President Carter will announce plans Thursday night to begin decontrolling oil prices June 1 under a proposal that his advisers say is calibrated to add a maximum of one half of one percentage point quarterly to consumer prices.
Under the proposal circulating in the White House yesterday, Carter's plan to end oil price controls by September 1981 will use existing authority. It will not depend on the complex two-step tax the president wants Congress to enact to prevent the oil companies from earning billions of dollars in windfall profits.
At the Energy Department and other agencies yesterday, senior advisers expressed skepticism that Congress will enact the levy. It is a variation of the president's crude oil tax that Congress rejected in 1977 and again last year.
The officials stressed, however, that the administration is determined to end domestic oil price controls whether Congress passes the tax or not. One senior DOE official called the tax "subtle blackmail." Another official said Carter hopes to win support for the measure by proposing a wide range of uses for the revenues including an Energy Trust Fund, credits for solar energy, oil shale, gasohol and possibly new transportation systems. At full tilt, the tax could produce $8 billion a year or more, depending on world oil prices.
Officials also said the decontrol measure would add 7 or 8 cents a gallon to gasoline prices by the fall of 1981.
At the heart of the Carter decontrol plan is a complex rule DOE is expected to issue that will raise prices for "old" oil, now selling at about $5.80 per barrel. Old oil is produced from wells drilled before 1972.
The projected DOE rule is base in large measure, on an amendment offered last year by Rep. Jim Wright (D-Tex.) that was vigorously supported by the oil industry. The Wright amendment would have provided world prices, now about $16.25 delivered to U.S. refineries, to oil produced from so-called "marginal wells."
DOE already has issued a proposed marginal well rule that would lift controls on about 900,000 barrels of old oil a day. Roughly 3 million barrels, or one third of domestic production, is old oil.
Under the Carter plan, upper tier or "new oil"-production from wells drilled after 1973 - would also be raised to the world price from its current controlled level of about $12.85 a barrel.
The Carter proposed oil tax would limit producer revenues in two steps, first taxing a portion of the amount they earn between controlled oil price levels and the foreign cartel's current price. A second tax would sop up oil earnings in the event the cartel announces still further increases in its prices between now and September 1981.
Carter will also propose that a third category of oil-"new-new" oil from recently drilled wells-be sold at the world price.
Yesterday a senior administration official said White House inflation fighter Alfred Kahn "can live with the package." Energy officials said that the inflation impact of the program would add from a little as one-tenth up to one-half a percentage point in any given quarter to the consumer price index.
Most sources depicted Schlesinger as the major winner in Cabinet infighting over the plan.
Schlesinger also is reported to have overruled objections by Treasury Secretary W. Michael Blumenthal and the Office of Management and Budget to a proposed credit for oil produced from shale.