Treasury Secretary W. Michael Blumenthal said yesterday, there is a chance oil-exporting countries will vote against price increases for next year, in a bid to help improve the world economy.
"We can't really be sure . . . but there is a chance that they will decide not to raise the price of oil for some time. I'm hoping that they will make that decision for an entire year." Blumenthal said on "Face the Nation" (CBS, WTOP).
The secretary said his optimism stems from his trip last week to Europe and the Middle East, during which he tried to convince leaders of oil-producing nations it would be in their best interests to forgo price increases next year.
The 13 members of the Organization of Petroleum Exporting Countries (OPEC) plan to meet in Caracas, Venezuela, next month to discuss oil prices.
Based on his discussions last week in Saudi Arabia, Iran and Kuwait, Blumenthal said he believes exporters "are actively considering" keeping oil prices steady through 1978. "But we will have to wait and see."
"Even a moderate increase would have a very negative effect on many economics around the world, including our own," said Blumenthal. "In the case of our country, each percentage of increase in the price of oil costs us about $400 million to $500 million in our balance of trade."
In countries that are "almost totally dependent on oil imports," each percentage point increase in oil prices "has a major inflationary impact," Blumenthal said. "Stability - meaning no price increase - is very important."
Blumenthal said the exporting nations have become aware of the importance of maintaining stable oil prices.
For example, he said: "Every time we have a high inflation rate and they contribute to it by raising their price of oil, the products we export start going up in price and they lose it [oil profits] all again by having to pay more for the goods they buy from us.
"They have to take into consideration a lot of conflicting factors before they make up their minds" on what to do about oil prices, he said.
America now spends about $45 billion annually for oil imports - a major factor in the nearly $30 billion trade deficit, Blumenthal said.
The deficit is "too high and too worrisome," the administration official said, citing it as a reason for enacting President Carter's energy program:
"There is, therefore, nothing more important . . . than for the Congress to adopt speedily and effectively a program for reducing the consumption of energy, and therefore reducing the need to import oil."
On other matters, the secretary said:
In conjunction with tax revision, the administration is considering business and individual tax cuts ranging from $15 billion to $20 billion.
Despite present setbacks in the economy, the admininstration can meet its goals of a balanced budget and a 4.75 per cent annual inflation rate by 1981.
Caution must be used in managing the money supply to avoid further slowing of economic recovery, but he declined specific comment on the Federal Reserve Board or its chairman, Arthur Burns.