Dimming Chances for Carter's Bill

A compromise on gas prices and oil taxes proves elusive

He called it the moral equivalent of war, but President Carter's battle against energy waste seems to be winding up the moral equivalent of Pickett's Charge. Carter's energy bill is not dead yet, but its vital signs are fading. Congress adjourned last week for its ten-day Lincoln's Birthday recess, leaving the measure comatose in a House-Senate conference committee and the nation not much closer to a comprehensive energy program than it was when Carter first unwrapped his plan last April.

Of the complex package's 113 items, two have caused all the problems. One seeks to extend federal price controls to natural gas that never leaves the state where it is produced (only gas piped across state lines is now regulated), but would raise the ceiling by about 19%. The increase would give producers more incentive to explore for new fields. The other section would increase the price of domestically produced crude oil by some 63% over the next three years through a federal tax on producers. This would bring prices to world levels set by OPEC and thereby discourage consumption.

Though both provisions slid easily enough through the House, the Senate called for total deregulation of gas prices and rejected the oil tax, leaving it to a joint conference committee to thresh out a compromise. The committee has been stymied on the natural gas question and by the fractious and squabbling performance of its Senate members. As a result, it has not even got to the crude oil problem.

The committee's dilemma is how to satisfy Senate forces led by Louisiana Democrats Russell Long and Bennett Johnston, who insist on a free market for natural gas, and Carter, who has repeatedly vowed to veto any bill that abruptly decontrols gas prices. The problem is complicated by another Senate bloc, this one led by Ohio Democrat Howard Metzenbaum and South Dakota's James Abourezk, both of whose states are heavily dependent on natural gas; they therefore demand that a federal lid be kept on gas prices. Democrat Henry Jackson, chairman of the Senate Energy and Natural Resources Committee, has been struggling for more than a month to cobble together a compromise deal featuring phased-in decontrol and higher controlled prices in the meantime, but so far he has been unable to find majority support among his Senate colleagues on the joint committee for any formula.

Last week a palpable sense of urgency surrounded his efforts, and for good reason. At week's end Jackson was leaving for a two-week China visit, and since a natural gas deal could not be worked out before then, Congress would reconvene on Feb. 20 to find a host of nonenergy matters, including the Panama Canal treaties and Carter's 1979 budget, on its plate. It is still possible, of course, for a natural-gas deal to be hammered out after Congress returns. Indeed at week's end the gloom lifted slightly when it was learned that the conferees had come very close to shaking hands--before backing off--on a deal suggested by Jackson to raise the ceiling on interstate natural gas from the present $1.47 per thousand cu. ft. Key features of the plan: a starting price of $1.84 increased by inflation plus 3% each year until 1985, when controls would end. Now, declared a top Jackson aide, "the clock is running against us. Politicians never like to say, This is the end,' but it will be tough to re-create the mood and momentum for compromise."

Whatever the outcome, the bill is still a far cry from the comprehensive energy package that the nation desperately needs. A fair amount of the blame must go not only to Congress but also to Energy Secretary James Schlesinger, the principal architect of the bill. Last winter he accepted Carter's almost impossible deadline of three months for producing an energy plan, then went about it by surrounding himself with a dozen trusted young staffers from the Washington bureaucracy. Without seriously soliciting the views of Congress, the cabal cooked up the plan in a semisecret fashion and presented it to Carter, who in turn pressed it on the nation.

With its emphasis on conservation, the bill fails to give sufficient incentive to business to increase production of oil and gas. It gives little attention to nuclear power and practically none at all to the energy available from unconventional sources such as shale oil, underground steam and the sun.

In the event that Congress cannot find the will to compromise on the bill's oil and natural gas features. Carter is considering using his executive power to levy using a $5-per-bbl. import tariff on foreign oil, raising its price to about $17.70. This would at least send a signal to the rest of the world that Washington is serious about reducing its oil imports and strengthening the dollar. But it would also boost inflation somewhat at home and have little effect on increasing energy production domestically.

What is needed is an energy bill that frees oil and gas prices, thus spurring conservation and giving producers more incentive -- and capital -- to find and new sources.

TIME has learned that whether such measures are adopted or not, a Son of Energy Bill is already in the works. Reports Correspondent Don Sider: ";Around Schlesinger's shop they're calling it National Energy Plan 2, and Schlesinger wants it ready as quickly as possible. It will be a catalogue of alternative energy approaches and will provide federal aid for developing and bringing to market solar power, wind and water power, coal gasification, the extraction of oil from shale and the generating of electricity wastes." That is some good news, and it can be made even better if Carter and Schlesinger learn from their past mistakes, as aides say they have, and seek out the advice of people who will be affected by the bill before sending it to the Hill. sb

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