Getting It Under One Roof

In its search for a strategy to deal with the energy crisis, the Nixon Administration has frequently seemed to be playing musical chairs. This year alone, the vital post of chief energy adviser to the President has been filled by three different men. Last week the Administration seemed finally to click on a winning choice. In a move that drew praise even from his harshest critics, President Nixon ordered a sweeping reorganization of the Government's energy policymaking system and installed a tough-minded former investment banker, Deputy Treasury Secretary William Simon, as his newest energy czar (TIME, Dec. 10).

Simon heads a new superagency that was set up by executive order last week as the Federal Energy Office, but will be renamed the Federal Energy Administration once Congress establishes it permanently by statute. It will centralize operations formerly scattered among many Government agencies, gaining authority not only over policy planning and the administration of allocation programs but even over fuel prices. Among many other agencies, FEA will swallow the Cost of Living Council's energy division, which controls prices for gasoline, heating oil and other petroleum products. That should end the type of bureaucratic delay that recently held up for three months an urgently needed mandatory allocation plan for fuels--a plan that, significantly, was originally drafted by Simon. As Simon explained to TIME Correspondent Sam Iker:

"Making and implementing energy policy used to be under a lot of roofs--over at Interior, at the White House, here in Treasury and elsewhere. But now we are going to integrate all policymaking and implementation under one roof. That is the vital change."

Another vital change is the substitution of Simon's driving administrative approach for the slow, cautious methods of his predecessor as energy czar, former Colorado Governor John A. Love. On Wall Street, Simon throve as a bond trader who regularly had to make quick decisions on deals involving many millions of dollars, with painful penalties for failure. A long-hours man who regularly lunches at his desk (on enormous delicatessen sandwiches), Simon does not believe in large formal meetings that seek to form a consensus among those attending. He prefers to get information and advice from close aides at a series of small meetings and then make the decisions himself.

Hardest Problem. In only about a year in Washington, he has impressed other bureaucrats, Congressmen and oil executives with his quick grasp of complex energy policies, and his appointment brought forth a chorus of praise that he finds almost embarrassing. Says Representative Silvio Conte of Massachusetts, a strong critic of the Administration's energy performance: "Of all the people I have dealt with in 15 years on this problem, Simon is the best. He has a handle on it better than anyone in the Government."

Having got the organization and the man, though, the Administration must still equip itself with an effective energy strategy. Simon promised to get moving on that immediately, pledging a decision by the end of this month on the hardest problem: whether to start gasoline rationing. Some Washingtonians have already concluded that he will say no. Their reasoning: Love is said to have been bounced from the top energy post because, after initial reluctance, he concluded that rationing was inevitable. Also, Simon retains his post as Deputy Secretary of the Treasury. That means that his immediate boss remains Treasury Secretary George Shultz, a free marketeer who is a bitter opponent of rationing.

In fact Simon, though reluctant to opt for rationing, seems genuinely to have an open mind on the subject. Right now the government is reassessing the size of the petroleum shortfall the U.S. will undergo this winter. Official projections of a 3.4 million-bbl.-a-day gap in the first three months of 1974 are based on so-called worst-case assumptions. These include a steady climb in demand, a cold winter and a cutback in Canadian oil exports to the U.S. So far, energy experts note, none of these dire fears have actually come true. In addition, gasless Sundays and other conservation measures outlined by the President two weeks ago could cut deeply into fuel consumption. These measures, coupled with an encouraging shift from oil to coal by several utility companies, lead some Federal officials to feel that the shortfall could be cut to 2.6 million bbl. a day--enough, in his words, to make the difference between rationing and no rationing.

If the gap indeed yawns no wider than that, Simon leans toward a kind of semi-rationing: a system that would allot a certain number of gallons of gas a week to each driver (or car) at taxes no higher than those now in effect but would clamp a heavy "excess-use" tax on purchases above that basic limit. The plan has some advantages over outright rationing. It would assure everyone of a basic gasoline supply while permitting people to choose freely how much they really wanted to drive. It would also produce new Government revenues that could be used to fund mass transit.

A similar excess-use tax might also be imposed on consumers of natural gas and electricity in order to save even more fuel. Under one idea now being considered in Simon's agency, consumption in excess of a certain amount--perhaps 85% of what was used during a base period last year--would be subjected to a heavy impost.

Sharp Rise. Simon nevertheless favors a rise in some fuel prices, both as a curb on burgeoning demand and as an incentive to industry to expand its search for new sources of fuel needed to attain independence from the Arabs and other foreign oil suppliers. But, recognizing that this approach would bring huge profits to the oil industry, he would couple that carrot to a stick: high taxes on any profits over a certain level that were not plowed back into new exploration, new refinery construction or research and development.

If he does decide on such a program, Simon faces some difficulties in putting it across. Congress will be cool to heavy gasoline taxes, to put it mildly. Democratic Senator Henry Jackson of Washington, one of Capitol Hill's most prominent voices on energy policy and a eulogizer of Simon last week, has warned that during the present period of high inflation, Congress would defeat any heavy-tax proposal by a lopsided vote.

Simon's biggest problem may be the one that played a part in bringing John Love down: getting through to the President. Love saw Nixon alone only four or five times during his five-month tenure. Love was supposed to remain a senior energy adviser under Simon, but he angrily quit the Government last week and went home to Colorado, asserting that he had never been able to "get the attention of the President."

Simon asserts that Nixon "fully realizes the gravity of the situation" and says that he has been "assured that we will have access to the President" whenever necessary. Indeed, the self-assured Simon manages to imply that he can make so many decisions himself that frequent access may not even be needed. "It's up to me to assess what is a presidential decision and what is a day-today decision that will take up his time," says the new energy boss.

Perhaps. But many of Simon's confident words sound distressingly similar to language once used by John Love. Even Simon admits that only the President can commit the Government on the most difficult questions, like rationing. Whatever Simon's prowess on the job, the U.S. really has the same energy czar that it has had all along: Richard Nixon.

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