PRESIDENT CARTER'S new energy proposals, calling for the gradual decontrol of domestic oil prices and a windfall profits tax on the oil companies, represent a timid, incomplete attempt to resolve the nation's energy problems. Carter has surveyed the sorry state of energy supplies in America, concluding that higher oil prices under decontrol will force conservation, increase production and make alternative energy technologies more price competitive.
And, in a limited sense, he is right. Decontrol, however, can at best provide but little relief; it should not be the centerpiece of any energy policy. Moreover, the costs of decontrol are high and can only be offset by a strong windfall profits tax giving relief to the poor and funding new government energy programs. Carter says he wants the tax enacted but has already as good as killed it by failing to make decontrol of oil prices contingent on Congressional approval of the tax. Carter is either optimistic about the chances of Congress passing a strong windfall profits tax or believes that decontrol without the tax will still benefit the country. In either case, he is mistaken.
It is a sad comment on the state of the politics of energy that consumers must pay even higher prices for oil products at a time when oil companies are making near-record profits. Decontrol is, unfortunately, one of the few options open to a president concerned with reducing American dependance on foreign oil. Although the Senate Energy Committee passed a standby rationing proposal, more stringent measures, though desirable, are politically unfeasible. The failure of Carter's 1977 energy proposals and the imminent watering-down if not complete destruction of his windfall tax proposals serve as ample evidence that the strong oil lobby within Congress can effectively block progressive energy measures. Voters must begin to pressure congressmen to pull away from the oil lobby.
FOLLOWING decontrol, the public will become more aware of the economic consequences of Congressional energy policies. In addition to producing limited increases in conservation and domestic oil production, decontrol should have the additional effect of further alerting the public to the gravity of the present energy situation. Longterm solutions to the energy problem can only come when voters see the crisis in energy; higher oil prices are, sad to say, apparently necessary.
Carter mistakenly sees decontrol as an end in itself, rather than as a starting point for a broader energy policy. Convinced of the merits of decontrol, Carter did not link decontrol and his windfall profits tax; this may cost consumers $32 billion over the next two years, while producing only limited energy savings. Under a comprehensive windfall profits tax, that money could go to relief for the poor, funding for new energy programs and--for those profits oil companies would be allowed to retain--investment in domestic oil production. Carter's proposed tax, however, is much too weak, providing insufficient funds for the poor and allowing the oil companies to retain too high a percentage of their windfall profits. And in any case, Carter's tax will surely become even less effective as it passes through the Finance Committee of oil millionaire Sen. Russell Long (D.-La.). Congress in 1975 decreed decontrol of domestic oil by 1981; if Carter had waited until 1981 for decontrol, the chances for a strong windfall profits tax would be nil. This year, Carter had the opportunity to engineer a trade--giving oil companies early-decontrol profits while passing a windfall profits tax that would over the next decade save consumers billions of dollars by recovering some of the excess profits. He has, for the most part, missed that opportunity. We now can only hope that most of his proposed tax plan will remain intact as it winds its way through Congress.
WHAT IS MOST disappointing about Carter's recent energy proposals, however, is their short-sightedness and timidity. The public's needs require a massive reorientation of national policy. Carter needs to propose--and to put pressure on Congress to enact--laws that would shift federal spending away from superhighways into mass transit, laws that would change utility rate structures, laws that would mandate conservation and finance home insulation, solar heating and other energy alternatives. Above all, Carter needs to regain the public's respect for, and willingness to follow a President's lead; with his energy proposals, however, Carter is fast squandering what credibility he has left.