Rep. Mike Synar (D-Okla.), who helped cut heavily into its funding last year, calls the Synthetic Fuels Corp. "one of the greatest corporate welfare programs in history."
Rep. Stewart B. McKinney (R-Conn.), who sees the program as vital to national security, nevertheless acknowledges that supporting it "is wonderful campaign fodder for your opponent."
Even the House's strongest synfuels backer, Majority Leader James C. Wright Jr. (D-Tex.), makes little attempt to defend the program's record. "If the space program was like this," a Wright aide said, the nation's rockets "wouldn't have gotten out of Houston."
The synthetic fuels program, when Congress enthusiastically authorized it five years ago, was to be America's guarantee of future energy independence, its answer to a possible second Arab oil embargo. The corporation was allotted up to $88 billion in federal loan guarantees and price supports to encourage new technology. Its goal was to produce 500,000 barrels of fuel a day by 1987.
But no sooner had Congress passed the answer to the tight oil market of five years before than a worldwide oil glut developed. Prices plummeted and major companies began deserting the synfuels industry in droves. In their wake is a Washington rarity: an agency with billions of dollars to spend and few takers.
With the Synfuels Corp. preparing to commit most of its $8 billion budget in the next two years, Congress is questioning whether this is a program whose time never quite arrived.
The corporation has a slim track record, having managed to fund only two major projects in five years. It is offering price guarantees up to $92 a barrel of oil, or two to three times the market price. Its last two presidents resigned amid conflict-of-interest charges, and their successor's nomination is in limbo for the same reason.
Now the sponsors of the nation's largest synfuels project, who have received $1.5 billion in federal loan guarantees, are threatening to bail out unless they receive an additional $790 million in price supports. Critics of the Great Plains project in North Dakota have cried foul, citing a new congressional audit that says the additional subsidies appear unnecessary.
The lawmakers fighting to salvage the corporation prefer to frame their arguments in terms of national security and energy independence.
"We have short memories about our fuel crisis," McKinney said. "There's a perfectly good chance that we may be paying too much for the synthetic gas. There's also a good chance that in a heartbeat oil could be $92 a barrel. If we were in a brushfire war in the Mideast, we wouldn't give a damn what the fuel cost."
But some House Democrats -- including Rep. Howard E. Wolpe (D-Mich.), Budget Committee Chairman William H. Gray III (D-Pa.) and Energy Committee Chairman John D. Dingell (D-Mich.) -- have joined Synar in an all-out attempt to kill the program. They are questioning why Congress should give synfuels subsidies to Fortune 500 companies at a time when student aid, mass transit and other domestic programs are under attack.
Senate critics such as Howard M. Metzenbaum (D-Ohio) have made similar arguments, but the program retains key support from Senate Energy and Natural Resources Committee Chairman James A. McClure (R-Idaho).
"Politics is carrying these projects," Synar said. "They ain't got a winner there. If we cannot kill this corporation, then there won't be anywhere in the federal government that we will have a better case."
As oil and gas prices continue to drop, a growing number of companies -- including Exxon, Mobil, Chevron, Amoco and Gulf -- have abandoned the synfuels business.
Congress cut $5 billion from the program last year in a compromise with the Reagan administration, turning back critics who wanted to chop twice the amount. The administration agreed to propose no further cuts, although Office of Management and Budget Director David A. Stockman still calls the program "a waste."
Former representative Thomas J. Corcoran (R-Ill.), who led last year's drive to abolish the program, now is the corporation's $96,000-a-year vice chairman. Corcoran said that he is part of "an attempt to reform the corporation" and that "the more modest program we have now is a good one."
Congress took a major step by eliminating production goals "that drove this agency to virtually pay any price to meet those goals," Corcoran said. He said the corporation now would focus on the most promising research ventures.
But Synar argues that Corcoran's new employer remains "a gold-plated agency." The corporation's president is paid $135,000, seven vice presidents receive at least $74,000, and more than half the employes make an average of $56,700. All employes receive full pension rights after one year.
In addition, new employes may be reimbursed for moving costs, temporary living expenses, house-hunting trips, closing costs for buying a home, higher mortgage rates on their new home and such incidentals as altering carpets and draperies. The corporation pays an outplacement firm to help some employes find new jobs and spends $100,000 a year on recruitment.
Corcoran said the benefits reflect the corporation's "unique mission. A person doesn't expect to spend 30 years here because the corporation's not going to last that long."
As other synfuels projects have faltered, the industry has held up the Great Plains coal gasification plant as its showpiece. But the money-losing plant is in trouble.
The sponsoring firms threatened to abandon the North Dakota plant once before, in 1983, when the Synfuels Corp. refused to approve price supports for the federally subsidized project. The corporation agreed to reconsider after a lobbying campaign led by Wright, McClure and then-White House counselor Edwin Meese III.
The General Accounting Office recently questioned the need for the $790 million in price guarantees, which sponsors would repay if they turn a profit. The GAO report said that the sponsors will realize a 19 percent rate of return even without the new subsidies, but that they want the federal aid to boost their short-term credit ratings.
Synfuels and Great Plains officials respond that oil prices have dropped since the GAO finished its study, making the project even riskier than before.
"I don't think any of the sponsors are excited by long-term losses and sticking with a project that won't be profitable until the late 1990s," Great Plains spokesman Tom Haan said. "If they don't get the price guarantees, they will walk . . . . This could close the door to the plant."
The intensity of the debate has produced some guerrilla warfare on Capitol Hill.
"We have our antenna out all over town," McKinney explained. "I feel when they're under attack, it's my responsibility to defend them."
But Synar contends that corporation officials "are running that thing like a CIA operation. They are so paranoid they pay one guy $57,000 a year just to follow me around."