The oil industry is readying its forces to press for a major change in President Carter's energy plan - a change that could increase the companies' revenues by billions of dollars over the next several years.
The industry alternative is modeled after legislative proposals put forth by the Ford administration and rejected in 1975 by the Democratic majority in Congress.
The industry says it has to have the revenue or cash flow as it is called, in order to increase oil production. "There can never be an excess in cash flow," says Blaine J. Yarrington, executive vice president of Standard Oil Co. of Indiana.
Carter's plan would raise domestic controlled oil prices over a 3-year period to the current $13.50 a barrel cost - adjusted for inflation - of imported oil by imposing an excise tax. Higher oil prices resulting from the excise tax, Carter says, would spur energy conservation.
The oil industry agrees with Carter that domestic oil prices should increase to the world price now set by the 13-nation Organization of Petroleum Exporting Countries.
But the industry executives disagree with Carter on how those increased oil revenues should be divided. Instead of going to the Treasury and ultimately back to the consumer, as Carter proposes, the oil companies argue that the price increase revenues should stay with the industry.
So the oil companies will press to have the excise tax phased out, the sooner the better. Sen. Henry L. Bellmon (R-Okla.) is readying an amendment that would cause the tax to fade away over 50 months but allowing the price to stay at world levels.
Carter's plan also would extend indefinitely the oil price controls that would be phased out in 1979 under the Energy Policy and Conservation Act that President Ford reluctantly signed into law in 1975.
Yarrington, like other industry executives, chaffs under Carter's oil proposal. "We would like to see a face-up to the real problem - phasing out controls," he said.
James R. Schlesinger, Carter's top energy adviser, says the crude oil equalization tax would peak at about $15 billion during the early 1980s. Total decontrol, which the industry has been fighting for since President Nixon imposed oil price controls in 1971, would give the oil industry a more than $14 billion jump in revenue in the first year, nearly 1 per cent of the U.S. gross national product.
The industry's legislative battle will focus on ending domestic oil price controls.
Oilmen will argue that their rate of return on so-called "old oil," from wells in production before 1972, which now sells for about $5.25 a barrel, is around $1.85: their take from "new oil," selling now for about $11.23, is about $5.04 - well below the $6 they say they pocket from selling oil at the $13.50 world price. The $6 profit, is necessary to find higher cost replacement oil reserves, oilmen say.
Bellmon met last week in Oklahoma with oil executives to get their views on the amendment he is weighing to phase out the excise tax.
Oil lobbyists privately say that the industry has yet to adopt a rigid strategy. Their tactics, however, focus on one goal: higher profits from decontrol. If their drive to phase out Carter's equalization tax fails, they would, as Yarrington says, consider as a fallback a provision enabling them to retain part of the tax to b plowed back into developing new oil supplies.