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Why did Carter propose letting higher taxes rather than higher prices discourage energy consumption? The obvious answer: to prevent oil companies from making windfall profits. In his press conference, he noted that the oil companies, under his plan, will have to report their profits in each geographical area and for each type of fuel they produce. That, he said, might well disclose anticompetitive practices that the Government could then use to prosecute the oil companies under the antitrust laws, and perhaps avoid any necessity of breaking up the companies or making them get out of non-oil energy fields, such as coal or nuclear power. This stand marked a softening of his position from the campaign: Candidate Carter said he would probably favor making the oil companies split off marketing activities and get out of non-oil businesses.
Is there a compelling alternative to the Carter program? Many parts of the plan—the stand-by gasoline taxes, the moves to push industry toward using coal—make sense. Moreover, a Democratic President cannot be expected to ask a Democratic, heavily liberal Congress for immediate decontrol of oil and gas prices that would indeed allow oil companies to make enormous profits. Aside from the political realities, such decontrol, as Carter noted, would give the economy an inflationary shock that it could not readily absorb.
But there could be another way: a phased decontrol that would allow prices to seek their own level—and discourage consumption—without dealing too great an inflationary blow in any one year. The Government could ensure that the profits oil companies make from higher prices would be devoted to exploration and development of new fields by placing a tax on any earnings that were not —with the proceeds to be devoted, perhaps, to joint federal-private exploitation of resources that are particularly difficult and expensive to tap, such as those lying under water on the outer continental shelf. The impact of rising prices on the poor could be offset by a system of federal gasoline and heating stamps, similar to food stamps. This proposal was rejected as too cumbersome.
Whatever the plan's shortcomings, even its critics give Carter the highest marks for focusing national attention on the problem, for ending the period of inertia and corridor infighting within the Administration, and for opening an intense, even vehement, national debate.
It is just possible that out of this debate will come a new partnership between Government and business, closer than Carter himself has proposed. An articulate advocate of such an approach is Thornton Bradshaw, the thoughtful president of Atlantic Richfield. Despite his belief in capitalism, Bradshaw contends that the U.S. does not enjoy a totally free market in which competing and countervailing forces work, as Adam Smith would have it, for the ultimate benefit of the consumer. Instead, the U.S. already has developed an only partially free market characterized by a unique blend of private and Government forces.