Reviving Ford's Fuel Plan

...The problem is that, even by the present Administration's figures, price decontrol will step up U.S...

...My guess is he will wiggle...

...Thus it is possible that immediate survival—the greater good of achieving reelection—could cause Carter to change his mind, to slow down or reverse decontrol...

...Ah, say the Carters and the Russell Longs and the John Towers and the John E. Swearingens, but we will not be buying half our oil from foreigners, because higher prices will encourage more domestic production...

...Is that right...

...Under the Energy Policy and Conservation Act of 1975, Congress ordered mandatory price controls until June 1, 1979...

...So the American people elected a Democrat...

...Yet Carter, ordinarily soporific in public appearances, wowed them in Richmond...

...The less controversial parts of Carter's energy program—a mixture of stricter regulation of energy use and less strict regulation of areas like the environment, where improvements require more energy—save five to 10 times as much imported oil as does price decontrol...

...If you vote against it, I think you are going to have a hard time explaining that to the folks back home, because you will be voting for—somewhere in one year—about $5 billion to $6 billion that will go to the oil companies, which they haven't earned, and they don't need...

...until Carter is down to the lick-log himself...

...the President retains the authority to adjust price controls in any way necessary...

...Just as he doggedly kept Egypt and Israel at the negotiating table and was essentially concerned that they reach some kind, any kind, of agreement, his main concern since coming to the White House with no more than an intelligent layman's convictions on energy has been to end the impasse in government between the low-price and high-price advocates...

...Official: "That kind of calculation, I think, can be made...

...The existing tensions only heighten my belief that we must do everything possible to avoid increasing our dependence on importing oil in the months ahead...

...In short, the President has decided there will be high prices and the single way to look like an opponent of the extremely unpopular oil companies is to vote for the 50 per cent windfall profits tax...

...And that is what the Administration's program promises for us...

...production would build up resistance to opec-ordered price boosts...

...The Republicans said: "We must immediately eliminate price controls on oil and newly discovered natural gas in order to increase supply, and to provide the capital that is needed to finance further exploration and development of domestic hydrocarbon reserves...

...Given his record on energy policy, that might not be easy...

...A White House briefer said: "We are going to work that out with Congress...

...Carter's switcheroo had more to do with politics than policy...

...But I haven't figured that out...

...Our national strength," said Carter, "is dangerously dependent on a thin line of oil tankers stretching halfway around the earth, originating in the Middle East and around the Persian Gulf—one of the most unstable regions of the world...

...Certainly they will do little good...

...Carter has announced he will use those last 28 months to phase out controls at a rate of about 3 per cent a month, with the final jolt to come on the last day...

...That fact also weakens the second argument—that higher U.S...

...But the plans to shockproof the poor are not very far along...

...production only by 80,000-400,000 barrels a day in the initial years...

...To keep the pressure up, Carter is portraying his move not primarily as a price-raising initiative, but as an opportunity for Congress to at last clobber the oil companies...

...But what happens if inflation is up and Carter is down going into next February's New Hampshire primary...

...tax, and put that sum plus any fines levied on cheating oil companies (a total that has reached $70 million so far) into an Energy Security Fund...

...Half a billion dollars yearly from the fund would be used for subsidies of $100 apiece to families on the food-stamp income level...

...The liberals could filibuster tax legislation with the help of a few pro-oil conservatives, such as Finance Committee Chairman Long (D.-La...

...Amid high dudgeon and sweeping denunciations, all Senator Edward M. Kennedy (D.-Mass...

...could counter with after Carter spoke was that the President should have gotten the tax first, then decontrolled prices...

...Official: "Because we do not recognize the relevancy of that particular calculation...

...imports 8.8 million barrels of crude oil and refined products a day, that won't make much of a dent in our foreign demand...

...He aroused more than a dozen bursts of hearty, spontaneous applause...

...The increase will reach 15-20 cents a gallon...

...The first argument, xenophobia, has been swaddled—as were the interstate highway system and the Vietnam War during their early days—in the blanket of National Security...

...If liberal senators believe that election-year jitters could prompt a Carter reversal, his blackmail tactics won't work...

...When it comes down to the lick-log, you are going to have to decide whether you are going to vote for or against a tax [on excess profits]," a Carter assistant warned members of Congress...

...For those extra barrels of American oil are going to cost quite a bit...

...the rest would go to mass transit and energy research projects that Carter does not want to pay for out of general revenues...

...The plan, claims the Chief Executive, will raise the cost of oil 4-5 cents a gallon by September 1981...

...In other words, oil prices are bound to go up, so let's do it Carter's way—raise prices $17 billion, get back $10 billion through a windfall profits Andrew Molllson iv a reporter in the Cox .\'ews/xipem ii 'ashington burvuu...

...Still, the success of deregulation will depend on the President's ability to convince liberals that prices have been irrevocably raised, that he will not change his mind...

...This impressed moderates, who are also happy that, by decontrolling oil prices on his own, Carter took them off the hook...

...For instance, in a speech he gave in Virginia, he said he refuses to believe Congress "will vote to make a few already rich companies billions of dollars richer, off the necessary sacrifices of ordinary Americans...

...It is hard to see how the sacrifices are necessary...

...He could do this easily...

...Fuel oil prices have gone out of sight in that state, and Meldrim Thompson, among the lowest of low-spenders, was toppled last year from the governorship following his support of a utility rate increase...

...Besides, the influx of newly produced American petroleum might help lower—or, more likely, slow the growth of— world oil prices...

...We are not making that kind of calculation that you have suggested because, that—given the expiration [in September 1981 of the President's power to control domestic oil prices], given the desire for smooth adjustment of the economy, and given the desire to eliminate subsidization—becomes irrelevant...

...We don't have a precise mechanism [and] whether it is done through a grant or indirect means is not determined at this point...

...Wrong, says Senate Energy Committee Chairman Henry Jackson (D.-Wash...

...Ford, in that April four years ago, declared: "Since my State of the Union message last January, there has been no improvement in the situation in the Middle East...

...This ploy seems—at least so far—to be working on the liberals...

...The Democrats said: "Republican energy policy has failed because it is based on illusions: the illusion of a free market in energy that does not exist, the illusion that ever-increasing energy prices will not harm the economy, and the illusion of an energy program based on unobtainable independence...

...President Carter was right when he said two years ago, "We can't substantially increase our domestic production...

...As Carter baldly put it: "Each one of us will have to use less oil and pay more for it...

...Now, as his aides and his actions have made evident, Carter thinks he has the liberals in a bind...

...Since the U.S...

...Families above the subsidy income level—about $7,800 a year for the legendary family of four—are supposed to bear the brunt of the higher prices, both through their gasoline and fuel purchases and when buying goods made of oil-based materials...

...From then until September 1, 1981, the controls are optional...

...Reporter: "How can you justify a program that results in having a marginal cost for oil of 65 bucks...

...If you make that kind of calculation, you will come up with that sort of number...

...This month he gave them a Republican energy program...

...Will Carter wiggle, or will he stick to his position...

...Four years after President Ford proposed a 24-month phase-out of Federal controls on domestic oil prices, President Carter has proposed a 28-month phase-out...

...After outlining Carter's decontrol plan, the White House fact sheet states: "It should also be noted that...

...Instead of buying half our crude oil at the world price of 34.6 cents a gallon ($14.54 per barrel) and half at the average domestic price of 22.5 cents a gallon ($9.47 per barrel), we would be buying all of it at the higher world price, which is set by the opec oil cartel...

...Of course, forcing conservation through higher prices is something the Democrats had promised not to do...

...Remember the 1976 platforms...

...There is no such uncertainty about what would have happened by now under the Ford legislation submitted to Congress in April 1975...

...That is well after the 1980 elections and far enough before the 1982 congressional elections for Congress itself to have originally determined that it would be a good time, if there ever was to be one, for ending price controls...

...As usual, neither man has been forthcoming with backup data, but at least they agree on the trend...

...There may be a way to explain that...

...Consider this dialogue from the White House press briefing preceding the President's April 5 televised address: Reporter: "I've seen a figure in the paper that each barrel of oil produced by decontrol is going to cost about $65...