WATCHING WASHINGTON THE POLITICS OF AN OIL IMPORT FEE

Independent producers should do a little reading before they get too excited about the possibility President Clinton might propose-and Congress might accept-an oil import fee.

They might start with issues of Oil & Gas Journal during March-June 1980.

The Independent Petroleum Association of America has decided to urge Clinton to seek a tariff on imported oil, either as part of a tax package or under his powers in Section 232 of the 1962 Trade Expansion Act (OGJ, Jan. 18, p. 16).

CARTER'S FEE

In 1980 another Democratic president, Jimmy Carter, discovered the hard way that Congress detests an oil import fee.

Carter used his trade act powers to impose a $4.62/bbl fee on imported crude and a $4.20/bbl tariff on gasoline.

The fee, which would have raised an estimated $10 billion/year and cut consumption 250,000 b/d within 3 years, would have ended when Congress approved Carter's proposal for a 10cts/gal gasoline tax increase.

But the tariff enraged U.S. refiners and many congressmen. Northeastern legislators were particularly concerned that the tax might slip onto home heating oil.

Members of one House subcommittee were so angry they cited Energy Sec. Charles Duncan for contempt of Congress after he failed to give them documents regarding the tariff. Duncan avoided jail through a deft compromise.

Meanwhile, Marathon Oil Co., gasoline dealers, and consumer groups sued to block the tariff. A Washington, D.C., federal judge quickly ruled the import fee was illegal, saying it was a revenue raising measure disguised as a conservation measure.

While that ruling was on appeal, Congress buried the issue for good. It overwhelmingly passed a bill to kill the tariff, and when Carter vetoed that bill, the House voted 335-34 and the Senate 68-10 to override the veto.

Several independents again raised the banner for an oil import fee after the brutal mid-1980s oil price plunge because the Trade Expansion Act allows such tariffs for national security reasons.

The free market Reagan administration stalled on their petition for months. In its final days, the Reagan administration finally issued a report admitting that increasing oil imports threaten national security but rejecting a tariff as unwarranted. Incoming President Bush ignored pleas that he reconsider Reagan's decision.

LOBBYISTS' VIEWS

"I can't see how the politics of an oil import fee have changed since the last time around," one Washington oil lobbyist said last week.

Another declared, "An import tariff would be a very tough sell in Congress. There would have to be many exemptions. It already has the business community split in a half dozen directions. And it would conflict with various trade agreements.

"Yes, my company wants stable prices, but it's very difficult to see how an oil import fee would get you from here to there."