PRESIDENT CARTER said, "The energy crisis is real." That's right. He said,"... the fundamental cause of our nation's energy crisis is petroleum." That's also right. Then he said, "Each one of us will have to use less oil and pay more for it." That is the voice of reality, clear and simple.
Mr. Carter has, at last, done the necessary thing. In his address on oil and energy policy, he committed himself to lifting oil price controls, gradually but completely, and he urged a new tax on the revenues that will flow to the oil producers. Those two steps are the crucial ones. Everything else in Mr. Carter's message can be debated and chopped and changed. Some of the secondary proposals can stand improvement.But if those two central points stick, the country will finally begin to move away from its dangerous and damaging dependence on imported oil.
Oil price controls mean that cheap American oil is now subsidizing expensive foreign imports. Perhaps that helps explain why the volume of imports has been going up so fast-and they now are half of all the oil that Americans use. The price rises ahead mean that the country will use less oil. Industry has already made impressive gains in conservation, in direct response to rising fuel costs. As for gasoline, the record of the past six years shows that sales are sharply sensitive to price changes. In 1974, when the price shot upward, drivers used less. But since 1975 the price, adjusted for inflation-the real price, as the economists put it-fell steadily until a few months ago. The result was, predictably, that people steadily used more of it. American gasoline consumption in recent weeks has been setting all-time records for this season of the year. The country can't afford it. Now, to enforce conservation, Mr. Carter is going to let the real price rise.
You can already hear the protests that it will be inflationary. But Mr. Carter has given precisely the right answer. Certainly it will be inflationary in the short run-but it will be far less inflationary than the controls. Under controls, fuel use is soaring, and the country will spend $50 billion for foreign oil this year. That huge outpouring of dollars is driving down the value of the dollar and driving up the cost of everything that the United States imports. That process is much more inflationary than any possible increase in gasoline prices.
A lot of people, including Sen. Henry Jackson, think that the president should have waited until Congress enacted the new oil tax before he committed himself to decontrol. But there's simple reply. About a third of Congress opposes decontrol, and about a third opposes oil taxes. If Mr. Carter made decontrol contingent upon the tax, those two factions-which agree on nothing else-would join to kill it. That's roughly what happened to the crude-oil tax that Mr. Carter proposed two years ago. This time he has taken on his own shoulders the responsibility to lift controls, unconditionally. But meanwhile he is pressing Congress to act promptly to recover for public benefit half of the enormous new revenues that this public action will generate. It is unlikely that, under these circumstances, Congress will refuse to act.
Americans haven't had to pay the real costs of fuel for years, and nobody welcomes the disruption of comfortable habits.But, as Mr. Carter suggested, those habits have made American security and prosperity a hostage to the good will of a few contries-above all, Saudi Arabia-in a desperately unstable part of the world. It is now up to people in this country to protect their own interests. In decontrolling oil, Mr. Carter supposes that Americans will react by insulating their houses, driving less and spending their money on things other than oil. That is a reasonable hope, and a rational policy.