Years in the making, energy program finally nears takeoff
Houston — Nearly seven years after the Arab oil embargo jolted Americans into awareness of their dependence on foreign crude, a broad national energy program to reduce US reliance on imports is taking final shape.
The program has plenty of critics, but it will mark a major achievement for the Carter administration that will unquestionably influence the nation's energy course for years to come.
The program includes three major new laws -- one passed and the other two now close to approval -- and scores of regulatory embellishments all aimed at altering domestic fuel consumption to achieve greater US energy independence.
The law already on the books is the $227 billion "windfall profits" tax on domestic oil revenues over the next 10 years. The other two measures, for creating an energy mobilization board to speed key projects and a synthetic fuels corporation to increase production of synthetic fuels, recently cleared congressional conference committees, making their final passage appear certain.
In its broadest context, the emerging US energy plan has this overriding goal: to chop dependence on foreign oil in half by 1990 without putting a lid on economic growth. (Petroleum imports so far in 1980 are running well below the level of last year. Imports stood at 6.7 million barrels a day in April, compared with 7.8 million barrels daily in the same month a year ago, according to the American Petroleum Institute.)
That means cutting as much waste as possible out of domestic energy consumption and increasing US supplies by slowing the decline in oil and natural gas reserves and increasing the use of other domestic fuels, ranging from coal to solar energy.
To achieve this, President Carter and Congress have, in some respects, increased the role of the federal government in the energy sector.
The synthetic fuels corporation, for example, would spend some $20 billion over the next five years in federal subsidies -- loans, loan guarantees, and some direct investment -- to develop an industry that so far has not been economically attractive to private interests.
The "windfall profits" tax increases the federal government's revenues from oil companies, and most of the new income has been earmarked for tax cuts elsewhere. About 25 percent of the tax revenues have been earmarked for energy aid to the poor, with another 15 percent for mass transportation programs and energy development.
The energy mobilization board, on the other hand, is intended to give private industry more freedom in developing energy projects considered vital to the country. It will streamline the permit process and set up a mechanism whereby some federal laws -- such as those dealing with the environment -- could be waived with approval by Congress to expedite certain energy projects.
American consumers are feeling the immediate impact of the new energy policies in higher prices. President Carter has begun the phased control of domestic oil and natural gas prices to discourage consumption, and that has meant higher utility bills and gasoline and home heating oil prices.
Less noticeable, perhaps, are a number of financial enticements for Americans to change their energy consuming habits. Legislation to establish the synthetic fuels corporation also would set up an energy bank to provide grants and subsidized loans to homeowners for making investments in solar energy and conservation.
The residential tax credit for solar investments recently was raised to 40 percent of the first $10,000 spent on solar equipment.
The federal government also was given legal authority in 1978 to order industry and utilities to stop using oil and natural gas as boiler fuels and to switch to coal.
In addition to new laws, President Carter's energy program includes a number of regulatory actions with significant impact. The Department of Energy (DOE) has set national standards for heating and air-conditioning nonresidential buildings, saving 200,000 to 400,000 barrels of oil a day, DOE estimates. DOE also is developing energy efficiency performance standards for buildings and appliances.
Some critics say burgeoning federal energy programs are the problem, not the solution. They say energy price controls were a mistake in the first place in that they encouraged consuptionm . And they claim that many programs today are aimed at solving the lingering effects of price controls while only compounding the problems.
"I have not seen the federal programs do much except increase the costs of energy and slow the [production and exploration] activity," asserted James E. Nugent, a member of the Texas Railroad Commission, which regulates energy production in this state.
Roger W. Sant, director of the Energy Productivity Center at the Mellon Institute in Virginia, is optimistic about the nation's energy future. Citing major gains in energy efficiency in home appliances, automobiles, and -- most significantly -- in industrial plants and equipment, he says: "The country is on a very good course now and it's likely to get better."
However, Mr. Sant does not give the credit to national energy policy. Rather , he says, the economic incentives to save energy are taking hold, despite government policies that tend to distort energy economics.
The synthetic fuels corporation, he says, is going to spend far too much money and will only raise energy costs by subsidizing a form of energy that, on its own, is not economically competitive. At the rate the country now is conserving energy, Mr. Sant argues, it is "very uncertain whether we will need those synthetic fuels" by 1990.