The Department of Energy yesterday gave President Carter four options for reducing oil imports by 40 percent to 60 percent in 1990, at a cost of up to $329 billion over the coming decade.
Each option would cut imports through a combination of synthetic oil production, increased output of hard-to-extract oil and gas, reduced use of oil by utilities and better insulation of residential and commercial buildings and switching them from oil to natural gas.
Option A, the smallest, would reduce imports by 3 million barrels a day and involve 500,000 barrels a day of synthetics from oil shale and coal.
Options B and C both involve a 4-million-barrel-a-day reduction, with either a 1-million or a 2-million-barrel-a-day synthetic fuels program and varying combinations of increased production of hard-to-extract oil and gas. The conservation and fuel-switching provisions vary little from option to option.
Option D, the largest, with a 5-million-barrel-a-day cut in imports, includes the largest production increases and the greatest savings from conservation and fuel switching than in any of the other options. It would involve 2 million barrels a day of synthetics, including 1.5 million from coal.
Carter is expected to choose among the options later this week as he prepares for a speech to the nation after his review of domestic issues at Camp David during the past nine days.
The DOE options paper pointed to the example of the pledge to put a man on the moon within a decade, and said, "You have an opportunity, just like President Kennedy, to establish a goal that will mobilize American ingenuity in the face of a foreign threat.
"Most of these options allow the U.S. to face the OPEC stranglehold in a bold and direct manner," it continued.
But the paper also warned that "important constraints," such as environmental restrictions, tight budgets, institutional barriers and political opposition, "could complicate achieving any of the options."
Last night officals from DOE, other agencies and the White House staff were preparing details of some aspects of the issues Carter must resolve.
There was sharp disagreement among the different agencies on whether a wholly independent corporation should be created to oversee the synthetic fuel development.Similarly, there was disagreement over how far the president should go in seeking authority to override environmental restrictions or state and local objections to construction and operations of energy facilities.
Energy Secretary James R. Schlesinger Jr. told the Senate Finance Committee yesterday, "No decisions have been made yet by the president about the composition of the synthetic fuels program."
He said his preference would be to go along with the 2-million-barrel-a-day target for 1990 in the Moorhead bill passed June 26 by the House.
The cost to the government of the 10-year oil import reduction plan which includes tax credits, direct out-lays, guaranteed purchases of synthetic fuels and loan guarantees, will depend heavily on the future course of oil prices.
Option D could force the government to come up with $208 billion in financing in addition to the revenues from Carter's proposed "windfall profits" tax, if oil prices go up only 1 percent faster than inflation.
If oil prices rise 3 percent faster than inflation, the windfall profits tax revenues will soar, turning that $208 billion deficit into a $42 billion surplus, the paper estimated.
The synthetic fuels options include either 250,000 or 400,000 barrels of shale oil production. The production of liquids or gas from coal ranges from 220,000 barrels a day to 1.5 million. Oil or gas from "biomass," such as alcohol from grain, would be no more than 100,000 barrels a day.
It seemed unlikely that Carter would choose anything smaller than the 2-million-barrel-a-day synthetic fuel option. As the paper pointed out, "The Congress and the public generally would not view a 1-million-barrel-a-day synthetic fuels program as credible."
On the other hand, a suggested 50-cent tax credit for each 1,000 cubic feet of natural gas produced from so-called tight formations, rocks that must be fractured before the gas is released, could be costly.
The tax credit would cost the Treasury between $3 billion and $12 billion through 1990, depending upon world oil prices. A larger 80-cent credit, to spur production to the equivalent of 750,000 barrels of oil a day, could cost up to $25 billion, the paper estimated
The paper also suggests new requirements for electric utilities to reduce their use of oil except for providing peak power, and federal grants to enable them to do it. "This proposal is designed to overcome inertia by utilities and public utility commissions. . . ," it said.
As further evidence of the popularity of synthetic fuels on Capitol Hill, the House Interior Appropriations subcommittee yesterday approved a $25 billion subsidy program aimed at achieving production of 5 million barrels of synthetics a day by 1995.
No legislation authorizing such a program has been passed, but the provision would order the secretary of energy to provide price guarantees to industry within 18 months to produce the fuel. CAPTION: Picture, SECRETARY SCHLESINGER. . . "No decisions have been made. . . "