Welcome Optimism on Oil Imports
The first anniversary of the Arab oil embargo occurred last week amid anxiety about the ability of the industrial West to survive its dependence on high-priced Middle East oil. At the same time, two huge studies struck a note of surprising long-range optimism, at least so far as the U.S. is concerned. Their overall conclusion: by 1985 the nation can sharply reduce its reliance on foreign oil and make itself reasonably immune to energy blackmail--and with fewer wrenching changes in living habits than have been generally assumed.
One study is A Time to Choose, a 511 -page book published last week by the Ford Foundation after two years of research. The other is Project Independence Blueprint, a 980-page document compiled for President Ford's guidance by a team of 750 analysts and experts directed by the Federal Energy Administration. They employed a gigantic computer model to calculate the effects on energy use of a bewildering variety of supply, price and policy changes. The Blueprint will not be released until next month, but TIME Correspondent Samuel R. Iker has learned many of its details, and they contain some surprises.
Odd Favor. For example, despite the worrisome success of oil exporting nations in maintaining extortionate prices for petroleum now, the study suggests that they will not be able to keep them up. In order to hold 1985 prices at $11 per bbl., approximately the current level, Middle East nations would have to hold production to slightly less than half what they could pump. Oddly enough, they would be doing the U.S. a kind of favor if they did follow that strategy: American imports of oil in 1985 would drop to 3.5 million bbl. a day, from 6.3 million now. Reasons: the high prices would discourage import demand, spur a vast expansion in Alaskan oil production in secondary and tertiary recovery of oil from existing fields, and in offshore oil development. It also would make the widescale gasification and liquefaction of coal economically attractive. More likely, the FEA experts calculate, the price of oil will drop to $7 per bbl. by 1985.
Mandatory Measures. In that case, imports would rise to 10.2 million bbl. a day--but only under the "base case" assumption that the Government did nothing special to encourage energy conservation or accelerate domestic production of fuels. The Blueprint offers a series of strategies for cutting imports. First, under an "accelerated supply" option, offshore drilling would be speeded on the Atlantic, Pacific and Alaskan shelves; environmental laws would be relaxed to permit the burning of more coal; and nuclear plants would be hustled into existence. The payoff: a drop in oil imports by 1985 to 5 million bbl. a day, even at a $7 price.
A second "conservation" option would aim at reducing the growth of energy use by such methods as enforcing national highway speed limits and standards for auto gas mileage; establishing national lighting standards and offering incentives such as lower fares and parking surcharges to get people to ride mass transit. Despite President Ford's stress on voluntary energy saving, the FEA experts argue that in order to be effective, many conservation measures would have to be mandatory.
By themselves, the conservation programs would hold oil imports in 1985 to 8.2 million bbl. a day. Combined with the accelerated supply option, they would slash imports to 3 million bbl. daily, or less than half the current level --and this at a $7 average price. Moreover, only half the imports would come from "insecure" (meaning Arab) sources. If policymakers decided that the nation could tolerate a higher level of imports, they could work out some mix of supply and conservation programs rather than go all-out in either direction.
"For instance," says Assistant FEA Administrator Eric Zausner, who directed the entire Independence effort, "we don't have to regulate the auto industry --but then we will have to develop the hell out of Alaska. A lot of the trade-offs depend on basic value judgments that the country really has to make."
A third strategy outlined by Blueprint would be to build up a stockpile of oil sufficient to carry the nation through a year during which foreign producers withheld 1 million bbl. a day of potential shipments to the U.S. The policy would cost $4.7 billion, but that would be a bargain; without it, such an embargo would take a $33 billion bite out of national production. Blueprint does not firmly recommend any of the strategies it describes; its purpose is to outline a wide range of choices.
No such inhibitions cramped the Ford Foundation's experts. They flatly advocate a Government program to cut the growth of U.S. energy usage to 2% a year by 1985, from an average growth of 4.5% annually in the past eight years.
Among their recommendations:
>A purchase tax on gas-guzzling cars and possibly tax credits for owners of efficient cars, designed to ensure that the average U.S. auto gets 20 miles to the gallon by 1985;
By going further--setting an auto-mileage goal of 33 m.p.g., for instance, and imposing a sales tax on energy--the nation could cut the growth of energy usage to zero by the year 2000, the report says. The foundation team calculates that even reducing the growth rate to 2% would shrink oil imports by 1985 to a mere 2 million bbl. a day.
What is more, says the Ford Foundation group, the nation could achieve that reduction while continuing to guard the environment; it could "still stop strip-mining for coal in the arid West" and would not have to rush nuclear plants into use while doubts remained as to their safety. "Neither jobs, nor growth rates in incomes, nor household comforts will suffer" by cutting the growth of energy use to 2%, they conclude. "Insulating homes and buildings and making cars that get better mileage are no threat to anyone--except perhaps to the energy-company salesmen."
Such remarks, and the general crusading tone of the Ford study, are likely to make it controversial. Under an unusual agreement with Project Director S. David Freeman, members of the 21-man advisory board--including educators, environmentalists and business executives--were allowed to append comments to the published report, and some made sharply critical ones. A Time to Choose "is neither elegant nor profound," said University of Minnesota Professor Dean E. Abrahamson. Petroleum Industry Consultant Minor S. Jameson said that the study showed "unjustified bias against private business." The more noncommittal FEA Blueprint may not raise tempers as much, but it too is sure to stimulate debate. Taken together, though, the two studies offer some welcome and carefully reasoned grounds for optimism about the U.S. energy future.
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