? And what about William Wht't?'? El?n??
observations? What of the current balance the
needs of the organization and that of the individual!
What of the implications for organirations that art
continually larger. more complex. more reliant on
interactive teamwork}r How can management Emmi
teract this tendency to blend into the crowd? 

editors recently posed these un?u?n?

1: tin-n. l'i I 



hr-H

to Klaus L. Mai. Vice President, Shell Chemical
Company.

"It is something we should be talking about a
int." he says. ?It is something we should con-
sciously weigh as we broaden the matrix structure
within any corporation and thereby become more
reliant on interactive communication for results.

"What we need.? says Mai. "is a minimum
amount oforganization to get the job done. just asl
would side with those who advocate a minimum
amount of government to maintain the state.

"Rather than bureaucracy. we need informality
to create the environment in which differences in
views and perceptions. freely expressed. can pro-
vide the essential ingredients of innovation. of
creative problem solving. of organizational achieve-
ment.

"The ultimate negative. as far asl am concerned."
he says, "is when group pressures bury courageous
individual expression. If allowed to continue. such
group pressures will affect all. including those who
have been identified as 'fast comers'. The latter will
have learned. even more quickly than the others.
that the best way to get ahead. to maintain their
position with minimum risk. is to ask ?good
questions' rather than to forcefully argue a point
of decision.

"Conflict. differences in view within the team.?
Mai continues. 'is an essential catalyst for progress.
for extraordinary achievement. Suppressing these
differences is to squelch the most valuable asset a
company has; the intelligence. the perspective and
perceptions. the innovative spirit an individual can
contribute to the enterprise."

How is the tradeoff between individual and team
contribution safeguardedl Edwin C. Holmer. Pres?
ident of Exxon Chemical. was quoted recently in
Chemical Week: "We have a worldwide company
that has made the matrix system work . . . We
have many ?ne minds in this organization. There
are only two ways of getting these people to
volunteer ideas and opinions: keep it informal; very
informal; and use one's considerable authorit?il
sparingly; very sparingly . . . 

agree completely." says Mai. ?1 cannot pre-
scribe the Bruce Henderson formula to our young
People. I would challenge them to express their
doubts about the values and goals that are part of
the corporate structure. I would ask them to seek
responsible compromise as conflict arises but to
demonstrate the courage to disagree. to avoid
falling into the trap ofvague and shifting commite
ments. to hang tough on core principles.

"Conventional management theory says that in
most instances the collective results of a team effort

h'lndh' I i-?l

will be superior to the contributions of any single
individual. That desired optimum result. however.
is possible only if every member of the team is
encouraged to function at the peak of his potential.

"1 think we should devote more attention to
stimulating the individual and individual Contribus
tions within the corporation. I don't think any of us
are consciously trying to suppress the individual.
but it can easily happen in the complex organiration
which we and many companies maintain today.

?And. if the are with us now. how will
they intensify later? All of the forecasts for the
1980?s indicate we are in for at least another
difficult year for the economy and for our industry-
Stress flowing from this can tend to suppress
individualism even more.

"Only if all management Sets the stage for
openness within the enterprise can the best of each
individual contribute to the formation of a deci-
sion. lClibviously. the calledafor balance between
allowing disagreement to emerge and timely deci-
sion-making demand unique qualities in manageM
ment leadership."

Perhaps Douglas MeGregor captured the essence
ofthis balance best. In The Professional Manager. he
describes the process of working through differ-
ences. He calls for authentic communication among
members of an organization. This means that each
member. including the leader. is genuinely free to
express his real feelings. as well as his intellectual
ideas. openly to the group.

It also means that such expressions will be
explored sympathetically. although not necessarily
agreed with. by the group until they are understood
fully. It means that the leader or other members will
not ride toughshod over any individual's views or
feelings.

?What all of this means.? l'vlai concludes. ?is
that all must attempt to discipline themselves to
listen genuinely [a most difficult task for some of
us). to cultivate a climate of mutual trust and
support within the group so that all can express
themselves without fearing consequences. Finally.
that given the competitive struggle for power and
status and the other rewards of corporate life. none
will take unfair advantage of the openness and
therefore the vulnerability of one?s fellow."

As Frederick R. Kappel. former President of
American Telephone and Telegraph Company said
in Vitality in Business Enterprise: ?Successful orga-
niaed effort depends upon the power of individuals
to make highly personal contributions. To make his
best contribution. a man must be his own unique
self and he must always know who he is . . .
l[Clint concern is to build individual vitality. . El

   

GASOHOL

. It may provide short-term relief

  

Snuf?' Smith must be confused. For more than 313
years of his comic strip life. Snuffv has been
fighting those ?infernal revenoers" awa?,? from his
still. Suddenlv. he discovers. the Federal Govern-
ment is offering subsidies and loan guarantees to
encourage people to produce grain alcohol. or
ethanol.

Snuff-v. of course. has been using his still to
produce corn liquor. which among the hill folks of
the comic strip environment is considered to be an
enchanting beverage and. one ofthe better things in
life. The government still frowns on this unless
proper licenses are obtained and taxes paid. but
producing alcohol for gasohol is now regarded bv
manv with almost patriotic fervor. and to fuel-
hungry American motorists, the product is as
enchanting and as vital to the good life as Snuffv's
beverage.

Even former astronaut  Gordon Cooper appeared
on network television news recentlv to extol the
virtues ofalcohol as a fuel. As an energv consultant,
he is assisting The Bank of America in California
with a project whereby the companv?s cars are
being converted to run on alcohol. Although the
conversion is relativelv expensive. Cooper said. the
fuel's nonspolluting characteristics and economics
plus reducing imports make it desirable.

Conversion to alcohol costs the bank about
STSD per car. Because of this. and because govern-
ment subsidies are tailored to gasohol. few of the
current experiments and projects involving alcohol
as a fuel involve the use ofpure alcohol. Its use as a
gasoline extender is far more popular. more ad.
vanced and seems more viable over the short?term.

Two basic alcohols have been proposed for use
as gasoline extenders. One is the previouslv mem-
tioned ethanol. which is made bv fermenting grains,
sugars. and food processing Wastea 35 well as
artificiallv. from petroleum. The other is methanol.
also known as wood alcohol. It is made from
natural gas. coal. straw and wood products. and
potentiaili,r could be made in large quantitici

Methanol. however. is not a feasible blending

1'2

to our dependence on foreign crude

agent in gasoline. It would require equipment
tailored for its use. In addition. it has not received
federal waivers required under the Clean Air Act
Amendments of 197? for use as an unleaded
gasoline blending component. Although methanol
should not be discounted as a wide-application
automotive fuel prospect. it is not a major factor in
either the current industrv surge or policv debate.

The recent flurrj.r of interest and activitv in
gasohol manufacturing was spurred bv last sum-
mer?s fuel shortages. the rising prices of gasoline
and continuing spot shortages of unleaded gasoline
which is required in today?s cars. There is also the
continuing need to reduce America?s dependence
on imported oil. Higher prices have reduced gasoline
consumption in recent months. but the need for
further reduction is obvious. During 19W. the
1.1.5. imported an average of 8.136.DOU barrels of
oil each dav. a percent increase over the same
period in 19?3. Alternatives to imported petroleum
resources are imperative.

The basic concept of using alcohol dates back to
the 19th centurv when. in 1876:. the first internal
combustion engine. the Dtto Cvcle. was design
to ton on alcohol. Henry Ford was an earlv
champion of the concept of making farmers enletg?
producers. The farm bot.r from Dearborn. Mltl?gam
designed his Model to run on alcohol. ??slec o5
anv mixtUre in between. During the 1930 
teamed Up with Dow Chemical Comm?? :r
attempt to market gasohol in the 
the name "Agrol". This project was aban tile
because this blend cost more than P?mlwm 
available at the time. . sin-if:

The gasohol idea has surfaced several nm?vitv in
with by far the most significant surge ufac?tl men?
191?s and A genuine grassroots non.
has not onlvr put the gasohol industfl' "1 [atol'S
but also has captured the attention 0f lf?iini?
and in?uential policvmakers within the meIIl'5
tration. Growing numbers of state H?l'?am is
and interest groups are lendingtherr ent-
Effort. It has asignificant farming sector 11'0?? 


TREND rid-He El Hui-h?! Ft}

Advantages of Gasohol

As Snuffy Smith and real?life moonshiners dis
covered long ago. one distinct advantage of alcohol
is that it can be derived from domestic plant
material not subject to interruption or price manip-
ulation by foreign governments. It uses one of the
nation's greatest economic agricultural
production to help solve its greatest economic
weakness dependence on foreign oil. Its necessary
raw materials can be replenished at every harvest.

Those who benefit from gasohol use are nu-
merous. The farmer gains a price support for his
grain crops with the expanding of his market. He
may also become a small alcohol producer 
legally.

Exceptional opportunities - loan

guarantees. tax credits and entitlements accrue
to the alcohol producer.
It offers the reseller jobber a pro?t opportunity by
expanding supplies of a scarce commodity. Dealers.
too. may find their allocated supplies extended
with the blending of gasohol.

And the consumer is given the opportunity to
make his contribution to lessening foreign depen-
dence while also likely noticing better automobile
anti?knock performance than he gets with lower
octane unleaded.

Debatable Aspects of Gasohol

Several major considerations should be examined
in taking a realistic look at gasohol's short and
long-term contribution to the nation's energy pic?
ture. Popularly debated ones are what has become
known as the ?food versus fuel" debate. gasohol's
net energy contribution. mechanical considerations
to using alcohol in an internal combustion engine
and the economics of the fuel. including subsidies.

Food Versus Fuel
Although ethanol can be made from any agricultural
feedstock which can be reduced to the proper
forms of sugar. crops that produce sugar and starch
are most commonly used in the United States.
Suitable crops include corn. wheat. grain and sweet
sorghum, sugar cane. sugarbeets and Jerusalem
artichokes. The ideal feedstock varies from one
Part of the country to another. making speculation
about the future of gasohol development uncertain.
Agrarian interests in Congress contend that if
there is land capacity for both food and energy
crops. food supplies are not threatened and such
expansion would help farmers. Opponents believe
it is not only dangerous to involve the food chain in
our energy dilemma but contend that full use of
Energy intensive crops would drive up prices of

both food and fuel.

TREND li'nlI-rnci'lh'I-Mh? I 

Supporters argue that only the starch component
of corn is necessary for conversion to alcohol. with
other components suitable for alternate uses such
as cattle feed. a food source for protein suppliers.

Dissidents claim that bad harvest years would
result in battles over crop allocation.

Proponents see gasohol as bringing a significant
amount of marginal land into production. along
with using lands now set aside.

USDA Depury Secretary jim \Villiams believes
natural fluctuations in corn production levels could
prove devastating to the cost and availability of
ethanol feedstocks for any significant gasohol pro-
gram. unless large reserves of corn are maintained
as a regular policy.

Supporters suggest non-food feedstock alternaw
tives for conversion to ethanol. Those now under
consideration include cheese whey and agricultural
wastes such as corn stalks or other residues left on
or in the ground.

What will the grocery bill rise to iffarmers don 't
have reasonable Supplies of fuel available? Food is
the staffoflife. It is cheap at any price. Availability
is the key to cost. A farmer with an empty fuel
barrel is a provider without the tools of the trade.
Again. gasohol is part of the answer. say proponents.

At this moment. gasohol production is not
taking food from the mouths of the hungry in the
U.S. We have a record surplus. and it appears that
will continue during the next few years. However.
we must also consider what will happen to that
Supply when the world population doubles in the
next 10 years. as is predicted.

Net Energy Contribution

The energy balance consideration questions whether
more energy is put into the production of ethanol
than the energy output of the product itself. and
whether it would require an increase. rather than a
decrease. in imported fuels.

While it is clear that there is energy inefficiency
in using most ire-place facilities to convert grain to
alcohol for fuel. there is general agreement that a
modern plant. fired with coal or other now-petro-
leum resources. would reduce crude imports and
result in a more favorable petroleum balance.

Several studies have been made on the subject.
but discrepancies arise because the studies use
different premises. starting points. processing meth
ods. feedstocks and ethanol heating values.

According to a study by an independent research
organization. traditional methods require more
than twice as much energy to grow and harvest the
grains and convert them to etlie nol than is provided

'3

by the ethanol. Despite advanced anl?gY Ef?cm??
fermentation and distillation techniques. the stu 
calculates 20 percent more energy would be C?n'
sumed than produced. However. if the ethanpc}
plant is fueled by non-petroleum sources. it cou
result in reducing petroleum imports. 

Sugar cane looms as a favorable farm crop in the
net energy balance controversy. Usmg sugar cane
or sweet sorghum to produce ethanol would deplete
only about a third of the energy produced. That's
because sugar cane wastes. known as bagasse. are a
cheap and available boiler firing source. And the
burning of bagasse in an ethanol production plant
would actually eliminate a waste disposal problem.
This has been the route employed in several
countries which have become significant ethanol
producers. including Brazil.

The achievement of a favorable energy balance
certainly needs to be a goal if gasohol usage is to
increase. If the US. has to import fuel for a farmer
to drive a tractor and fertilize his crops. and if
petroleum is used to fire the plant to turn that crop
into ethanol. a net energy loss is most likely to
occur. in that event. direct conversion ofimported
crude to gasoline is preferable.

Technical Aspects of Gasohol Usage

A discussion which merits much consideration is
distribution of gasohol to the consumer. Perfor-
mance problems. for the most part. have bEen
solvable. Gasohol increases octane ratings over
regular unleaded but provides poorer mile-
age in. new cars.

However. there are some troubling technical
aspects to blending alcohol with gasoline for large?
scale distribution.

Uasohol in the presence of even small amounts
of water undergoes phase separation into two
layers. The bottom layer is composed of water and
most ofrhe alcohol. while the top layer contains the
gasoline from which most of the alcohol has been
removed. This will create a serious disposal problem
for [unit bottoms at service stations and bulk plants
which contain a mixture of water and alcohol. To
date. all gasohol blending to Shell?s knowledge has
been done either into tank trucks for delivery to
service stations. in special segregated terminal
tanl-tage. or in dedicated refinery tanlts from which
the gasohol is delivered directly to the retail outlet.
Studies have convinced Shell that gasohol cannot
be transported via the normal gasoline pipeline and
marine delivery systems.

Even on a localited basis where economic sources
ofethanol are available and phase separation can be
largely circumvented by blending into the delivery



trucks. there still remains a problem. The addition
of ethanol to an unleaded gasoline increases its
volatility and severity in causing crap-orange Emiso
sions. Accordingly. the Environmental Protection
Agency is considering limiting the physical prop.
erties of the final blend to those typical of the
unleaded gasoline previously marketed. Since
ethanol increases the volatility above that of the
base gasoline. it would be necessary to under-
pressure the base gasoline. To achieve this. Either
segregated small batches ofgasoline exclusively for
gasohol use would have to be supplied and stored at
terminals engaged in the blending or the total
supply. including the much larger quantities of
unleaded to be delivered without blending. would
have to be underpressured. In the latter case Shell
estimates that the underpressuring would result in a
2 to 4 percent reduction in unleaded supply.

While these aspects of the fuel blend create
logistical and other problems and raise costs. they
are not insurmountable when viewed as part of the
total program.

The Economics of Gasohol

Until recently. the relatively cheap price of petro-
leum products made ethanol and other alcohol
fuels too costly to have any real commercial value
for use as fuels. Gasohol?s popularity as a fuel began
when Congress exempted it from the fouracents-a-
gallon federal fuel excise tax. through the National
Energy Act of and allowed it to compete
more favorably with gasoline on a cost basis. The
exemption applied only to agriculturally-derived
ethyl alcohol. and the mixture had to be 90 percent
gasoline!" percent alcohol.

In addition. 16 states in the past two years have
adopted various exemptions of their own. [Oilfilu
With gas exemption. has the highest. 
Maryland has the lowest at Some apply D?li' ll
the alcohol is distilled within the state.

The crude excise tax bill provided a direct tax
credit to ethanol producers of 40?; gallon "lull
1992 and wilI likely spur many new products"
plants. 

Another gasohol provision in the bill raised th?
investment tax credit to 20 percent from ll:l [J'irm'lt
for alcohol fuels facilities.

Existing federal subsidies for alcohol fuels amount
to the highest of any non-nuclear eneri?' 

The federal motor fuel excise tax 
including the recent addition of the 03505;;
Conservation Fee program. amounts??j $1.1 
barrel on 10 percent blends. The incluslui1 
alcohol in DOE's Entitlements ?Hill?s?
additional subsidy worth $3.25r?barrel. bringing


TREND Him.- a hunt!?- .I- In?

the total subsidy to $20.4?x?barrel as of March
1930.1n addition. state subsidies may run as high as
barrel. Also operating are financial incentives
administered by USDA in the form of loan guarana-
tees for alcohol pilot plants.

As a result of these heavy state and federal
subsidies, the American Petroleum institute cons
tends. and Shell concurs. that gasohol competes
artificially. Government controlled prices hide the
true cost of energy from the public and encourage
consumption rather than conservation of energy.

Advocates of the fuel blend counter the subsidy
argument by involving 1.1.5. reliance on precarious
foreign oil supplies and the accompanying trade
de?cit. They also highlight the more immediate
nationwide unleaded fuel shortage which gasohol
has alleviated in some regions. Sources at the
Department of Energy (DOE) and the Office of
Technology Assessment (UTA) acknowledge the
subsidies give gasohol its competitive edge. but
consider them the lesser of two evils. President
 Carter agreed. supporting a permanent extension of
the four-cent?per-gallon excise tax exemption be-
yond its Dctober 1. 1984. expiration date.

In addition. the lCarter Administration persuaded
Congress to vote additional tax credits. loans. and
loan and price guarantees to boost gasohol produc-
tion over the next two years to six times its current
level. 

On the minus side ofthis aetivity is the rapidly
changing technology of gasohol. Will the plants
built today using these subsidies be economically
viable five years from now?

Other Considerations

Despite optimism about gasohol in some quarters.
there is skepticism in others which is one reason
Why the Administration?s incentives are so gener-
ous.

1" all-Int. 19?9 study. the report ofthe Alcohol
Fuels Petr?y Review identified four issues that will
shape ethanol's future as a fuel additive: the
amount of new conversion capacity that Will be
built. the availability of inexpensive feedstocks. the
development of cost-cutting technology. and the
relative costs of competing fuels.

As these four issues suggest. gasohol's future

EPEnds on a number of interrelated elements that
deny 9115?? prediction. One aspect that won?t be a
Pf?blfm. given sufficient crude. is the availability
or ga??li?t for gaSohol blending. The 1.1.5. govern?
tnent has and can only further cornpound the
difficulties ofproper supply distribution by trying
ID. Influence the distribution of the almost 300
million gallons of gasoline which are sold each day

TREND- V?m? Nun-the . Ivl'h

in this nation. Approximately half of that represents
unleaded sales. and. of that number. on a daily
basis. 425.000 gallons have been designated for
potential gasohol blending. as ofMarch 1980.

President  Carter?s goal ofproducing 500 million
gallons of ethyl alcohol annually by the end of
1981. which approaches extending the 1.1.3. annual
fuel supply by ll": days. probably cannot be met.
However. the goal may be achieved by 1983 and re-
sult in a cut in oil imports ofabout oner?halfofone
percent. By 1985. ifthe goal of producing 1.8 bil-
lion gallons of ethyl alcohol is met. crude oil im-
ports could he reduced by approximately another two
percent. assuming new ethanol plants are fueled
by nonspetroleum sources. These goals and regula?
tions may change under the Reagan Administration.

Conclusions

Gasohol can help reduce 1.1.8. dependEriee on
imported crude. It is one of the few short?run
partial solutions to our liquid energy problems.
Given the right crops. in the right part of the
country. with the right technology and tax treats
ment. gasohol can be part ofthe solution to short
supplies.

But it must be recognized as an interim one to be
used until more permanent oil?saving processes can
be implemented. Converting coal to gasoline. ob-
taining oil from shale. and development of solar
energy and other synfuels are crucial and necessary.
but they are years away. Applying time and money
to gasohol projects will not address all of the
questions of where future gasoline supplies 
including the 90 percent gas in gasohol will come
from. Also. Shell believes alcohol fuels will flourish
primarily at the local and regional levels where
otherwiSe discarded feedstock for conversion are
readily available and a vigorous market is close at
hand. reducing transportation costs to a minimum.

For these reasons. Shell currently has no plans to
enter the gasohol business. The company plans to
continue to pursue onshore exploration. where it is
now active in some 48 locations. and to enhance its
strong offshore position where it is currently
engaged in the company?s largest exploration and
development program ever. At the same time. Shell
will continue to develop and expand its coal
resources.

But gasohol will help buy time for the energy
industry while these answers. some of which require
a much longer lead time. develop. We need all of
the alternatives we can come up with.

There could be a real opportunity here for
Snuffy Smith. and the "infernal revenoers" will be
on his side. El

15

cm

. . 

I .

 

It could result in more effective safety
effort by both industry and government

The US. Supreme Court's recent decision which
struck down the Occupational Safety and Health
Administrations benzene standard is encouraging
Shell?s specialists in these areas because it is a step
tovvard requiring a more reasonable approach to
regulation than OSHA has been taking with benzene
and carcinogens. Even so. it was a narrowly split
decision and did not face the 
issue.

"This decision could result in more meaningful
deployment of limited health resources and per-
sonnel by both government and industry.? says Dr.
Curt W. Smith. a senior consultant in Shell?s
Health. Safety and Environmental Support group.
"Whether it does or not will depend primarily on
reaction to the ruling."

At issue in the decision Was an OSHA standard
that reduced the permissible airbourne benzene
exposure limit to a time-weighted average of 1 
from it] and limited all skin exposure and 
contact to liquids containing no more than a trace
amount of benzene. Benzene is a colorless liquid
used primarily as a raw material or intermediate in

if!

the chemical industry and in the manufacture of
motor fuel. There is a relation between leukemia
and exposure to high concentrations of benzene.
OSHA presented no scientific evidence. however.
that exposure to the concentrations of benzene.
permitted by current regulations either as a ?flu?:l
or gas, presented any significant risk. .
in upholding by a majority of 5-4 a Fifth Circuit
CDUH of Appeals decision which struck down
standard. the Supreme Court held that
OSHA must determine. based on substantial SCREW
tific etridence in the record. that a given espo?u?-?im
?1 chemical Poses a significant rislt of substantial
health impairment before the agency establishes a
lower exposure limit. Up to this time OSHA has
maintained the reverse. that indiistr'ir h? ll?:
burden of proving a safe {no rislt} It?? in]:
carcinogenic materials. In short. the court strut:
policy of banning a chemical or
l'L'?Ulating ?kp?sures to the lowest possible lile 
the basis that there is no safe exposure level f?r 
Industrial carcinogen. [n so doing. the court has
established a basis for challenging the pivotal

h'i-fuiIi-e hi Natal-Ir 4 Iii?-r

revision of the recently promulgated generic
carcinogen regulations.

This aspect of the decision goes far beyond
benzene to all other substances being considered
for regulation as a carcinogen, and thus is an
important step forward in limiting expensive regu-
lations to those situations where there 15 definable
significant risk.

OSHA's deputy director, Basil Whiting, said
the Asiatic? was of course disappointed by the
decision. The language is very complex and SSH A
is studying its implications carefully. Although the
court found that OSHA failed to make a finding
that its benzene standard would remedy a significant
health risk, he says, it clearly reaf?rmed 
mandate to issue health and safety standards. And
although the court's decision may make ?fulfilling
the task more difficult, OSHA will pre55 ahead in
its effort to assure every working man and Woman a
safe and healthful workplace.?

"This is not a death blow to the government?s
efforts to clean up the workplace; it is sound public
policy,? The New York Times said in an editorial
regarding the court's decision, continuing:

"Some regulatory agencies already follow such
guidelines. The enurt is not requiring OSHA to
quantify risk with mathematical certainty; indeed.
OSHA remains free to err on the side of over-
protection. With a little more effort, the agency
may even be able to justify a 1 standard for
benzene; it shied away from trying because esti?
mating health risks at low doses is notably difficult
and because it believed it did not legally have to
do so. The difficulties remain formidable but the
Supreme Court has wisely made such analySiS
mandatory.

"No amount of a carcinogen is good. But before
Suci?ri' decides how to allocate scarce billions for

ealth. it is proper indeed essential - to ask:
How much is bad??

An interesting aspect of the Pluraliry Opinion.
was written by Associate Justice John 1Paul
Stevens and joined in for the most part by Chief
?Shite Warren Burger and AssociateJustices Potter
Stewart and Lewis Powell, is that it expressly did
not address the cost-benefit issue which industry

oped the decision would consider.


the Opinion contains several asides

l?llhICh' indicate that the four justices signing th?
11731?? F?Pinion may believe the OSH Act reu-
2:313? gust? says 13. F. Aurelius, an attorney in
nvrronment and Labor Department. "At
the Opinion points out that although
th A didn?t quantify the bene?ts, the benefits of
new standard appear to be small. At another

?ly'ufum' HI-lhdh'! I Ilall'h



pastas?? we may 

carcinogens in their? w. 1c regulation of all
. 15 when would cost with little if

any, discernable benefits." 

Concurring Dpinion of Justice Powell,?
Aurelius continues, "is directly to the point in this
regard as it clearly indicates his view that Section
3i3} and 6(blf5) of the Act requires OSHA to
rnake a determination that the economic effects of
its standard bear a reasonable relationship to the
expected benefits of same. Indeed, Justice Powell
urged the Justices signing the Pluraliry Opinion to
face up to this issue.?

In a Concurring Opinion, Justice Rehnquist
found that Section of the OSH Act is uncon.
stitutional in part because Congress did not provide
an ascertainable standard to guide OSHA in its
standard setting process. The decision whether the
law ofdiminishing returns should have any place in
the regulation of toxic substances is for Congress
[not to decide, he said.

The dissent ofJustice Marshall, who was
joined by Justices White, Brennan and Blackmun.
concludes that OSHA must be able to act even
where there is no definitive scientific information
showing the extent of the health standard. Justice
Marshall also clearly indicated his View that a
reasonable relationship between the costs and
benefits of an OSHA standard are not required by
the Act.

"While we should all be very pleased with the
results of the benzene decision. we should keep in
mind that there are still many important issues left
open,? Aurelius said. "The issue of determining at
what point a health risk is, in fact, significant to
workers and the cost!? benefit issue may be decided
by the Supreme Court in its decision on the appeal
filed by industry in connection with OSHA's
cotton dust standard."

Shell's Curt Smith believes one of the most
significant aspects of the decision is the Court's
recognition that the OSHA Act?s mandate for a
"safe and healthful workplace? does not neces-
sarily require total elimination of hazards. Rather.
theJustices explained, the issue is a matter of acting
to reduce exposure where there is "significant risk
of harm. 

?No activity in life is completely, 100 percent
safe; nor is it possible for us to make it that was."
Smith says. "Trying to do so would cost umrn?ii?
inable sums of money. It is only by identifying areas
of significant risk and attackini-i Tim? in Order ?f
importance with intelligence. monlliIr and. mane
power that we can make significant and continuum
improvement in health and safer?? Th? court
decision seems to point in that direction.?



Chemical feedstocks
from synfuels

Shell?s forecasters now believe synfuels
may be a signi?cant source of chemicals
before the end of the century.

Last year was an eventful time in the oil and
chemical industries. Early in 1979 it appeared that
the world was drifting towards a comfortable
balance between crude supply and demand. This
was suddenly changed by the crisis in Iran. which
withdrew some five million barrels a day from
world oil supplies. The supply crunch encouraged
OPEC to sharply escalate prices throughout the
remainder of'the year and into 1980 . . . and to
support the high pricing structure by limiting
produetion to demand levels.

"Most forecasters saw five to ten years of
planning values consumed in less than a year

:3

because of control of supply and sharply
escalated prices.? says W. W. {Bill} Reynolds.
Manager of Strategic Planning For Shell Chemical
Company. Prior to breakout of the conflict between
Iran and Iraq. there was more than enough crude oil
being produced. Inventories were high and OPEC
had been cutting baelt on production. Shell's fore:
casters are assuming this supply control will cons
tinue to be the case and are revising their economic
scenarios accordingly.

"We no longer talk about energy forecasrs."
Reynolds says. "In fact, we avoid making any
implication that we can Forecast the future in

 

yd? hale-II" l- 

energy. What we do is look at the economic.
political and technical driving forces and put
together an energy budget. The budget always
works. supply and demand are always in balance.
The only questions are what the budget will require
at specific times. where those requirements will be
produced and whether the technological and eco-
nomic factors will be in place."

Using this approach to examine the economic
position of coal versus crude oil and particularly
coal?derived chemicals and the position they may
occupy in the future. Reynolds concludes that
economics have in fact raced ahead of our available
technology. If present supply and demand trends
continue. there will be growing pressure for alter.-
nate feedsrocks by the 1990?s; and by the year
2000. synfuels could account for from 5 to 10
percent of all chemical feedstocks. In the decade
after that. some 35 to 40 percent of new feedstock
capacity may be derived from synfuels.

?The rate at which synfuels can be brought along
is limited by infrastructure. construction and fabri-
cation capability. and not resource.? Reynolds
says. "The development of synfuels by 1990 would
represent a fast pace. Beyond 1990. the shortfall in
energy. using the budget approach. suggests that
something like five million barrels a day of synfuel
will be required by the year 2000."

Whether synfuels production develops accord-
ing to the Department of Energy?s goals is ques-
tionable. Certainly government lease sale policies
will have to change before a million barrels a day of
synfuel is produced from shale oil. Reynolds says.
Shell?s forecasters feel more secure about coal
gaslfication projections because there are ade?
quate reserves. 2] the technology is available. 3) it
looks economically attractive and is physically
feasible.

In July. 1930, President Carter signed the Energy
Security Aer. which has the goal of bringing
500.000 barrels a day of fuels into
production by 193?. and two million barrels a day
by 1992. Simple logistics make this unlikely to
happen that soon even if the economics make it
desirable. For instance. Chemical Week recently
Pointed out that this would require an oxygen
51113?? Capability two to three times the existing
one now in the 1.1.3.. and the supply capability
would have to be in place within seven years. At its
peak it would need T5 percent of the heat exchange
er capacity and 83 percent of the country?s dragline
capacity.

A plant capable of producing 50.000
barrels a day requires eight million tons of coal
annually. Assuminga 25-year life. each plant would

TREND de?h'lunhrr .1 lull-u

require reserves of at least 200 million tons. This
complicates siting problems. It is estimated that the
1.1.5. has about 450 billion tons of economically
accessible coal of which 200 to 260 billion tons are
economically recoverable. However. how many
sites are there where 200 million tons are readily
available?

Using calculations from a theoretical process for
manufacturing ethylene glycol from coal and com-
paring these on a cost per BTU basis with the cost
of producing this material from crude oil indicates
that the critical value needed between coal and
crude oil has already arrived. Reynolds points out.

"We do not yet have the second generation
synfuel technology that was used in these calcula?
tions and do not expect it to be in place until the
early 1990's.? he continues. "but we can say.
except for the case where crude oil values do not
increase in real terms. that the band of cost
equivalence will be reached for all of the economic
paths in the late 1930?s or early 1990?s.?

"We can also project that if crude oil prices were
to increase at an average annual rate of 3.5 percent
real versus 1 to 2 percent for coal. that by the
mid-90?s syngawderived ethylene would have a
clear cost advantage. Of course. any kind of rapid
price eacalation like we experienced in 19?9 would
jump syngas to a clearly favorable position at an
earlier time.?

The U.S. petrochemical industry has enjoyed a
unique position among LLB. manufacturing indus?
tries to its world trading partners by the historic
availability of natural gas and natural gas liquids.
Shell's forecasters see this supply more or less
holding with a slight decline over this next decade.
This depends to some extent on government policy
and what happens to price control after 1985. I0qu
Coast region natural gas production and ethane
production would follow a gradual decline from
the level of about 400.000 barrels a clay to under
300.000 barrels a day by 1990 if the current
average level of recovery of 35 percent were
maintained.

This decline. plus the fact that incremental crude
in the U.S. is going to have to come from hostile
environmental regions where it is expensive to find
and produce. will push the chemical industry
toward synfuels as a source of feedstocks. The
constant danger of supply interruptions by foreign
governments is another incentive for the industry
to move forward with synfuel technology. Doing so
is certain to cause a significant restructuring of the
industry. but chemicals from coal seem certain to
come. and perhaps much sooner than originally
projected. El

19

Shell Chemical 
Room 122?

One Shall Plaza
Houston. Texas TTEHJE