Ford Goes It Alone on Oil

The Ford Administration moved last week to get its long-stalled national and global energy programs moving again. While Secretary of State Henry Kissinger was in Paris urging a new conference of oil producers and consumers, President Ford took to national television and ripped into the Democratic-controlled Congress for doing nothing but "drift, dawdle and debate" on domestic energy policy. The President theatrically tore leaves off a calendar to demonstrate that he had been waiting since February for some sort of energy legislation. He then announced that he would go ahead with his own controversial, twice postponed plan to hike energy costs in an effort to curb demand and make the nation less dependent on foreign oil.

Ford said that effective June 1 he would double the $1-per-bbl. import tariff on crude oil that he imposed in February, and add a new 60-c--per-bbl. levy on imports of refined products like gasoline and heating oil. A third $1-per-bbl. increase is yet to come. Ford pledged again to send Congress a plan for gradually decontrolling all U.S.-produced oil; about two-thirds of it is now price-fixed at $5.25 per bbl.

Costly Plan. The President's initiatives are no substitute for a broad, congressionally approved program that would include mandatory conservation measures. This year, for example, the tariff increases will pare imports by a mere 100,000 bbl. per day, to 6.2 million bbl., according to the Administration's own figures. Yet the cost of the plan will be substantial. White House officials acknowledge that deregulation would eventually kick up the price of gasoline, residual oil used by heavy industry, diesel fuel burned by trucks and other petroleum products by 5-c- to 6-c- per gal. The increased tariff will add another 1 1/2-c-. Democratic Senator Henry Jackson of Washington claims that the tariff hike alone will boost consumer prices by $2.5 billion a year. The measures are particularly punishing for New England, which imports and burns relatively more oil than any other region; they could add as much as $250 million a year to the area's fuel bill.

Some lawmakers are already prodding the Democratic leadership into trying to block Ford's plan shortly after Congress returns this week from its ten-day Memorial Day recess. In March, Ford vetoed a bill suspending his authority to raise import fees. So, blocking the tariff boost now would require a two-thirds majority in both House and Senate; a coalition of Republicans and oil-state Democrats could well sustain the veto. The decontrol proposal is far more vulnerable; it could be shelved by a simple majority of either house within five days after being received.

Any Democratic victory on decontrol could be short-lived. On Aug. 31, the Emergency Petroleum Allocation Act, passed by Congress in 1973, will expire, and with it all federal authority to control prices. Unless an extension of the act is passed and signed into law by then, the economy will get the full shock of a jump in U.S. oil prices to the world level all at once--not over two years or so, as Ford proposes.

Some hope still exists that Congress and the White House can get together on energy policy, but it is barely a flicker. Democrats contend that Ford's strategy of raising prices is the wrong way to force oil conservation, but they cannot agree on any approach of their own. A bill that the White House described as a "marshmallow" finally squeaked through the House Ways and Means Committee before the recess. It would, among other things, raise the federal tax on gasoline from its present 4-c- to 7-c- next January, tax business use of petroleum, and levy a tax on gas-gulping cars. The Democrats did not bring that bill to the floor because they lacked the votes to pass it.

Threat of Embargo. The basic problem is that the lawmakers and their constituents do not see an energy emergency compelling enough to warrant tough action. Liberals in particular worry more about the problems of unemployment and recession than about making the nation invulnerable to a new Arab oil embargo. On the other hand, the Administration regards a stringent U.S. energy program as an essential element of foreign policy. Kissinger wants to remove the threat of another embargo from all considerations of what policies Washington should pursue in the Middle East and elsewhere.

In Paris last week to address the 18-nation International Energy Agency, Kissinger gave his lagging strategy a shove by appealing for a reconvening of the conference of major oil producers, industrialized consumers and poor countries that broke up in April. The conference was supposed to arrange a world energy summit that the U.S. hoped would ensure stable oil prices and supplies; it foundered because the U.S. and other industrial nations would not agree to demands that the summit also discuss stabilizing the prices of a broad range of other raw materials, which, unlike oil, have collapsed. Kissinger now proposes that the conference set up three commissions: one for energy, another to discuss raw materials generally, and a third to examine ways in which the industrialized world could assist the poorest developing countries.

Kissinger also urged that the 18 IEA nations collectively cut imports of oil by 4 million bbl. per day by the end of 1977 and spend up to $1 trillion in the next ten years to develop additional sources of energy that would make the industrial world independent of the oil cartel. Yet, as Kissinger conceded, there is nothing that the consuming nations can do in the next several years to prevent oil producers from raising prices whenever they want to. Indeed, the Organization of Petroleum Exporting Countries may hike world prices by as much as $2 per bbl. in September--a move that would give the American economy a vicious double jolt if Congress and the President let all U.S. price controls die a month earlier.

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