Gasoline tax idea worries oil industry
Houston — President Reagan says his administration will be ''looking at everything,'' including a federal ''user fee'' on gasoline, in the battle to reduce the federal deficit. This apparent presidential U-turn reinforces oil industry apprehension that new taxes lurk down the road.
Increases in the federal gasoline tax, import fees on foreign crude oil, and new windfall-profits taxes on both natural gas and Alaskan oil - all these are options being weighed by legislators intent on controlling a runaway deficit.
And all of them send shivers through the oil industry, whose leaders plead the need to lift taxes from their companies to help stimulate energy production. The proposed hike in the gasoline tax, while not a direct threat to company profits, is nonetheless viewed by industry spokesmen as an overall threat to productivity. It is seen as a possible opening to other forms of energy taxation.
Last week, Rep. Dan Rostenkowski (D) of Illinois announced his own proposal for a gasoline tax hike before some 3,000 oilmen at the annual meeting of the American Petroleum Institute (API) here. He argued that ''the real choice facing the Reagan White House is between big defense cuts and big tax increases.'' The 1983 deficit is likely to top $150 billion and keep climbing, he said.
His gasoline tax proposal, like that being considered by the President, would use a hike of 5 cents a gallon to underwrite the massive repair of the nation's roads and bridges now being widely discussed as a way of providing jobs for the unemployed. The administration plan was originally submitted to the White House by Transportation Secretary Drew Lewis last spring.
Mr. Rostenkowski's comments raised great concern among the industry representatives gathered here because of his key role in drafting tax legislation as chairman of the House Ways and Means Committee.
The congressman said Congress may justify new energy taxes as a way of reducing consumption and thereby reducing the risk of ''increasing demand for imported oil and tempting another round of OPEC price increases.''
The federal government isn't alone in its willingness to consider new taxes on energy. Hard-pressed state governments have already begun squeezing more tax dollars out of oil companies. Connecticut, New York, and Rhode Island, for instance, now have gross earnings taxes of 1 or 2 percent on the total sales of petroleum products within their borders.
In response to Rostenkowski's warning that energy taxes may increase, oilmen at the API meeting argued that increasing taxes would drive energy costs higher and worsen the nation's economic problems.
Exxon Corporation chairman Clifton C. Garvin Jr. said that if Congress heaps new taxes on what he terms an already dangerously overtaxed oil industry, it will siphon off the profits oil companies need for exploration.
The API reports released here stressed that without adequate industry profits and increased drilling:
* Energy shortages will return, driving prices up.
* The US will throw away recent progress toward reducing dependence on imported oil.
* The US will again be vulnerable to the supply woes that brought gas lines and factory closings in recent years.
The API warning that severe energy shortages are still possible coincides with a gloomy warning from the Cambridge Energy Research Associates, although the Cambridge report looks to causes other than taxing oil company profits. This forecasting group, headed by Harvard University energy expert Daniel Yergin, concludes that the current oil ''glut'' could turn into a shortage and trigger another major energy crisis ''by as early as 1986.'' The report, released last week, argues that current excess supplies are due largely to world recession. Therefore, the report warns, economic recovery could bring a surge in demand and give OPEC the ability to restrict supplies again.
''The oil industry is not a bottomless pocket,'' Frank Jandrowitz, the API's vice-president for state relations, warns. The tax signals states are sending now will only encourage oil firms to relocate to more friendly states, he says.
To lessen the risk of another energy crisis, Exxon's Mr. Garvin and other industry leaders insisted in Houston that the Reagan administration should act quickly to decontrol natural gas prices and abandon the windfall profits tax.