The Carter administration plans to put kerosene and home heating oil back under the price controls removed from those fuels by President Ford last July.
The Federal Energy Administration will put kerosene and heating oil under price controls as soon as both fuels break through what the FEA calls the "trigger price," which they are close to doing now in the Northeast and in the North Central states of Wisconsin, Michigan and Minnesota.
"My predecessor, Frank Zarb, committed this agency to a return of price controls if heating oil went back through the trigger price," Federal Energy Administrator John F. O'Leary said yesterday in a telephone interview. "Zarb made that commitment as a price for getting decontrol through Congress and I plan to honor that commitment."
About 210 million gallons of heating oil and 8.4 million gallons of kerosene - more than one-fourth of the oil burned daily in the United States this winter - are sold every day for heating purposes.
The trigger price for heating oil varies from region to region. It is 40 cents a gallon in the North Central states and 43.5 cents a gallon in the Northeast. Trigger prices for kerosene are about the same. Heating oil this week is selling for 39.9 cents a gallon in the North Central states and 43.2 cents a gallon in the Northeast.
Kerosene and heating oil prices have risen sharply in both regions in the last four weeks, spurred by the relentless cold weather and the shortage of natural gas. Heating oil prices have been raised by distributors three-tenths of a penny a gallon every week in the last four weeks in all Northeastern states and in the three North Central states.
The trigger price was agreed on by the FEA last July when Congress removed controls from heating oil and kerosene. At that time, prices of both products were about 2 cents a gallon below the agreed trigger price, which was set as an index for the FEA to keep a watch on prices.
In an action related to price controls, the FEA yesterday ruled that fuel oil dealers east of the Rocky Mountains could apply for "entitlements" worth 5 cents a gallon for imported kerosene and heating oil. The entitlements allow fuel oil dealers a five-cent-a-gallon discount on imported oil that now costs about 5 cents a gallon more than domestic heating oil.
The discount comes in the form of a rebate paid out of a money pool set up by all major oil companies in the United States. The pool is paid for by companies that own domestic oil supplies and is drawn on by those with little or no domestic oil.
The action taken yesterday by the FEA covers only states east of the Rockies, where the weather has been coldest and demand for heating oil the highest. January's cold snap drained domestic heating oil stocks by more than 15 per cent below what they were last January. The last week of January saw heating oil stocks drop 420 million gallons.
There is no shortage of foreign heating oil, especially in the Caribbean where four huge refineries make products from oil they import from all over the world. Venezuela also operates a huge refinery that has produced a surplus of heating oil.
Yesterday's entitlements move was an "emergency" action by the FEA that will last only through the end of March, the remainder of the heating season. It was taken primarily to rebuild oil, stocks and avoid any winter shortages, but it was also an effort to put a brake on heating oil prices, an FEA source said.
Industry sources say the entitlements action will put some curb on prices but not enough to freeze them. They say the natural gas shortage has triggered such a demand for heating oil that the price is bound to rise through the rest of the winter.
The FEA reported yesterday that the cold weather and higher fuel prices may add almost $100 to the average homeowner's heating bill, boosting it to $290. If the cold weather comes back, the FEA said, Americans heating with gas, oil and electricity will pay $6 billion more than the $13.2 billion they paid for heat last winter.
At the White House, press secretary Jody Powell suggested that President Carter will propose measures to soften the impact of higher heating bills on low-income families. Powell said Health, Education and Welfare Secretary Joseph A. Califano Jr. is studying how best to provide relief to those who need it.
"It is not a simple matter," Powell said, to devise "an equitable and efficient manner to get the money to people who need it that avoids portions of it going to people who are not in need."
On Capitol Hill, a private, non-profit organization to promote energy conservation was announced by Sens. Charles H. Percy (R-Ill.) and Hubert H. Humphrey (D-Minn.). The organization is called "Alliance to Save Energy," with former President Ford and Vice President Mondale as honorary co-chairmen.
Percy said the organization hopes to operate on a $2-million-a-year budget, funded by contributions. The money will be spent to promote conservation.
Meanwhile, weather satellites confirmed yesterday what millions of Americans already know. About 65 per cent of the North American land mass is covered by snow.