Moving to a Showdown

The long struggle between the White House and Congress over national energy policy moved closer to a showdown last week. After waiting out a fruitless two-month truce to give the House and Senate time to wrap up an acceptable package of energy legislation, President Ford ordered a phasing out of Government price controls on U.S.-produced oil over the next two years. The move could more than double the price of about two-thirds of the nation's oil output--a prospect that is anathema to many of the Democrats, who hold commanding majorities in both House and Senate.

At the same time, Ford made a conciliatory gesture aimed at keeping alive negotiations between the Administration and Congress. He agreed to put off for up to a month a doubling of the $1-per-bbl. tariff on imported oil that he imposed in February. But that is the less important of the two administrative actions that the President has been considering; the lifting of price controls on domestic oil would ultimately be far more costly to consumers.

Either house of Congress can block the proposal by majority vote, and the Senate, acting with unusual speed, has already passed by 47 to 36 preliminary legislation that will help do just that. A similar measure is expected to clear the House, possibly as early as next week. Democratic Senator Henry Jackson of Washington called Ford's proposal "inflation on the installment plan and rationing by prohibitive prices." Indeed, the President's order collides head-on with a bill already passed by the Senate that not only extends price controls of most domestic oil but in effect provides for some small rollbacks.

The first showdown is likely to come in about three weeks, when the Federal Energy Administration will try to put into effect the first phase of decontrol. Even if the White House should win the initial test, the stage has been set for a whole series of possibly disruptive confrontations between the President and Congress. Reason: legally, Ford has to resubmit his decontrol proposals to Congress every 90 days. That provision, says Federal Energy Administrator Frank Zarb, would give "Congress a continuing bite at the apple."

Under present law, "old" oil is price controlled at $5.25 per bbl. Old oil is defined as the amount of crude a well pumped month by month in 1972; any amount produced over that level is considered "new" oil and is not controlled. Under Ford's order of last week, 4% of the old oil would be freed from control each month; over two years or so its price would presumably shoot up to the world price of about $11 per bbl. Zarb estimates that decontrol would eventually add about 5-c- per gal. to the price of gasoline. The prices of heating oil, industrial fuel and all other petroleum products would be pushed up too. Senator Jackson figures that decontrol would ultimately add $250 a year to the energy bill of a typical U.S. family.

A Little Time. Controversial as the decontrol plan is, Ford has at least avoided an immediate clash with Congress by delaying for a month the scheduled $1-per-bbl. increase in the tariff on imported oil. In February the President imposed the first $1-per-bbl. tariff and planned to raise it by another $2--$1 in March, another $1 in April. Congress swiftly passed a bill temporarily suspending the President's authority to post the increases. Ford vetoed the bill, but struck a compromise: he would defer adding the second dollar until May 1. As that deadline approached last week, it was clear that if the President boosted the tariff, Congress would dust off the vetoed legislation and try to override him. If nothing else the President's delay gives both sides a little more time to work out some compromise.

Best Mix. But not much room for compromise is visible; the White House and the Democratic congressional majorities differ deeply not just on details but in their philosophical approach to the problem of holding down imports and making the U.S. less dependent on foreign crude. The President would like to rely almost exclusively on higher prices and taxes to dampen demand for oil and encourage production of more domestic petroleum. Generally, the Democrats favor reducing fuel consumption by conservation measures and some form of Government allocation. But the Democrats are so deeply divided on the best mix of measures that their progress toward drafting any energy legislation has been tortuously slow.

The House Ways and Means Committee, under Democratic Chairman Al Ullman, has agreed to an initial increase in federal taxes on gasoline by 3-c- to 7-c-; as much as 20-c- more could be added in April 1977 if gas consumption climbs 3% or more above the 1973 level. The committee is still struggling to find agreement on import-quota levels, a windfall-profits tax for the oil industry and a levy on industrial petroleum use. Last week, to Ullman's discomfort, the committee voted down several proposals to place stiff taxes on the sale of gas-guzzling cars. The House commerce subcommittee has been even more bogged down. Among other things, it has yet to decide how, or even whether to approve a plan that would decontrol the price of oil far more gradually than the proposal that the President has offered.

The consequence could conceivably be a stalemate in which Congress would block decontrol and/or a tariff boost, but be unable to produce any legislation that Ford would accept. That would probably result in a political orgy of finger pointing and leave the nation with no energy policy at all. There seems to be little public opinion push for any. A private poll that the FEA has had taken regularly for the past year or so shows that a majority of those questioned would prefer even some kind of rationing to higher energy prices. But another of the poll's findings offers what could be an insight into Congress's dawdling. Of those questioned, 52% put unemployment at the top of their worry list, 25% were primarily concerned about inflation, and only 12% thought that energy was the maui problem.

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