n025  0948  16 Mar 81
PM-OIL
By SHEILAH KAST
Washington Star Service
    WASHINGTON - The oil industry is caught in a fierce debate over how
far market forces can go in handling an oil shortage, but it seems to
voice little objection to a whole range of government interventions
that do not involve price controls or allocation regulations.
    At the center of the debate is a report approved last week by the
emergency preparedness committee of the National Petroleum Council,
an industry-dominated advisory committee to the Energy Department.
    Because DOE has fallen far behind schedule in drafting its own
contingency plan for an oil cutoff - and has only slim chances of
developing an adequate plan in the near future, according to a recent
General Accounting Office assessment - the National Petroleum Council
study may well become the core of the government's plan.
    The impact of the study is strengthened by its emphasis on allowing
the free market a''to operate to the maximum extent'' during a
shortage, a policy which parallels the one Energy Secretary James B.
Edwards has told several congressional committees he hopes to install.
    The study calls for no government price or allocation regulation if
imports are cut less than 2 million barrels a day - about one-third
the current import level and a far greater cutoff than the 1973-74
Arab oil embargo. If the disruption reaches 2 to 3 million barrels a
day for six months or more, the study says the government should
allocate oil among refiners and marketers, ahould consider limiting
refiners' profit margins.
    At the same time, the study outlines dozens of voluntary and
government-mandated actions aimed at reducing oil use or increasing
U.S. production. The committee stressed that it was merely describing
and not recommending some of the more controversial strategies, such
as cutting back the work week from five to four days and eliminating
discretionary flights by private airplanes.
    Some of the strategies, such as banning all sales of fuel on
weekends (at a saving of 240,000 barrels of oil a day) clearly would
require a government order.
    Others, such as putting half the drivers of cars into carpools
(380,000 barrels a day) or eliminating some little-used airline
flights (85,000 barrels a day) would not be effective unless the
government accomplished an aggressive public relations or
''jawboning'' campaign.
    The tourism, trucking, aviation and other industries that would be
hurt by some of the strategies already have started trying to
convince the NPC that they violate market principles, and are
expected to lobby the Reagan administration also.
    Among the biggest oil savers outlined in the report would be
emergency increasing in oil production (about 300,000 barrels a day)
and switching utility and industrial boilers from oil to natural gas
and coal (up to 70,000 barrels a day).
    Although the committee said it would probably be necessary to relax
standards for clear air and nuclear safety, it identified few oil
savings in those areas.
    While the Reagan administration is likely to favor strategies such
as amending the Fuel Use Act to permit electric utilities to burn
more natural gas, it is likely to look askance at others, such as
reducing the speed limit to 50 miles per hour.
    The president of the industry's major union, the Oil, Chemical &
Atomic Workers, Robert F. Goss, attacked the committee's reliance on
rising prices to pinch off demand, saying that approach would result
on enormous windfalls to the oil companies.
    ''Dependence on market forces is another way of saying, 'Let's push
up the price of oil until the average citizen cannot afford to buy,''
Goss said. ''This is rationing by the size of the pocketbook.''
    Goss, a member of the emergency preparedness committee, said he
favors a coupon rationing system instead, an idea already rejected by
the Reagan administration. Goss and other members of the committee
disputed the report's optimism that billions of dollars in higher oil
company revenue could be quickly recycled through the federal
windfall profits tax to help poor people pay their higher fuel bills.
    Goss cast one of three votes against the report. The other two nays
came from the opposite direction - refining companies who object to
the study calling for any government price or allocation controls, no
matter how great the shortage.
    ''The report is saying the government will more rapidly correct the
problem (caused by a severe shortage) than the market will,'' said
Sidney R. Petersen, chairman of the board of Getty Oil Co.
    ''We don't agree with that,'' he said.
    Edward T. Dicorcia, vice president for supply of Exxon USA and
a middle-of-the-road approach.
    The GAO, in a study requestd by Sens. Edward M. Kennedy, D-Mass.,
and Charles Percy, R-ill., said poor organization at the energy
Department has held back contingency planning.
    
    
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