Business: Crude Assaults

More ferment in fuel

When Jimmy Carter said a trillion, did he really mean to say a hundred billion or so? And did he threaten the oil companies earlier with "punitive" legislation when he actually only had an "unfriendly" law or two in mind? These were some of the weighty issues that preoccupied the policymakers on the energy front last week, as attention continued to be focused on Big Oil's current gusher of profits.

Although the national need now is for effective leadership that can begin cutting the U.S.'s dependence on foreign oil without further delay, the President and Congress spent much of last week quarreling over what to do about oil industry profits. The low point was reached on Monday in Providence, R.I., when Carter told a conference of Northeastern state officials that the Senate's efforts to water down his proposed windfall profits tax "could become a trillion-dollar giveaway to the oil companies."

The President's broadside was recklessly inaccurate, and embarrassed White House staffers had to rush to issue "clarifications," The trillion dollars, a White House aide explained, is actually the amount of additional oil revenues—not profits—that the companies will receive as a result of decontrol of domestic crude oil prices over the next ten years. What Carter meant to say, the aide insisted, was that the Senate version of the windfall tax bill will leave the industry with $130 billion more in profits from decontrol than the House measure. Other aides meanwhile tried to downplay and defuse the remarks the President made a week earlier about "punitive actions" that might be taken against the oil majors if the windfall tax did not meet his expectations. A better description of those still unspecified actions, one official suggested, would be "unfriendly." Louisiana Democrat Russell Long, who as chairman of the Senate Finance Committee was a chief target of Carter's latest venting of his frustrations over energy policy, pointed out that on balance the Senate's windfall tax proposal is tougher on the large oil companies than the House version. Said Long: "When people campaign for office, they tend to make controversial statements."

Carter's latest episode of rhetorical overkill may have won him some election campaign points, coming when oil companies have been announcing unexpectedly high profits. Last week, following reports by other major oil companies of large third-quarter profit boosts, including Exxon's 118% rise to a record $1.1 billion, the Standard Oil Co. of California announced a quarterly gain of 110%. Ten of the largest U.S. oil companies showed third-quarter gains averaging 94%.

The President's move to hit out at the oil company targets was especially ill-timed, since many of his energy measures seem at last to be moving through Congress. Said one Energy Department official: "I can't believe Carter's pulling this stuff. His rhetoric can't do any good, and it could do real harm." The House and Senate windfall profits tax bills will soon go to a conference committee; compromise legislation to form the Energy Mobilization Board is on the verge of being worked out; and the Senate now seems ready to approve the creation of the Energy Security Corporation, which is to spur the building of synthetic-fuel plants.