The Carter administration said yesterday it will let U.S. refiners start exporting some domestic oil products to Japan and other buyers to reduce a glut of heavy crude oil on the West Coast.
Such export proposals have met with emotional opposition in Congress in the past, from members who say it is absurd to export U.S. oil at the same time that the country is importing so much foreigh oil at great cost.
"If you've got a shortage that is the moral equivalent of war, how can you export what you're short of?" Sen. John Durkin (D-N.H.), one opponent, asked last night.
But major oil companies, particularly those with large new supplies flowing into the West Coast from Alaska, have pressed for permission to export as a way of reducing the glut, which has threatened to depress oil prices.
The decision to grant export licenses is part of a complicated package of new federal energy regulations announced at the White House yesterday by Energy Secretary James R. Schlesinger.
The regulations include other steps to ease the West Coast glut and a proposal to triple subsidies paid to East Coast refiners who import residual fuel oil. The subsidies are paid by refiners elsewhere in the country and are presumably passed on to those refiners' customers.
The immediate result, Schlesinger said, will be to reduce fuel prices in the East and raise them slightly - about 1/8 cent per gallon - for consumers in the rest of the country.
Schlesinger said that, over the long run, the complex set of rules announced yesterday will increase demand for, and production of, domestic oil and thus reduce imports.
But he also conceded that, to some extent, the decision to permit exports will work against that long-range goal. He said exports had to be authorized because "California has a particular problem."
Fuel oil refined from West crude is hard to sell domestically because it is expensive to transport to U.S. markets and because its high sulfur content causes air pollution. Western refiners, holding excessive stocks of fuel oil they cannot sell, have slowed all refining operations, Schlesinger said, including production of gasoline and other refined products for which there is a demand.
Schlesinger said that permission to export will help the firms unload 30 million barrels of residual fuel oil not in storage. Then they will step out refining operations and produce the needed gasoline, he said.
But he conceded that granting export licenses will reduce the pressure on West Coast firms to invest in new production facilities and pipelines that would make the West Coast fuel oil marketable in the eastern and mid-western United States.
New production and transport facilities, he said, are "the obvious long-term solution" to the West Coast oil glut. Exporting, he said, is "a short-term solution at best." Export licenses will be granted only on a temporary basis, Schlesinger added, but he did not say for how long.
The Carter administration has resisted the oil companies' requests for export licenses, largely because of congressional opposition. Last July President Carter turned down Schlesinger's proposal to let oil from Alaskan fields be sold to Japan.
The export decision announced yesterday applies only to residual fuel oil, a refined product, and not to crude oil straight from the well.
In a written explanation of the new regulations, the Department of Energy said it had considered permitting exports of crudeoil as well, but rejected that idea because "once oil is exported on a regular basis, it would be difficult to later reverse that policy."
Congress was so angry at the suggestion that domestic oil might be exported that it passed legislation last winter prohibiting the export of Alaskan crude oil. Energy Department officials said the new regulations announced yesterday would not violate that ban because exports of refined product only would be authorized.
Durkin said he would introduce legislation Monday to prohibit export of any domestic oil, crude or refined. "The president's going to look like a damn fool, letting Schlesinger do this," Durkin said. "I don't hink Congress will buy it."
Rep. Henson Moore (D-La.), who has angrily fought Schlesinger on other matters, sided with the energy secretary on the export decision. "California's got a problem, and he had to do something," Moore said.
In addition to the export licenses, the new regulations would adjust federal subsidies to make West Coast fuel oil more competitive in other U.S. markets.
The regulations concerning West Coast oil are final, and will take effect unless COngress takes action to stop them.
The increased subsidies for East Coast refiners are set forth in a "proposed rulemaking," which will not take effect until hearings have been held.
Schlesinger promised a group of eastern members of Congress a month ago that he would act to increase the subsidies, which are known as "entitlements" in regulatory jargon. That prompted anger among Gulf Coast and western congressmen, and the Senate Energy Committee approved legislation prohibiting the increase.
Schlesinger said yesterday, though, that he expected the full COngress to permit the increases he has proposed.