A Federal Oil Firm

U.S. oilmen find much to fret about these days: congressional pressure to end the depletion allowance and lucrative foreign-tax write-offs, calls for a rollback of domestic oil prices and growing resistance to offshore drilling. Still, nothing bothers them more than the possibility that Government might not only increase its intervention in the oil industry but actually decide to get into the business itself.

This week Illinois Democrat Adlai Stevenson III plans to introduce in the Senate a bill calling for creation of a National Energy Supply Corp. Its purpose: to operate alongside existing energy firms and offer the public a "yardstick" by which to realistically gauge the industry's prices, profits and overall performance. The notion of a federal oil firm is likely to be given an even stronger push by another bill, also scheduled to be put forward in the Senate this week, by the current front runner for the Democratic presidential nomination, Washington's Henry M. Jackson. His legislation would create a National Energy Production Board with a big mission: it would attempt to mobilize public and private resources on a grand scale to bring about a dramatic increase in domestic production of oil and natural gas.

The plans in detail:

STEVENSON'S YARDSTICK: The Government-owned National Energy Supply Corp. would gradually get into the full range of oil and natural gas exploration, development and production. The NESC would be given first crack at development rights for up to 20% of any Government-owned oil or natural gas tract on land or offshore. The corporation would produce some fuel for Government stockpiles and sell the rest to independent oil firms--at prices that would aim to stimulate competition in the industry. The NESC would not market its oil and natural gas at below cost, but it would keep its profit margins low, in line with an overall mandate to reduce domestic fuel prices for consumers.

JACKSON'S MOBILIZED The National Energy Production Board would be empowered to develop oil and natural gas on public lands, but its main purpose would be to organize and speed up exploration and production efforts by all U.S. oil enterprises. Jackson believes that a crash effort is needed to develop domestic oil resources, between now and 1985, when investments in nuclear plants and other alternate sources begin to yield energy dividends. He envisions an energy superagency that would establish priorities, let huge contracts and even set up new companies for specific jobs. The aim of the board, says Jackson, "would be to help us mobilize like we did in World War II."

Opposing federal intervention, oilmen argue that government oil firms in European countries, like France's Compagnie Franchise Des Petroles, have not been spectacularly successful at developing new production. A U.S. federal energy corporation, they say, could not add much to private industry's expertise in exploration and production. At the same time, oilmen raise the specter of socialism. "What comes next?" asks Frank Ikard, head of the American Petroleum Institute. "How about a Federal Livestock Corporation? Or a Federal Iron and Steel Corporation?"

The most controversial argument for a bigger Government role is Jackson's complaint that private companies have not developed the U.S.'s domestic energy resources as vigorously as they could have done. The industry replies that it has been hampered by several factors, including environmental concerns that in some areas have forced companies to go so far as to disguise their drilling rigs as tall buildings. In the future, Congress and the companies will certainly be debating the charge that the industry could have found and pumped more oil. Meanwhile, whatever their specific merits, the Jackson and Stevenson bills will help give some shape to the growing debate over how, and how far, Government power should be used to help the U.S. move toward its goal of energy independence.

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