President Carter's bold-sounding pledge to hold U.S. oil imports to 8.2 million barrels a day this year has been carefully calculated to have virtually no effect on consumption.
The pledge won't put the country in a bind, a Carter economist said. "We calculated it up and down four different ways to make sure it wouldn't."
Administration officials expect imports this year to average just 7.8 million barrels a day.
In essence, Carter offered few proposals that would affect the nation's immediate energy situation. Instead, most are directed on the longer term.
Parts of the plan to reduce oil imports by 4.5 million barrels a day by 1990 have more substance than the immediate ceiling on imports, but some of those proposals involve high technological, budget and environmental risks, administration officials say.
Of the environmental risk, one administration planner said, "The environmental officials in the administration lost big."
Carter's broad-ranging proposals also include some changes already occurring rapidly, such as conversion of oil-fired electric utility plants to coal and of oil-heated homes to natural gas.
Energy Secretary James Schlesinger said the targeted reduction in oil imports of 4.5 million barrels a day in 1990 is "am ambitious goal but it is achievable."
The plan continues controls on gasoline and crude oil prices in the short run, and the president, in his speech yesterday in Kansas City, stressed repeatedly that the government would continue to allocate supplies of petroleum products to priority users.
A number of Carter advisers, including Schlesinger, had urged ending price controls on gasoline and dropping the allocation system, which has favored rural over urban areas.
Instead, Schlesinger's department announced yesterday that all independently operated stations in the country would now be allowed the same 15.4-cent markup per gallon. New regulations for company-owned stations will be forthcoming. Allocations to new statoons could not exceed 50,000 gallons a month.
"That will only cut competition even more in a place that was becoming really competitive last year," complained a private energy economist. "They must want to ossify that whole part of the economy."
The use of allocations to protect high-priority users and spread any shortages among other users "will have to go until our long-term plans begins to pay off," Carter said.
The proposed Energy Security Corp. and the Energy Mobilization Board are "the heart of this new endeavor," Schlesinger said.
If Congress approves, the corporation will have $88 billion in financing authority for construction of plants to produce synthetic fuels from coal, oil shale and organic materials. The board will have power to waive procedural steps to obtain environmental permits for construction of energy projects.
The corporation's mandate is to build plants for producing 1 million to 1.5 million barrels a day of liquid fuel, or its equivalent in gas, plus 400,000 barrels a day of oil from shale, 100,000 barrels a day from so-called biomass (organic matter), and 500,000 to 1 million barrels a day from "unconventional" gas.
The corporation will be independent and outside the government. It can achieve the production targets using any combination it chooses from among price guarantees for the plants' output, federal purchase agreements, direct loans and loan guarantees.
It can also build a "limited number" of government-owned and operated plants, or government-owned but privately operated plants, a White House fact sheet said.
Whether its full $88 billion authority will actually result in spending will depend heavily on the course of oil prices. If oil prices rise fast enough, many of the guarantees would be met by the market price for which the synthetic fuels would be sold, and thus cost the government nothing.
"Estimates of the costs of producing synthetic fuels from coal vary from $27 to $45 per barrel depending on the plant's products . . . and its location," the fact sheet said.
Shale oil, the synthetic closest to commercial production, the paper added, "will probably be less costly than coal liquids, with an estimated cost of $25 to $35 a barrel."
Oil from shale will require an investment of more than $1 billion for each plant. Carter had already proposed that shale oil be allowed a $3-per-barrel tax credit, and this proposal is being renewed. "It is expected that many companies need only the encouragement provided by this tax credit to begin the construction and operation of major oil shale production facilities," the fact sheet continued.
Synthetic fuel from biomass - which can include anything from corn to wood chips to garbage - will be the most expensive fuel in some ways. Carter proposes permanent elimination of the 4-cent-a-gallon federal fuel tax ofgasohol, the mixture of 10 percent alcohol and 90 percent gasoline now being sold. This is the equivalent of a $16.80 subsidy on each barrel of this synthetic, according to the White House.
An Options paper prepared by the Department of Energy last week warned that the levels of synthetic fuels production under consideration would "encounter some degree of physical and environment constraints, and entail degrees of technical risk."
The options paper concluded that the environmental risks are "moderate."
There are technical risks - risks that a particular method for extracting a synthetic fuel may not work - even for the processes now in use in other countries, it added, because no plants have been built on the scale needed here.
Moreover, other types of technology, such as the direct liquefaction of coal, carry a higher technical risk, because "they have not yet been demonstrated at near commercial scale," the paper said.
The Environmental Protection Agency, most of whose recommendations were shunted aside in Carter's final plan, did get presidential backing for a major drive to extract natural gas from formations - known as tight sands - that require fracturing to unlock the gas.
Carter is asking that this type of gas be given a special incentive price and, in addition, a tax credit of 50 cents for each 1,000 cubic feet produced. The credit would phase out when the market value of the gas reaches the oil equivalent of $28 a barrel.
About 5 percent of current @u.s. production, or about 1 trillion cubic feet annually, already comes from such formations. Those producers, many of whom are in the Appalachian Mountains of West Virginia, would get an extra $500 million a year for doing what they are already doing.
Carter hopes the incentives will result in an added 1 trillion to 2 trillion cubic feet of gas a year from the tight sands, which would be the equivalent of 500,000 to 1 million barrels of oil a day.
The president also wants to increase the output of "heavy oil" by 500,000 barrels a day. Located mostly in Kern County, Calif., these deposits of almost tar-like crude must be heated, usually by injecting steam, before the oil will flow.
Carter acted yesterday to lift controls on the price of heavy oil, most of which has been selling for about $6 a barrel. It now will sell for about $18.
Equally important, Carter is directing that the heavy oil producers get priority rights to natural gas to fuel their steam generators. Air pollution problems associated with the use of heavy oil to make the steam has severely limited production. CAPTION: Picture 1, Secretary Schlesinger: the first two elements are "the heart of this endeavor." By Frank Johnston - The Washington Post