ENERGY : Options for Overall Strategy Await Bush’s Consideration

The Bush Administration’s long-running effort to forge a national strategy to assure a stable, safe and adequate supply of energy enters a decisive phase this week.

After nearly two years of protracted skirmishing among an array of warring interests, the Economic Policy Council and the Energy Department today will deliver a package of about 60 energy option papers to President Bush.

The policy alternatives were distilled from competing proposals put forward by oil, gas, coal and nuclear power industries, auto makers, other manufacturers, conservationists, consumer groups, industrial-policy enthusiasts and free-marketeers, to name a few.

From these “illustrative packages of options,” as Energy Secretary James D. Watkins calls them, Bush must choose a coherent assortment of elements.

Current planning is for Bush to mull the energy options until next month and then incorporate the final decisions in the budget package to be presented to the new Congress in February.

BACKGROUND: Watkins took up the task of preparing a national energy strategy when he joined the Cabinet in March, 1989. The goal, unchanged by the Persian Gulf crisis despite the sense of urgency it brought about, is to develop a comprehensive set of options balanced among competing needs of supply and demand, growth and conservation, by the end of this year.

By August, when Iraq’s invasion of Kuwait raised a specter of a 1970s-style energy panic, the Energy Department had almost finished drawing up its basic options--67 to 70 separate proposals, developed from some 2,400 backup documents. Starting in late October, Watkins and Linda Stuntz, assistant undersecretary for policy and planning, began presenting the options to members of the Cabinet-level Economic Policy Council. The suggestions have undergone extensive revision.

The council has held at least three full-dress meetings. The most recent session, held last Wednesday, witnessed another clash between supply-siders and conservationists.

Sources said White House Budget Director Richard G. Darman and Housing Secretary Jack Kemp took the lead in fighting proposals to impose new regulations on industry and levy new taxes on energy. Environmental Protection Agency chief William K. Reilly was said to be virtually the only backer of Watkins’ bid for more balance between production and conservation.

ISSUES: The scope of the options to be presented to the President remains under wraps, but their main thrust has been widely reported:

--Incentives to expand oil and gas production. These include tax credits and proposals to open federal wilderness areas, especially the oil-rich Arctic National Wilderness Refuge and parts of the Outer Continental Shelf, to exploration and production.

--Streamlined regulations to ease construction and commissioning of new nuclear power plants and new natural gas pipelines.

--Tax credits and similar incentives to encourage expansion of renewable energy sources, including visionary solar and wind power schemes as well as more mundane plants that generate energy from incinerated trash.

--Incentives to promote alternate-fuel motor vehicles, which would run on mixtures of gasoline and methane or ethanol, on compressed natural gas, or electricity.

--Federal efficiency standards for appliances, certain types of industrial machinery and newly constructed commercial and residential structures.

--Higher excise taxes on gasoline, along with other consumption deterrents, such as higher excise taxes on gas-guzzling autos and tax credits to encourage production and purchases of more efficient cars and trucks.

OUTLOOK: Some kind of program setting forth an Administration energy policy is likely to emerge early next year. Whether the policy will be considered credible and politically viable is less certain. It is highly likely, however, that most of the contending forces that have vied so far to make an imprint on the policy will be unhappy with at least part of it.