- 38 -
from the facts of these cases. In the Krause case, the taxpayers
invested in limited partnerships whose investment objectives
concerned enhanced oil recovery (EOR) technology. The Krause
opinion states that during the late 1970's and early 1980's, the
Federal Government adopted specific programs to aid research and
development of EOR technology. Id. at 135-136. In holding that
the taxpayers in the Krause case were not liable for the
negligence additions to tax, this Court noted that one of the
Government's expert witnesses acknowledged that "investors may
have been significantly and reasonably influenced by the energy
price hysteria that existed in the late 1970's and early 1980's
to invest in EOR technology." Id. at 177. In the present cases,
however, one of respondent's experts, Steven Grossman, explained
that the price of plastics materials is not directly proportional
to the price of oil, that less than 10 percent of crude oil is
utilized for making plastics materials, and that studies have
shown that "a 300% increase in crude oil prices results in only a
30 to 40% increase in the cost of plastics products." While EOR
was, according to our Krause opinion, in the forefront of
national policy and the media during the late 1970's and 1980's,
there is no showing in these records that the so-called energy
crisis would provide a reasonable basis for petitioners investing
in recycling of polyethylene, particularly in the machinery here
in question.
Moreover, the taxpayers in the Krause opinion were
experienced in or investigated the oil industry and EOR
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