ON ENERGY POLICY, Congress has long since settled down to trench warfare over ideological issues that have less and less to do with reality. Meanwhile, the administration makes obscure regulatory changes that have enormous effects - not always intentional - on the actual operation of the national economy. One looming example is the administration's impending decision to expand the subsidies for foreign fuel oil of the type known as residual - the very heavy oil burned by industry and, especially, electric utilities.
The subsidy is an unusual one, since it is paid by one class of consumers directly to another. It appears in no public budget and requires no appropriation. This peculiar arrangement is an attempt to deal with the wide disparity between the high prices that OPEC sets for foreign oil and the lower prices that Congress maintains, under price controls, for U.S. oil. The people with cheap domestic oil and the people with expensive foreign oil are supposed to reconcile their accounts and exchange money once a month to ensure that no one has any significant advantage over anyone else.
The administration deplores this cumbersome and infinitely complex mechanism, and one of the purposes of the famous Energy Bill is to get rid of it. But the Energy Bill, as you have doubtless noticed, has not been making much progress lately and, in the meantime, the subsidy system continues to expand in size and intricacy. It was originally written to cover only crude oil, not refined products. But imports of residual fuel oil have been receiving a partial subsidy for some time, and now they will get the full subsidy.
This latest expansion of the system will increase its cost about half a billion dollars a year. One effect is to redistribute income, although that isn't what Congress or anyone else really had in mind. The benefits will go to the East Coast, and especially to New England, in the form of lower costs of industrial fuel oil and the electricity that it generates. The cost will be paid by the people everywhere who use other oil products, chiefly gasoline and home heating oil. In regional terms, it will be paid mainly by people in the states that are not on the East Coast.
Naturally, the New England delegation in Congress have been actively supporting this proposal. But the administration swears that there have been no sordid deals or trades for votes. Unlikely as it might seem, that is probably true. We are dealing, after all, with the Carter administration. As a practical matter, having decided to extend these subsidies, the Energy Department would have been better advised to strike whatever sordid deals it could, and extract some help from the New Englanders on the unfortunate Energy Bill. The administration's highminded failure to exploit its opportunity, once again, helps explain the legislative impasse.
But if the administration has not used its leverage on the beneficiaries of this decision, it has certainly managed to incite the losers - of whom the most vocal are the refiners in the Gulf Coast states. This row comes at a particularly bad moment, threatening the last desperate effort to save the Energy Bill. Why did the Energy Department move now? Because this is the time of year when the East Coast distributors have to start building their inventories, if the tanks are to be full when winter arrives. Nobody wants to accumulate large stocks until he knows what the government subsidy policy will be. The Energy Department had to make up its mind. The irony is, of course, that its decision further damages the fading prospects of the Energy Bill that was to have made this whole patchwork of subsidies unnecessary.