Due to an inadvertent transposition of quotes, words attributed to Sen. Edward Kennedy (D-Mass.) yesterday in a story about oil price decontrol actually were comments made by Energy Secretary James Schlesinger about Kennedy's analysis of the administration's decontrol proposal. Schlesinger termed that analysis "a compendium of misconceptions that threatens to mislead the American people." CAPTION: (NEW-LINE)Picture, Presidential advisers Schlesinger and Schultze testifying on energy policy. By James K. W. Atherton-The Washington Post
U.S. officials now believe that the new surcharges being imposed by some oil cartel countries will not be rolled back, contrary to earlier expectations, and they fear that Saudi Arabia may levy one beginning in July.
The surcharges of $1.20 to $1.80 a barrel will bring the cost of imported oil to about $18 a barrel and will add about $6 billion to the U.S. import bill this year. They also could mean roughly $4 billion in additional costs for domestic oil not covered by price controls.
As a result, the Carter administration has increased its estimate of the cost of decontrol to consumers. Energy Secretary Janes R. Schlesinger, while not mentioning the surcharges directly, told the Joint Economic Committee's energy subcommittee yesterday that decontrol will add 5 to 7 cents to the price of a gallon of gasoline. The original estimate was 4 cents.
The higher figure, other officials confirmed, is due to the surcharges, which increase the difference between controlled U.S. prices and world prices.
Under questioning from subcommittee members, Schlesinger also raised the prospect that oil companies might have to switch to making more home heating oil this summer, perhaps making spot shortages of gasoline more likely. Heating oil inventories are so low that the companies may not have enough time to rebuild stocks before next winter unless they adjust their refinery runs long before the summer driving season ends, he said.
Meanwhile, the House Commerce Committee tentatively rejected President Carter's request for standby authority to ration gasoline. Democrats will try to reverse the vote today.
Schlesinger clashed repeatedly yesterday with Sen. Edward M. Kennedy (D-Mass.), the chairman of the Joint Economic subcommittee, about Carterhs plan to decontrol oil over the next two years.
Kennedy blasted the decontrol plan as a "compendium of misconceptions" that is intended to "mislead the American people." The higher prices for oil, he declared, would leave his constituents "decimated and devastated."
The Massachusetts senator called the plan "bad energy policy" because it would not lead to increased production of oil in the United States or to conservation in energy use Decontrol is "a policy of inequity" that will hurt consumers while adding to already high oil company profits, he added.
Schlesinger defended the plan, including its propsed "windfall" profits tax, which would effect about half of U.S. production and about 30 percent of total U.S. consumption, counting imports. He termed it "a courageous act by the president" to deal with the fact that Congress ahd mandated that controls end on Sept. 30, 1981.
Both Schlesinger and Charles L. Schultze, chairman of the Council of Economic Advisers, who also testified, pointedly challenged Kennedy's assertion that decontrol would have little effect on either production or conservation. In combination, those effects would reduce anticipated oil imports by one million barrels a day in 1985 Schlesinger said.
Schultze told Kennedy that the total impact of decontrol in terms of higher prices would be equal to only 0.6 percent of total personal income in 1982, the first full year of decontrol. And he said with passage of the profits tax and present income and severance taxes, public bodies would recapture about two-thirds of that.
That two-thirds could be used for cash grants to the poor to help offset the higher energy costs and to finance long-range energy research and development in a time of tight budgets, Schultze said.
"We would all be better off if we watched our adjectives," Schultze declared with some heat. "While decontrol is difficult and painful it is not debilitating or devasting or dramatic."
Many administration officials earlier had hoped that the oil surcharges, which the Organization of Pertroleum Exporting Countries authorized at a March 26 meeting in Geneva at the same time it raised its official price by 9 percent, would not stick. Now they are more pessimistic.
One high administration official said flatly that he expects the surcharges to stay and that there will likely he some action at the next OPEC meeting in June "to legitimize" them further.Translated, that means that the Saudis might agree to another increase in the official price or add a surcharges of their own.
The House Commerce Committee's refusal to send to the House a plan for rationing gasoline in case of substantial shortages came on a vote of 22 to 20. Rep. Andrew Maguire (D-N.J.) then shifted his vote from yes to no so that as a member of the prevailing side he could later move to reconsider if there was a chance to change the outcome.
But Republican opponents tried to nail down the decision by moving immediately to reconsider and then trying to kill the motion by tabling it. Several supporters of the plan walked out and the committee was forced to adjourn for lack of a quorum until this morning when supporters will try to turn the vote around.
The rationing plan will probably come to a House vote in any case because any supporter can call it up even though the committee does not act. But backers would prefer to have the committee in charge supporting rather than opposing the plan.
The House committee has now voted against three of the four standby programs Carter submitted to save energy.It also opposed giving him power to order gasoline stations closed on weeekends and to curtail outside advertising lights.It approved setting limits on thermostat settings in non-residential buildings.