Senate Rejects Oil States’ Import Fee Plan

The Senate voted 55 to 41 Wednesday to strip from the omnibus trade bill a provision requiring the President to impose an oil import fee or import quotas whenever the United States seems ready to import more than half the oil it consumes.

The action, the first taken by the Senate on a key provision of the mammoth package, was a direct defeat for Finance Committee Chairman Lloyd Bentsen (D-Tex.) and for the beleaguered domestic oil industry.

The vote split along regional lines, with agricultural states and the industrial Midwest and Northeast pitted against the oil-producing states and their Sun Belt allies in the Southeast. It was a victory for the Reagan Administration, which, while warning about the increasing reliance on foreign oil, has opposed measures that would cause higher energy costs for American consumers and businesses.

‘Special Interest Legislation’

Import quotas are “special interest legislation at its worst . . . a backdoor way to ram through an oil import fee,” charged Howard M. Metzenbaum (D-Ohio), a leading opponent of the measure, in urging the provision’s defeat.

Bentsen and his allies posed the issue primarily as one of national security, claiming that the proposal was designed to force the Reagan Administration to devise an energy policy where none exists today.

“We say get off the dime,” Bentsen declared. “Give us an energy policy. We can’t have a foreign policy jerked around by the Emir of Kuwait.”

Currently, the United States imports about 38% of its oil, up from 27% only a year ago. An Administration study earlier this year projected the United States would reach the 50% level between 1990 and 1995.

Under Bentsen’s provision, the Administration would have been required to estimate U.S. oil import needs three years in advance and to impose a fee, quota or other plan as soon as 50% foreign imports were projected. The step or steps chosen to curb imports would have been subject to congressional veto by a two-thirds vote.

Would Expand Exploration

An import fee or quota would have the effect of forcing up the price of imported oil, allowing the U.S. oil industry to raise its prices and providing a greater incentive for expanded production and exploration. The latter have slumped since the world oil price collapse last year, severely damaging the economies in oil states.

Opposition to the measure was championed by Sens. Bill Bradley (D-N.J.) and Bob Packwood (R-Ore.), the ranking Republican on the Finance Committee and co-manager of the 1,000-page trade package now awaiting action on the Senate floor.

Bradley charged that forcing the President to impose oil import measures would be tantamount to ceding him new powers--”an abdication of responsibility” by Congress, he said. Bradley dismissed fears of renewed Middle East control of U.S. oil supplies by noting that no more than 10% of U.S. oil supplies now come from the Persian Gulf.

He added that in the Bentsen proposal, “there is nothing to counteract the sort of economic nightmare we encountered in the 1970s,” when the Organization of Petroleum Exporting Countries cut back oil production, causing severe shortages.

$200-Billion Cost

The Administration joined non-oil state senators in complaining that the 50% import ceiling was purely arbitrary and that a 10% import fee would cost the economy up to $200 billion over eight years by absorbing disposable income that consumers and businesses could spend in other ways.

In its proposals for cutting foreign oil reliance, the Administration has called for deregulation of the natural gas industry, regulatory changes to revive the dormant nuclear energy industry and accelerated offshore and Arctic drilling.

Bentsen conceded after the vote that no plan like his would be likely to succeed without Administration support.