A Soft Alternative

After much internal struggle and strain, the Democrats managed last week to produce their long-awaited " alternative" to President Ford's price-oriented energy program. The plan, drafted in haste by ad hoc task forces from both Houses of Congress, led by Rhode Island Senator John Pastore and Texas Representative James Wright, had both practical and political purposes. First, it was intended as a guide for Democrats on various committees drafting energy legislation, although it is not binding upon them. Second, and more important, it was to serve as the Democrats' bargaining position in working out energy policy differences with the White House.

The Administration and Democrat ic programs were far apart in many ways. President Ford's program is ex pensive, tough and urgent: it calls for a combination of tariffs, excise taxes and deregulation of domestic-oil and natural-gas prices in order to raise energy costs enough to force a 1 million-bbl.-per-day reduction in oil imports by the end of the year. One main aim: to in crease economic pressure on the OPEC oil cartel by encouraging stringent energy conservation efforts in other oil-consuming countries.

The Wright-Pastore program, by contrast, is mild. Its main goal: to stimulate energy conservation over the long term but avoid any action on the price or availability of oil that might damage prospects for a turnaround in the U.S. economy. The Wright-Pastore conservation target is exactly half as ambitious as Ford's--an oil-import reduction of 500,000 bbl. per day in the first year.

Like the Ford program, the Wright-Pastore plan calls for measures to reduce energy consumption over the long term, such as incentives to improve insulation of private houses. But unlike Ford, the Democrats would focus the U.S. conservation effort on cars, which account for 40% of all petroleum consumption. They would require increases in gasoline mileage of 50% by 1980 and 100% by 1985; graduated excise taxes and rebates pegged to fuel efficiency would be imposed on new cars. A 5-c- increase in gasoline taxes would be enacted to provide revenues for an energy trust fund that would develop coal gasification and liquefication plants and other energy sources. A broadly powered National Energy Production Board of the kind favored by Washington Senator Henry M. Jackson would be established to direct U.S. energy development.

Seeking Toughness. The main complaint that Ford and his advisers would probably make about the Wright-Pastore program is that it does not promise to cut U.S. oil imports sharply enough. As it happens, the feeling is shared by at least one powerful Democrat, House Ways and Means Committee Chairman Al Ullman. The Wright-Pastore plan, he says, is "a Milquetoast program that doesn't do anything. Our position has to be tougher, much tougher."

Ullman is trying to line up congressional support for his own program, which includes a tax, rising from 100 to 400 per gal. in four years, on gasoline purchased in excess of a basic weekly allotment per vehicle. The Ullman plan also incorporates a cleverly simple tactic for dealing with the oil-cartel countries. Under the Ullman plan, the Government would set a quota on oil imports and create a United States Purchasing Agency that would buy all the oil brought into the country. Sellers would submit sealed bids quoting their prices per barrel, and orders would be given to the lowest bidders. The theory is that some of the 13 members of the producers' cartel, worried about the growing glut of oil on the world market and unhappy about having to reduce production as a result, would be tempted to undercut the cartel price.

This tactic is similar to one proposed by M.I.T. Professor M. A. Adelman, who suggests that the U.S. periodically auction off a limited number of import licenses to the highest bidders; the winners would be paying for the right to sell oil to the U.S. at the world price. Cartel members who buy licenses secretly through front men would in effect be giving the U.S. Government rebates on oil purchases. Producers boycotting the U.S. auction would have to dump their oil elsewhere, thus depressing the world price. The intended result of both these schemes: to encourage the kind of cheating by the producers on established prices and policies that could crack the cartel.

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