Business: Now the Heating Fuel Furor

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The U.S. subsidizes some imports—and enrages its allies in Europe

The energy debate is turning into a finger-pointing fiasco. While trains and other forms of mass transit choke up with riders and driving in the U.S. declines for the first time in years, Americans go looking for scapegoats. Consumers accuse the oil industry of pushing up prices by holding back supplies. Oilmen blame Washington for snarling them in red tape and overregulation. Congress blames the White House for not providing effective leadership. The President blames the public for not believing that the peril is real.

Last week Europeans got into the blame game. Government officials, editorial writers and just plain folks by the millions were griping that if Jimmy Carter were to get his way, Europeans would wind up shivering through next winter in unheated homes. To the Europeans, it looked once again as if the world's most powerful nation—and premier petro-pig—was trying to push its energy agonies off on its allies. At issue was the Carter Administration's quiet announcement three weeks ago of a "temporary" U.S. subsidy of $5 per bbl. on imported diesel oil for trucks and tractors and heating oil for homes, factories and office buildings.

Stockpiles of these so-called distillate fuels are dangerously low, down some 15% from a year ago, and they will not be replenished quickly because the Administration is urging oil companies to step up their refinery runs of gasoline instead. The $5 subsidy is supposed to help ease the pinch by boosting diesel and heating oil imports from refineries in the Caribbean. Yet Europeans are every bit as dependent on scarce supplies of diesel and heating oil as Americans are, and they too get deliveries from the Caribbean refineries. The Carter Administration claims that the Europeans' panicky, pay-any-price mentality has lured so much Caribbean production to the Continent that U.S. importers are no longer receiving their fair share. The Europeans retort angrily that Washington's subsidies are just pushing up prices even higher and that the U.S. is actually getting all the oil that it normally does in the first place.

Neither side so far has produced convincing statistics, but by last week the squabbling had degenerated into some of the nastiest transatlantic name-calling in years. The West German Economics Minister, Count Otto Lambsdorff, expressed "surprise and regret" at the U.S. subsidy. One of his assistants captured the prevailing sentiment: "It hurts when your friends stab you in the back." In Washington, French Foreign Minister Jean François-Poncet led a weeklong parade of protesting diplomats through the White House. François-Poncet got a mere 15-minute meeting with President Carter, and that reflected the crisp indifference that the Administration seemed to be showing.