Eager for congressional action on energy to meet their constituents' demand over the July 4 recess, the House yesterday overwhelmingly passed a bill setting up a multimillion dollar program to create syntheic fuels as a substitute for dwindling supplies of crude oil.
The vote was 368 to 25.
At the same time, the House Rules Committee moved to send to the floor for action later this week a second major energy measure taxing windfall profits of oil companies.
With broad bipartisan support, the synthetic fuels bill moved through the House like an express train. The only arguments were over the size of the program and whether it should be funded out of the Treasury or a trust fund formed from windfall profits tax monies.
Majority Leader Jim Wright (D-Tex.), with the backing of the Democratic leadership, moved to up the ante on the bill from a five-year goal of 500,000 barrels of synfuels a day to a 1990 goal of 2 million barrels a day. Wright's amendement also increased the authority from $2 billion to $3 billion. The amendment passed on a voice vote.
Republican Whip Robert Michel (R-Ill.) argued that the $3 billion should be taken from the trust fund to be set up from the windfall profits tax, but that idea was defeated by a 55-to-33 vote.
Wright's amendment provided that the $3 billion could come from either the general treasury or the trust fund.But Michel said "it will come back to haunt us if we tax the oil companies, but then hit the taxpayer for more money to finance synthetic fuels." Michel said the trust fund should not be used "as a general fund to solve social ills" such as aid to the elderly, rebates for the poor and other items liberal democrats want paid for from the trust fund.
But Rep. Stewart McKiney (R-Conn.) said there was no guarantee at this point the Senate would pass a windfall profits tax and if the tax died, the synthetic fuels bill would die with it.
Technically the synthetic fuels bill is aimed at supplying synthetic fuels for military use, since it is attached to a defence production bill, but the expanded program would provide for some private-sector needs also.
The measure empowers the president to make advance commitments to buy synthetic fuels for mational defense and use up to $3 billion to pay the difference between the contract price and the market price of syn-fuels, which it is estimated now would cost about $28 a barrel.
If the subsidy fails to encourage industry to build synthetic fuel plants, the government could build them and lease them to private operators.
The bill also provide loan guarantees and direct loans as incentives to industry to invest in the plants.
The bill does not specify any particular type of synthetic fuel, and allows industry to choose between coal lique-faction, oil shale, biomass and any other feedstocks and conversion process.
It limits government contracts to a maximum 100,000 barrels a day purchase, and gives the Congress a one house veto over any purchase of more than 75,000 barrels a day.
Wright said the bill would "give the American public the heart and hope the nation is moving ahead." He said the "time has come to break the stranglehold foreign powers are exerting on us" through their control of the oil supply."
The House turned down 263-127 an amendment by Rep. Morris Udall (D-Ariz.) that would have prevented the eight largest oil companies from participating in the program.
But it accepted amendments that would prevent the president from using bill to impose rations, prohibited resale of synthetic fuel to foreign countries and expedited licensing and contract procedures by requiring final approval of permits by federal agencies within 12 months.
The cost of the bill depends on the market price of oil and of synthetic fuels at the time the fuels are manufactured. Wright predicted if costs keep rising on OPEC oil, the bill could cost nothing. But the Congressional Budget Office estimated the cost of the $2 billion scaled down version could be as high as $22 billion.
Meanwhile, the House Rules Committee cleared the windfall profits tax bill to the House floor with a rule permitting two specific amendments.
One would lower the proposed tax rate from 70 to 60 per cent. The other would toughen the bill by lengthening the period that low-cost "old" oil would be subject to a high tax. The resoultion was approved by a voice vote. The bill is scheduled for House action Thursday.
The synthetic fuel bill the House passed will not provide a drop of gas or oil for several years. For the immediate future the nation can look forward to continued shortages a Shell Oil Co. official told a House energy subcommittee yesterday.
R. E. Hall, general manager of oil products at Shell's Houston headquarters, said "we are going to see a shortage in (oil) products as long as we this shortage of crude (oil) coming into refineries."
The result, Hall said, is that Americans face a trade-off: They will have to get by on less gasoline and diesel fuel this summer if the oil industry is to produce enough home heating oil to meet next winter's demands.
Gasoline, diesel and heating oil are all produced from the same raw material - crude oil. To produce more of the latter, Hall said, "you've got to cut gasoline production barrel for barrel."
Hall said he expects the oil industry as a whole will be able to produce the 230 to 240 million barrels of heating oil that the federal government has said must be on hand by the start of the heating season next october.
"But that will come at the expense of gasoline," Hall said. "The lines this summer will not get any shorter."