THE PRESIDENTS call for a voluntary freeze on home heating oil prices is a truly pointless gesture. The cost of heating oil began to rise like a rocket last winter. As the months passed, the White House seemed to have little to say on the subject. Refining and retailing margins have doubled over the past year, but the Council on Wage and Price Stability has not been heard from. Now this terrific surge appears to have ended, at least for the present. The rocket has leveled off and perhaps even fallen a little. That's when Mr. Carter calls for a freeze.
The retail price of home heating oil in the Washington area last summer was about 49 cents. By the end of last month it was, on the average, up to 83 cents. Last week it hit 88 cents. Currently the average appears to be around 86 cents. These numbers come from our own rough survey, and are not exact. But they indicate a pattern. The market is softening.
The idea of a voluntary price commitment comes from Texaco, which says that it will try to hold the present line until the end of the year. That's a useful declaration, and will diminish the sense of panic among consumers who feared that the increase might continue as the weather got colder. But it also has to be noted that Texaco's wholesale price, around 38 cents a gallon last summer, is now 67 cents. The higher costs of crude oil appear to account for less than half of that rise.
It's worth asking why the price of heating oil went so high so fast in a market that is normally very competitive. The answer begins with the Iranian revolution and, in this country, a fear of shortage that created a seller's market. Then the anomalies of the federal price regulations began to have important effects.
Gasoline prices are controlled, and heating oil prices are not. The Ford administration had intended to decontrol both in 1976, each in its slack season. It took care of heating oil in the summer, but lost an election before it got to the winter and gasoline. To follow the consequences, you have to know that the gasoline controls, designed only as a temporary measure, prohibit refiners from passing through to their customers many kinds of legitimate costs. Unleaded gasoline is particularly expensive to manufacture. When all oil markets got tight last spring, the refiners evidently saw an opportunity to push onto heating oil some of the costs of making gasoline -- the costs that federal regulations refused to let them charge motorists. That isn't the whole explanation of the recent run-up in retail fuel oil prices, certainly, but it's a significant part of it. The family that heats its home with oil is now helping to pay for the gasoline that propels its neighbors' cars up the highway. If Mr. Carter wants to help the people who are confronted with those enormous bills for oil heat, he might usefully begin immediately by decontrolling gasoline.