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Carter claimed that his program would ensure that "the American people are not robbed" but would also provide adequate incentives to the oil companies to find new fields and produce more fuel. His plan would tax oil at the wellheads so as to raise retail prices to the world level set by the oil-producing cartel (OPEC). Under the Carter plan, most of the wellhead tax would be rebated to consumers. The oil and gas companies would also like to see domestic oil prices rise to world levels, but they object to the wellhead tax and rebate plan. They want to retain all of the proceeds from the higher prices—not to keep profits high, they insist, but to finance the ever growing cost of exploration.
One possible alternative to the Administration and the industry proposals has been offered by Senate Finance Committee Chairman Russell Long. He proposes the creation of what amounts to an energy trust fund, under which the Government would impose a wellhead tax and then use the revenue to stimulate new exploration and development of alternative energy sources by the oil industry. Last week, however, the Finance Committee scissored the entire wellhead tax scheme out of the bill. Instead, it proposed a $32 billion package of tax credits and grants, to be financed directly by the Treasury, that would aid industry in converting from oil-heating systems to coal-fired units; it would also help to finance the development of unconventional energy sources like shale oil.
Despite the Finance Committee's action, the wellhead tax is not dead. The House has approved the tax, and when the House-Senate conference meets, it may well be resurrected. What form it might take is anybody's guess. The conference could adopt Carter's rebate plan, Long's trust-fund scheme, or, what seems to many observers to be the most sensible compromise of all, a plan to rebate some of the money to consumers and some to the oil and gas companies.
To buttress the case for his own scheme—and against the oil industry's proposals—the President threw out some dramatic figures during his press conference. He said that in 1973, just before OPEC imposed its oil embargo and sharply raised prices, U.S. oil and gas companies had an income of $18 billion. Under his proposal, Carter said, that figure would rise to $100 billion by 1985—"an enormous increase." But, he said, the oil and gas companies are demanding legislation that would yield $150 billion in revenues by the same year. That $50 billion difference, Carter insisted, "will come out of the pockets of the American consumer and go into the pockets of the oil companies themselves." Said Carter: "Our proposal, if adopted, would give the oil companies the highest prices for oil in all the world. But still they want more." Carter also estimated that if natural gas prices were to be deregulated, the price would multiply to 15 times what it was in 1973.