President Reagan yesterday removed the remaining price controls on gasoline, propane and U.S.-produced crude oil, in what aides called a first step in his promised campaign to "deregulate America."
Reagan's decision, giving the oil industry control over gasoline prices and distribution for the first time in a decade, would add between six and 12 cents a gallon to the price of gasoline, moving ahead an increase that would otherwise have occured by this fall when price controls were to lapse automatically.
The lifting of the network of petroleum regulations permits refiners and gasoline retailers to change whatever they chose for their products, and some service station operators may test the market with sharp increases. But most energy experts in and out of government predicted that the ample current stocks of gasoline and other petroleum products will prevent a runaway escalation of fuel prices.
Energy Secretary James Edwards, who announced Reagan's action at a crowded news conference yesterday, predicted that gasoline prices would rise by three to five cents a gallon or less than half the estimated maximum increase likely under the decontrol action. Competition among retailers would prevent them from imposing the full increase, Edwards indicated.
Decontrol will be "good for America," Edwards said. Reagan "promised to deregulate America. This is a step in that direction," the energy secretary said.The speedup in decontrol will increase government tax revenues by $3 billion to $4 billion, he added.
Some congressional Democrats said that removal of price controls on domestically produced crude oil would leave the United States even more vulnerable to further price increases by the Organization of Petroleum Exporting Countries, since its price will now be the standard for all U.S. production.
"I intend to take whatever steps are available in the Senate to see that this tragedy does not befall the American people," said Sen. Howard H. Metzenbaum (D-Ohio), a leader of the Senate's depleted corps of liberals who favor energy regulation.
OPEC prices now average $38 a barrel and the price controls that covered about 15 percent of U.S.-produced crude oil prior to Reagan's order kept the average domestic price about $3 to $4 a barrel less than the world figure.
Among other possibilities, decontrol critics fear that oil shipments from the Mideast could fall and oil prices rise if the war between Iran and Iraq causes further damage to their petroleum facilities.
If world oil prices remain stable, Reagan's action will merely speed up the price increase that would have occurred by Oct. 1, when petroleum controls were due to expire by law.
"In the long run, decontrol will be beneficial to our country by increasing domestic energy production, [and] by encouraging the use of alternative fuels and technologies," said Sen. James McClure (R-Idaho), chairman of the Senate Energy Committee.
Edwards told reporters that the price increaes permitted by decontrol will promote energy conservation, saving between 50,000 and 100,000 barrels of oil a day. He wasn't able to explain the grounds for this estimate, however. Independent energy analysts like John Lichtblau of the Petroleum Industry Research Council said there will be only slight improvements in energy conservation due to the speedup in decontrol, and only minimal growth in promotion, as well.
Reagan's decision abolishes the complex rules for allocating gasoline during shortages -- rules that Reagan aides blame as the main cause of the gasoline shortages on the East and West coasts when Iranian oil exports were cut off in 1979.
It also ends regulations that have prevented Texaco, Gulf and some other companies from moving out of regions where their operations aren't profitable enough. Such marketing shifts are now expected, but McClure warned that a serious disruption of fuel deliveries to parts of the country could cause Congress to reconsider controls.