EVENTS ARE NOT dealing kindly with James R. Schlesinger the secretary of energy, or with the administration's energy program. It's one laceration after another. The latest is the California oil glut. It has now forced the secretary, reluctantly, to let West Coast refiners get rid of a temporary surplus of heavy fuel oil by selling it abroad.
To oil men in California, that's merely the normal and sensible thing to do with a surplus. But to the politicians in Washington the symbolism is devastating. President Carter and Mr. Schlesinger have labored for more than a year to induce a reluctant Congress to pass a broad bill with a series of new taxes to diminish oil imports and ward off shortages. Now, in the midst of this exercise in persuasion, the administration is forced to concede that the West Coast oil glut has reached a point at which there are no longer tanks in which to put any more of the stuff and, if the companies can't ship some of it overseas, they are going to cut production.
The reason for this embarrassing abundance start with last winter's heavy rains in California. By filling the mountain reservoirs, the rains have provided enormous amounts of hydroeletric power and taken some of the load off the oil-fired generators. That, in turn, has created a sudden and unexpected surplus of the heavy industrial fuel known as residual oil.
Well, why not move it ot other parts of the country that now burn imported oil? Easier said than done. Because of the mountains, the West Coast has always operated as a market separate from the rest of the country. There is talk of better pipelines, but the projects are currently hung up on various economic and environmental issues. Oil can move by sea, but the costs are monstrous. Tankers big enough to be efficient can't go through the Panama Canal. California oil is a rather low grade polluted with sulfur, and it would need heavy subsidies to complete on the East Coast with foreign oil. The natural market for the West Coast surplus is not New England but - of course - Japan.
There is a meaning to this incident that ought not be missed - and it is not the meaning that the outraged huffing anf puffing in the Senate might suggest. The West Coast surplus is a case study in excessive regulation. Congress decided several years ago to fix the price of oil to the penny. Since oil comes from many sources at many different costs, price-fixing requires a vast system of equalization subsidies. These subsidies are now creating endless anomalies that have to be corrected by equally endless political rulings that, in turn, create their own unanticipated side effects. Anomalies would also develop in a less heavily regulated market, but they would be corrected in the profits and losses of daily trading. They would be the traders' private business.
The dangerous thing about the present system is that every minor adjustment has to be examined, debated and defended as public business. Every ruling and correction is a national decision with national and even, as in the case, international implications. The California surplus of residual oil is trivial and transient. But the remedy mow involves the White House, which must anxiously weigh its impact on all the other Carter administration policies in oil and energy. This elephantine process is a recipe for disaster in a turbulent, volatile, worldwide market in a commodity of which this country consumes three million tons a day.
Mr. Schlesinger would like to replace most of this regulation, subsidy and price-fiddling with one relatively simple tax on crude oil. It's a genuinely good idea. But unfortunely - another unlucky event for the administration -the California tax vote has thrown Congress into a panic that the hope of getting any new tax on crude oil is now zero. For those in Congress who cannot see where the present system of price controls and subsidies is leading, there will undoubtedly be further cases shortly of a similarly instructive character.