Congress eyes tax on imported oil

By , Staff correspondent of The Christian Science Monitor

Temperatures are warming up, gas prices are sliding down, and the talk on Capitol Hill is turning to an oil tax.

Supporters say the time is ripe to levy a $5-a-barrel fee on foreign oil. Fuel prices are dropping so low that consumers would hardly feel the 12 cents per gallon the tax could add, they say. Also, the bitterest winter in years with its huge heating bills has ended.

''It's more do-able as prices come down,'' says Senate Finance Committee chairman Robert Dole (R) of Kansas of the import fee.

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''I would support a policy to maintain the price of oil as it is today -- a tax to soak up the [future] decline in prices,'' says Rep. Dick Cheney (R) of Wyoming, a member of the Republican leadership.

Such talk of an import tax has been breaking out all over Washington, as politicians search for a way to cut the federal deficit. The tax on foreign oil would bring an estimated $12 billion into the US Treasury.

But supporters also say the fee would keep the US from turning back into a nation of energy wasters. ''People are going to get sloppy and start driving big cars and not care where they put the thermostat,'' warns Congressman Cheney. He says the dropping fuel prices will do ''serious damage'' to efforts to develop domestic energy sources.

Besides cutting the federal deficit and encouraging conservation, the import fee would ''provide a buffer against a sudden rise in oil prices,'' says a Dole aide. It would also save from bankruptcy synthetic fuel and oil shale operations and projects to turn grain and garbage into fuel, he adds.

But the oil tariff is far from a sure thing.

''I don't think it's going to go anywhere because it's an election year,'' says Edwin Rothschild, spokesman for the Citizen-Labor Energy Coalition, a consumer group. Not only would the tax raise gas and heating oil prices, he charges, but it would add 1 percent to the inflation rate and crush the economic recovery in its bud by increasing industrial fuel bills.

''We're not going to go back on conservation,'' maintains Mr. Rothschild, who calls the price drops only a ''short-term relief.'' Home buyers will still look for the most efficient house they can find, he says.

The consumer group spokesman sees the oil industry behind the move for import fees. ''They're losing their shirts,'' he says, especially on some of their energy exploration projects.

In fact, the oil industry has divided over the import tax. Big companies that rely on foreign oil supplies oppose it, some smaller domestic producers favor it.

Companies that have launched major efforts to find new oil in the US have been hit hard by falling prices. Between the last week of December and March 15, the number of oil rigs operating in the US dropped by more than 700. ''That's the largest drop in the history of the industry,'' says Richard C. Sparling, director of economic and financial studies for the Independent Petroleum Association of America. The association represents about 8,000 small companies, the so-called ''mom and pop'' outfits of the oil industry.

Although weather explains part of the smaller rig count, the oil industry as a whole has scaled down capital and exploration plans from a year ago. As prices fall at the gas pump, the projects are losing their attraction.

On Capitol Hill, oil industry lobbyists check regularly on talks about an oil import fee, but few are openly pushing the idea.

Oil companies ''lobbied for free enterprise'' in the past, says Mr. Sparling, whose association has not taken a stand on the import tax. Now that price controls have been lifted, it would be ''hypocrisy'' to go back and ask for a tax to control the market, he says.

If the $5-a-barrel fee is levied on foreign oil, it could be done by either of two ways. Congress could pass the tax, or the President could order it under the Trade Expansion Act, which gives him power to restrain imports of any commodity that affects national security.

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