President Reagan tendered a goodwill gesture to hard-hit oil-producing states yesterday, promising to renew his efforts to repeal the windfall profits tax on American oil producers and to deregulate natural gas.
In a meeting with governors and members of Congress from states suffering because of collapsing world oil prices, Reagan also said that he will continue to seek repeal of a law that restricts the use of oil by utilities.
He further promised to look at measures pending on Capitol Hill to help "preserve the viability" of marginal production wells, known as "stripper" wells.
The president did not make any new proposals, but underscored those he previously made, seeking to appear responsive to growing signs of economic dislocation in the oil states of the Southwest.
His actions were a signal of White House concern about the possible political fallout on Republican campaigns this year if the economic troubles deepen.
Texas Gov. Mark White, a Democrat, who is seeking reelection this year, was not invited to the White House meeting, officials said. Instead, the White House invited Republicans to meet the president and announced his actions afterward.
Reagan advocated repeal of the windfall profits tax in his 1980 campaign, but never made a major push for it as president.
The repeal, if voted by Congress, would have little practical effect now, since the windfall profits tax is producing little revenue for the Treasury and is scheduled to be phased out no later than January 1991.
However, repeal could have important political ramifications in such energy-producing states as Texas and Oklahoma. Recently, Vice President Bush, a Texan, set off a controversy when he expressed concern about the impact of falling oil prices on the region.
Many criticized Bush's political judgment, saying it would hurt him in Northeastern states that traditionally have paid higher prices for energy.
Yesterday, by offering sympathy and promising to take a look at ways to protect stripper wells and to repeal the windfall profits tax, Reagan appeared to be taking Bush's approach on a more limited scale. Previously, the administration's primary stress had been on Reagan's commitment to the free market as the way to set prices.
White House officials and members of Congress said that repealing the windfall tax could have benefits later on.
Rep. Dick Cheney (R-Wyo.) said the windfall profits tax "fundamentally discourages people from taking risks that go with exploration for oil and gas" and suggested that "now, while the price is down," is a good time "for us to clear away some of the underbrush that would otherwise serve as a disincentive to the kind of investment we're going to have."
Sen. Don Nickles (R-Okla.) said repeal would save millions of dollars in bookkeeping costs for the industry and government.
Rep. Bill Archer (R-Tex.) said that the tax "places a very large administrative burden on the industry."
Imposed in 1980 as world oil prices skyrocketed, the windfall profits tax was designed to capture the difference between the world price of crude oil and federally controlled domestic price levels.
"Due to the decontrol and ensuing drop in world oil prices, however, there is no significant revenue accruing to the U.S. Treasury under this provision," presidential spokesman Larry Speakes said in a statement.
The American Petroleum Institute, which represents 222 large and small oil companies, hailed the president's position, but suggested that it did not go far enough.
"The elimination would be a sensible action for the government to take, and would provide greater incentives for the exploration for future domestic oil," the institute said in a statement.
"It would, however, not address the short-term problem of enabling oil producers to develop marginal properties," such as stripper wells that became uneconomical as oil prices plunged, the institute said.
In addition to promising to look at congressional initiatives on the stripper wells, Reagan said that he again will press to repeal provisions of the Power Plant and Industrial Fuel Use Act, a law passed in the Carter presidency that seeks to restrict utilities from burning more oil.