An Energy Department program aimed at increasing heating oil imports and reducing pressure from New England politicians appears to have backfired on the Carter White House.
Last week, in a little-noticed ruling, DOE announced that it would provide a $5-a-barrel subsidy for imported heating an diesel oil to build up inventories the department says are at "unusually low levels."
Right after the subsidy was made public, however, prices for heating oil and diesel fuel on the Europen spot market went up more than $5 a barrel, effectively undercutting the effect of the subsidy, according to some oilmen.
On the eve of the Energy Department's announcement, the spot price for middle distillate oil, essentially heating or diesel fuel, was $45.47 a barrel. Since then the price has risen in Rotterdam to $51.
After the price jump, European Common Market Energy Commissioner Guido Brunner delivered a vigorous protest to U. S. Ambassador Deane Hinton in Brussels, saying that the Carter administration subsidy would result on unnedded upward pressure on world oil prices.
Adding to this diplomatic outcry, French Prime Minister Raymond Barre in a speech yesterday labeled the DOE program as "a very serious subject of concern."
At the Energy Department yesterday a senior official said, "That we were a pary of the price rise is something we can't deny." At the same time, he and other officials contend, the subsidy is necessary to channel supplies from Carribean and Canadian refiners to the U. S. market.
Last week DOE said the nation's distillate stocks were 118 million barrels, far short of the 240-million-barrel goal Carter set for October, the beginning of the heating season.
DOE official say they are still hopeful that the subsidy, which is retroactive to May 1 and expires Aug. 31 will increase heating oil and diesel imports by 150,000 barrels a day. Distillate imports are now about 90,000 barrels a day.
Charles Burkhardt, of the New England Fuel Institute, conceded that the price rise eats up much of the subsidy benefit. But, he said, "a lot of us still believe it will be effective."
The subsidy, which will be administered through DOE's entitlements program, will effectively spread part of New England's heating costs and the cost of diesel imports to consumers around the country. John Buckley, vice president of Northeast Petroleum Co., estimates that the effect on consumers will be an additional 10th of a cent a gallon nationwide.
DOE officials estimates that the full cost of the subsidy may amount to about $70 million, depending on how much oil is imported.
On Capitol Hill, Rep. John D. Dingell (D. Mich. )said, "I am not sure it will work," Dingell, who chairs the House Commerce subcommittee on energy and power, went on to say, "Given where we are now in terms of heating and diesels supplies, it was probably as good a response as they could have made."
A Senate Energy Committee staff member offered a more cynical view. "There is no question that this is aimed at placating Kennedy and Durkin." Sen Edward M. Kennedy (D-Mass.) and Sen. John A. Durkin (D. N. H) have been vigorous critics of the Carter administration energy policy.
The subsidy program is a part of a new White House - directed effort headed by the Stuart Eizenstat, Carter's domestic policy adiser, to have domestic oil companies import more oil and oil products.