Energy Secretary James R. Schlesinger indicated yesterday that the Carter administration is willing to give the oil industry higher prices than the President first proposed in order to assure approval of the energy bill pending in a House-Senate conference committee.
"There may have to be some adjustments" in the amount of oil subject to price controls "in order to gain support from the industry" and members of Congress who favor increased incentives for production, Schlesinger said in response to a question at a news conference.
Schlesinger also indicated that the administration would accept prices on new natural gas above the $1.75 per thousand cubic feet that Carter proposed and the House approved. In exchange, however, Carter wants to have federal price controls extended to cover so-called intrastate gas - gas sold in the same state where produced. Presently, only interstate prices are subject to federal regulation.
"I don't think there is any ground for retreat" on the intrastate issue, Schlesinger told reporters.
New gas in the interstate market now sells for $1.46 per thousand cubic feet, as against $2 or more in intrastate sales. Producing-state congressmen and some oilmen have vigorously opposed extending federal controls to the intrastate market. The House-passed energy bill would do this; the Senate bill would deregulate all natural gas prices.
A senior Department of Energy official said that Carter would probably accept a gas bill allowing prices to rise about $2 per thousand cubic feet. During the Senate filibuster on the bas bill, Schlesinger agreed to support a compromise offered by Sen. Henry M. Jackson (D-Wash.) which would have raised the new gas price to $2.03, and have led to deregulation by the early 1980s.
"Some people are going to have to think about the unthinkable - and that means moving higher on natural gas prices than they thought they would have to," the official said.
The type of concession Schlesinger spoke of an oil prices would be done by adjusting a complicated mechanism known as the "decline curve," which determines the price of oil coming from older wells.
Most such oil is subjected to a federal price ceiling of $5.25 a barrel, but some can rise to $11.75. The proposed adjustment would let more rise to the higher level.
The industry had proposed achieving this result - higher prices - through a different means. Carter wants to raise the price of all U.S. crude oil through taxes; the industry had proposed that some of these tax revenues to be given back to producers.
The House approved Carter's tax plan. The Senate, unable to agree on what should be done with the revenues, rejected the taxes. But it did approve a series of tax credits or cuts for energy producers and assorted energy users, all ostensibly to encourage increased production or lower oil and gas consumption.
The Senate's idea was to use House taxes to finance its credits. Schlesinger said yesterday the administration "will wind up up accepting some of the credits in the Senate bill."
The Senate and House energy conferees will take up the oil and natural gas issues in the energy bill when they return from a 10-day Thanksgiving recess.
Schlesinger said the oil and natural gas portions of the bill are linkled. "Inevitably there is a logical connection between the two," he said.
"The greater the cash flow from natural gas, the less need" for incentives on oil, Schlesinger told reporters.
Sen. Russell B. Long's spokesmen welcomed Schlesinger's remarks, saying, "The administration is finally moving towards the middle area; it is something that can be done, and something that the conference can buy." Long (D-La.) is chairman of the Senate Finance Committee, and has been in contact with Schlesinger and Carter over the last weeks laying the framework for a compromise on the controvesial oil and gas pricing issues.