Standard Oil Co. of Ohio has agreed to reverse its position and go forward with plans to construct a $1 billion California-to-Texas oil pipeline, Energy Secretary James R. Schlesinger announced yesterday.
The announcement came at the conclusion of a 1 1/2-hour meeting of Sohio executives, members of Congress and California state officials. They agreed on tentative plans that could overcome remaining regulatory and possible legal obstacles to completing the pipeline.
Sohio Chairman Alton Whitehouse said his company would resubmit its application for a permit to California's Southcoast Air Quality Management Board, one of two critical permits the company needs for the project.
Meanwhile yesterday, Energy Department officials said the agency is readying a proposal that could place a regional or national ceiling on gasoline prices.
"The purpose would be to get rid of competition-inhibiting aspects of the current rules and to assure consumers that they are not being gouged," said a department official.
The proposal, which would put a ceiling on prices wholesalers and retailers could charge for gas, is "a trial balloon we want to put up," according to one DOE official. The earliest it could be put into effect is late this summer, officials say.
While officials emerging from yesterday's meeting expressed satisfaction that the project was alive again, Schlesinger warned later at a news conference that there is no assurance the 1,000-mile pipeline will be built.
"While they [Sohio] are in a favorable frame of mind, they have made no commitment," he said.
Whitehouse announced on March 13 that the Cleveland-based oil company was abandoning a five-year campaign to build the pipeline after spending $50 million and acquiring 700 permits.
Sohio, 51 percent of which is owned by British Petroleum, is one of the major oil producers on Alaska's North Slope along with Exxon and Atlantic Richfield. The Sohio pipeline - called "Pactex" by the oil industry - was designed to ship surplus Alaskan and California oil to Texas and to resolve the West Coast oil glut problem.
Sohio claimed it was canceling plans to build the pipeline because of "killing delays" from regulators in Gov. Edmund (G. (Jerry) Brown Jr.'s state government.
In political circles, Sohio's decision has been interpreted as a severe setback to Brown's anticipated 1980 presidential bid because it added to earlier allegations that Brown is antibusiness, the governor's critics say.
Following Sohio's announcement on the cancellation, Brown lashed out at the oil company, calling it an "outlaw corporation,"while his political aides suggested that Sohio's decision was a part of the North Slope producers' strategy to win approval for Alaskan oil exports, or swaps.
Following yesterday's meeting, Tom Quinn, one of Brown's chief political strategists, said that "there is still a suspicion afoot that Sohio is using the pipeline to win federal approval of oil exports."
Quinn, who also heads the state Air Resource Board, said he urged Schlesinger to have the federal government guarantee the project. "If Schlesinger and the Congress believe this pipeline is necessary for the nation's security, then the federal government should do it," Quinn said.
According an Energy Department official, Schlesinger responded by saying he was confused about whether the "federal government should spend money on the pipeline before or after the constitutional convention to limit federal spending."
Brown has called for a constitutional convention to mandate a balanced federal budget.
During the meeting in the Forrestal Building, Reps. John D. Dingell (D-Mich.) and Morris K. Udall (D-Ariz.) said they would take legislative action, if necessary, to expedite final approval of the pipeline.
Both expressed adamant opposition to allowing Alaskan oil exports.
One of the critical energy issues President Carter considered during his Camp David meeting Monday was a proposal from Schlesinger to ask Congress for approval for Alaskan oil swaps.