President Reagan, in a token gesture of concern for states hurt by declining oil prices, said Tuesday that he will support legislation to accelerate the repeal of the windfall profits tax on the oil industry, which is now scheduled to be phased out beginning in 1991.
Reagan made the pledge in a meeting with five congressmen from some of the hardest hit states, Texas, Oklahoma and Wyoming. They emerged from the White House praising Reagan even though repeal of the measure will offer no immediate economic relief to their states because there are no profits to tax.
Rep. Bill Archer (R-Tex.), calling the meeting "extremely beneficial," said Reagan "shares our concern and understands the national security implications" of encouraging domestic oil production.
Archer said repeal of the windfall profits tax would lift "a very large administrative burden" on the oil industry and encourage future oil exploration.
White House spokesman Larry Speakes said that providing additional incentive to explore was a key factor in Reagan's decision. It will mean "one less barrier to exploration in the future. If you find something, you don't have to give your money away," he said.
Rep. Dick Cheney (R-Wyo.) said Reagan also reiterated his opposition to any new taxes on the oil industry being included in tax reform legislation. Reagan did consider an oil import fee earlier this year but eventually ruled it out despite considerable congressional pressure for such a revenue raiser.
Tuesday's announcement provided Reagan with a vehicle to relay his concern for the plight of the oil states without aligning himself too closely with the industry--thereby allowing him to sidestep a political mine field that Vice President George Bush walked into last month.
"It's a little thing to be able to toss to the energy-producing states at a time when it doesn't cost anything," said one White House political adviser, who spoke on the condition that he not be identified.
Bush, before embarking on a recent tour of the Middle East, expressed concern for the U.S. oil industry in comments that prompted speculation that the Administration was ready to abandon its free-market policy to set higher oil prices artificially.
In responding to the pleas for help from the oil industry, Reagan also repeated his commitment to the deregulation of natural gas and pledged his willingness to consider measures designed to preserve the viability of marginal production wells known as stripper wells.
But a White House statement stressed that Reagan's intervention had definite limits: "While the President remains concerned about our energy security, he reaffirmed his belief that lower energy prices are of great overall benefit to the American economy."