Imported oil -- what could be a more sensible product to slap with a tax just now? Taking a tax bite out of imported oil could raise large amounts of revenue and help balance the deficit-ridden federal budget -- an increasingly important consideration in the face of the Gramm-Rudman-Hollings budget-balancing law.
An oil-import fee also would gather back into United States government hands some of the enormous wealth that departed (mostly to the Middle East) during the 1970s.
By keeping oil prices relatively high, moreover, a tax on imported oil would encourage energy conservation by American consumers, its proponents say. Conservation otherwise might wane as oil gets cheaper.
Finally, an oil import tax would shield American oil producers from financial setbacks due to falling prices and cheap imports. Hence it might play well politically in the Southwest energy states if foreign oil prices plummet.
The timing would be great, too. As oil prices drop, the tax could be ``wedged in,'' proponents say, so that its impact is not felt much by consumers. If oil slips $4 a barrel, the government could take $3 and leave $1 to the consumer and energy prices would still look lower.
But there is plenty of opposition to any oil tax.
Like all taxes, an oil-import fee would be inflationary, its critics say. Like all consumption taxes, moreover, it would be regressive, affecting the poor more than the rich. And like all import fees, it would be a tariff -- therefore, protectionism -- and would would alienate US allies in the Middle East, Africa, and Latin America.
Finally, no matter how it is structured, an oil import fee would be a tax increase -- which President Reagan still says he's dead-set against.
Whether imported and/or domestic oil is taxed more than at present depends largely, it appears, on how far and how fast oil prices drop.
If prices slip below $20 a barrel and appear to be going sharply lower, then domestic oil interests might begin to favor an import fee, admits John Lichtblau of the Petroleum Industry Research Foundation in New York.
``In general, there is no great support for it in the oil industry at the moment,'' Mr. Lichtblau says. ``I don't believe there will be one -- unless oil declines.''
If oil prices slip below $18 to $20 a barrel, Lichtblau says, domestic oil companies would be hurt financially and would be unable to replace depleting reserves. ``They would be in bad shape, and maybe then they would debate an import feel.''
If oil prices tumble, Lichtblau notes, the president could impose an emergency import fee as a national security measure to protect US energy sources from the influx of cheap oil.
Sen. Gary Hart (D) of Colorado is the leading advocate of a $10 a barrel oil import tax. An aide says Hart's aim is ``energy security,'' making sure Americans continue to conserve. The senator favors distribution of revenue from such a tax to the needy, to the social-security system, and to states most affected by the higher cost of imported oil. Budget balancing would be a byproduct.
But an oil tax would not be painless.
It might cause the collapse of the Organization of Petroleum Exporting Countries and an all-out oil price war, notes Stephen Marris, former chief economist of the Organization for Economic Cooperation and Development and now senior fellow with the Institute for International Economics in Washington.
An oil price war would throw international banking into a spin and cause deep problems in Mexico, Nigeria, Venezuela, and a score of oil nations. ``An oil surcharge now,'' Dr. Marris says, ``could break the whole thing.''
Any tax, says a recent study by the Dallas branch of the Federal Reserve, would slow US economic growth and boost inflation. If prices fall $4 a barrel, and $2 is taken as taxes, says study coauthor Roger H. Dunstan, ``instead of $4 worth of growth, you get only $2 -- not as strong as if prices fell.''
Milton Kopulos of the Heritage Foundation admits Congress might be attracted to an oil tax because it ``would be an enormous revenue generator,'' producing as much as $40 billion a year when the take from the windfall profits tax is added in.
But he estimates that such a tax would add four to five points to inflation and would worsen US unemployment. Kopulos says that if the aim is ``energy security'' the best answer would be to renew tax benefits that promote drilling and exploration, not boost taxes.
From a conservation point of view, there is a bit better case to be made for an at-the-pump gasoline tax.
Economist Marris says a gas tax would help promote conservation. Each 1 cent of tax would boost government revenue by $1 billion. This, he says, would ``get at the most dynamic element of demand: automobiles.''
But a gas tax would not be favored by American oil companies, since it would be levied against both domestic and foreign oil. A direct tax on the product of US oil companies would cut into profits.
Moreover, while a gasoline tax might discourage consumption, it would do little to slow imports. And Mr. Dunstan at the Dallas Fed notes that a gasoline tax would ``raise the price of inputs'' for refiners, thus contributing to inflation.
There are, says Dunstan, ``inherent problems with fiddling around with energy prices.''
Only in the event of a fiscal crisis, all these analysts agree, would President Reagan be likely to consider a tax on imported oil.
Thanks to Gramm-Rudman-Hollings, such a crisis probably won't come until next summer at the earliest -- after oil and gasoline prices begin to drop, according to most scenerios. By then, any gasoline or imported-oil tax would look like a tax -- because prices would rise again once the tax took effect.