The oil industry formally opened its campaign yesterday to win in the Senate a set of energy concessions at sought but lost in the House.
Charles DiBona, executive vice president of the American Petroleum Institute, said President Carter's energy plan, which the House approved Aug. 5, will do "more than good" and will not provide additional supplies of energy by 1935. He called it more of a tax bill than an energy bill and said that increased domestic production of oil and gas, rather envisions, is need to to meet rising energy demands.
Carter's House passed plan calls for a sizeable tax on U.S. crude oil to raise its price and discourage consumption. The proceeds from this wellhead tax would go to the Treasure, then back to the public through income tax rebates.
The oil companies agree the price of their product should go up, but think some of the increase should stay with them as incentives to increase production. They also think Congress should take all price controls off natural gas, instead of just relaxing them somewhat, as Carter has proposed.
DiBona said the conservation measures in the House bill would only "slow the growth rate" of energy consumption. Even if Carter's goals are met, he said, U.S. energy consumption would be 25 per cent higher in 1985 than last year, making increased energy production necessar.
DiBona said the House legislation would cost American taxpayers an average of $18 billion a year through 1985, or a total of $145 billion. If approved by the Senate, it would be one of the largest, if not the largest, tax increases ever imposed by Congress, he said, with less than half of to be refunded to the taxpayers through rebates.
But an API researcher said later in a telephone interview that DiBona had inflated the figures somewhat by assuming things about the bill that are not in it.
The staff of the Joint Committee on Taxation projects $96.5 billion in gross federal revenues from the new energy taxes through 1985, or an average of $12.1 billion a year. With a total rebate of $43.6 billion for the same period, that yearly tax figure would drop to $6.6 billion, or one-third of what DiBona suggested it would cost the taxpayers.
One of the most important of the House bill is the crude oil tax, which would increase the cost of a gallon of gasoline an estimated four to seven cents. The House bill scheduled the equalization tax to be phased out by 1981, but DiBona apparently included it in his calculations through 1985.
DiBona said at a news conference that the measure could send gas prices up to $1 a gallon, "not immediately, but in the long run."
"The price at the [gas] pump would be less under our plan" than proposed in the House bill, DiBona said, "but I can't tell you how much."
If price controls on oil and natural gas were ended, DiBona said, the money that would go to the government in taxes could be better spent in searching for and developing new domestic supplies of energy. He said he was "absolutely confident" that, if the oil companies did not have to pay the equalization tax, they would plow the additional revenues back into new production of oil and gas. He said he could not guarantee that, however, and suggested that when the Senate considers the bill, it could find a way to force that guarantee.
Carter administration officials have said that oil industry profits are high enough even under price controls to encourage new discoveries. But DiBona said the incentives are just not there: that "the bill as it now stands would actually reduce capital available for exploration and production - not increase it."
He said the bill does nothing to alleviate American dependence on foreign oil imports and either ignores "key obstacles" to expanding the supply of petroleum or adds them.
The "single most destructive" part of the price control system, he said is the 1975 Energy Policy and Conservation Act, under which price ceilings are averaged for old and new oil. He called it a "Catch-22" situation because the law "requires a reduction in revenues for existing oil equal to the increase for newly found oil." The House bill retains these provisions, he said, which "negates" efforts to stimulate discovery.
At current production rates, DiBona estimated a 50-year supply of oil and gas and said the industry could best develop new synthetics and energy substitutes by "producing the oil and gas we have." He downplayed a reporter's question about the Pentagon's interest in preserving domestic supplies in case of military emergency.