The President's chief inflation fighter, Alfred Kahn, urged Jimmy Carter last week to meet with major oil company executives and ask them to restrain their prices -- partly to deflect political heat over the president's oil price decontrol decision earlier this year.
A memo from Kahn to Carter, drafted last Friday, was blocked however by Carter's chief domestic policy adviser, Stuart Eizenstat. Eizenstat ruled out a presidential meeting with the oil executives and instead called for a meeting next Thursday at the Energy Department with Energy Secretary Charles Duncan, Treasury Secretary William Miller and Kahn.
"The reason for having the meeting is to discuss the cost of energy and the seeming differential between crude oil prices and the prices of refined products," Eizenstat said yesterday in a telephone interview.
Kahn's memo to Carter called on him to "emphasize the necessity of working together (with the oil industry) to avoid a public backlash against decontrol." The head of the Council on Wage and Price Stability urged Carter to have a "jawboning session" with the oilmen, saying that "the central issue is neither profits nor compliance."
Repeatedly in recent weeks, and as recently at last Saturday, the president's primary challenger, Sen. Edward M. Kennedy (D-Mass.), has attacked Carter's plan to remove oil price controls. Public sentiment against Carter's plan and the industry also has been fueled by the massive third-quarter profit increases announced by major oil companies.
Kahn's memo said there is "no doubt that the industry, as a whole, has not complied with" the spirit of price guidelines. It also said that "increases in the price crude oil by the OPEC (cartel) nations can account for less than one-half of the price increase so far this year in refined petroleum products." Meanwhile, the memo stated, refiners' profit margins have risen from 6.9 per cent during the first quarter to 37.4 per cent in the third quarter.
Yesterday, however, in an appearance at the National Press Club, Kahn cast some doubt on the precision of those numbers. "It is fair to say the prices of refined products have gone up," he said. But it is not possible to say how much of the increase is "due to buying products on the spot market . . . buying non-crude refinery stocks" or other reasons, and how much is added profit, Kahn said.
It is "premature" to say how wide-spread violations by oil companies of the administration's voluntary price standards may have been in the third quarter, but he expects a large number than in the previous quarter he said.
Eizenstat said that administration officials are not likely to ask the companies to impose voluntary pricing guidelines, as suggested by Kahn. As for the differences with Kennedy over decontrol, Eizenstat said, "Our position has long been clear. We know Kennedy is against, but votes in the Congress on it have been held, and there is no vehicle to reimpose price controls."
Meanwhile, in an unusual press notice distributed to reporters yesterday, the Energy Department released a copy of a letter from David J. Bardin, head of DOE's Economic Regulatory Administration, seeking to rebut remarks Kennedy made on CBS television Sunday about decontrol.
Bardin noted that Kennedy had voted in 1976 to decontrol heating oil as proposed by the Ford administration. Sunday, Kennedy said heating oil decontrol was an area of difference between himself and Carter.