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Show Western Resources Oil shale ' By Helene C. Monberg ,. hin?ton-Lessees of the four detracts in the West and Irs interested in oil shale opment cannot count on much Sid in the near term, including a SIS credit on shale oil. -rlafs the outlook as Congress gets T fnr its August break, despite the Snt's announcement July 15 that Li L submitting to Congress a 10- ar dan to make this nation less indent on foreign oil. The very Srt of his plan was an $88 billion Sum to assure the production of 2.5 million barrels of synthetic fuels (syn-i (syn-i ki a day by 1990 thru the establish-t establish-t oa trust fund thru which an energy Security Corporation would get shale oil and other syn-fuels development develop-ment going. V, syn-fuels program was to be funded thru a windfall profit tax on the etroleum .industry. The Administration Ad-ministration also offered other incentives in-centives to energy companies to move 1 ahead on syn-fuel development, in-' in-' duding the $3-a-barrel tax credit on '. stele oil. "There has been a 180-degree turn in : congress since the House passed the : Moorhead syn-fuels bill in late June," a ' congressional aide who has been ; watching syn-fuels developments in 1 Congress told Western Resources Wrap-up (WRW) this week. That is a ! commonly held view by most ob- servers. As the lines in Gasoline station '' shortened, Congressional interest in 1 syn-fuels developments markedly '' HOUSE PASSES THREE BILLS The House has passed three bills in ,! the past five weeks which could provide r: some aid to oil shale developers. The s first was the Moorhead bill (3930), an a amendment to the 1950 Defense it: Production Act, reported out of the if House Banking Committee with a lone dissenting vote on May 8. It passed the . House on June 26 at the height of the gas . shortage' by a vote of 368-25. It j. authorizes $3 billion to encourage the ,', production of 500,000 barrels of syn-,j syn-,j Ihetic fuels by 1985 and an additional 2 :b million barrels a day by 1990 by the U .government purchasing syn-fuels for t, national defense purposes. Q The Moorhead bill provides in-centives in-centives to industry thru price supports, (! direct loans and guaranteed loans to u build commercial syn-fuels plants. It Ik gives the President standby authority i, oorjanize'government corporations to produce syn-fuels if private industry is not able to meet the production goals set forth in the bill, subject to a 60-day one-House-of-Congress veto. The syn-fuels syn-fuels would be used by the government, notably the Department of Defense, with any excess transferred to the rational stockpile or. to the strategic pptroleum reserve. Rep. James H. Quillen, D-Tenn., summed up the. purpose of the Moorhead bill during House debate on , ; Jw 2R: "During the Second World Hi, War when we ran out of natural rub-g rub-g er...the government started a massive iriJ Warn for synthetic rubber. Within a r e months we had a synthetic rubber that look care of our needs during the , w yearsand is taking care of our edsnow...Go back to another project )f wing the war when the Manhattan s,, Project was conceived at Oak Ridge p "em).. .Thru a massive effort this , : rnuntry developed the atomic bomb, it When hydrogen bomb later.. .We can , c nto our shale deposits. We can "Aee shale oil and refine it into ,ar to meet our needs. We can I. I ale chem'cal synthetic feed stocks. :' B create synthetic fuels from "' I " ;rh's country can do whatever it r'i'wsetourmindstoit." hi USe Inte"or Department IK lled $1.5 billion to implement the Moorhead bill when the funding bill passed the House on July 30 by a 344-42 vote. The money is to be used "for the purchase or production of synthetic fuels and synthetic chemical feedstocks" feed-stocks" but not for construction of syn-fuels syn-fuels facilities. Under a clarifying amendment that he worked out with the Office of Management and Budget, Chairman Sidney R. Yates, D-Ill., of the House Interior Appropriations Subcommittee told the House the money would come from an energy trust fund, if one is established by other legislation, otherwise out of general appropriations. In line with the Administration's original budget request in January, HR 4930 contained $27 million for oil shale research and development, including continued evaluation of retorting concepts and . shale oil processes and continuing studies on environmental, health, safety and socio-economic aspects of oil shale development. Reps. Gunn McKay, D-Utah,'and Joseph M.McDade, R-pa and others had originally proposed' within the House Appropriations Committee adding $7.5 billion authorized in the Moorhead bill to $25 billion. Their plan was abandoned in the face of a procedural challenge to it as being authorizing legislation in a funding bill. WINDFALL PROFIT TAX AND TAX CREDIT The House passed by voice vote and sent to the Senate on June 28 a bill (HR3919) imposing a 60 percent windfall wind-fall profit tax on increases in domestic crude oil prices resulting from deregulation of crude oil and from excessive increases in world oil prices mandated by OPEC. Revenues from the tax would be placed in an energy trust fund to finance programs, including in-cluding syn-fuels development, to ease the energy crunch. The House-passed bill ends the tax in 1990. The Administration wanted and the House Ways and Means Committee recommended that the tax be made permanent. The oil industry opposes the tax. The House was told during debate it would raise an additional $40 billion in taxes thru 1984 and about half that amount in the calendar years 1980-82. The Senate Finance Committee started mark-up of HR 3919 on August I. The tax is figured on a very complicated com-plicated three-tier formula which is hard for the tax experts staffing the Joint 'Committee on Taxation to ex- plain. Questions about the tax itself and its intended purpose-to get a syn-fuels program underway-were raised not only by Chairman Russell B. Long, D-La., D-La., of the Senate Finance Committee, but also by several other Members, including Herman Talmadge, D-Ga., A. A. Ribicoff, D-Conn., MikeGravel, D-Alaska. D-Alaska. Spark M. Matsunaga, D-Hawaii, D-Hawaii, and Bob Packwood, R-Ore. It appeared to this WRW correspondent and to others who attended the first mark-up session that this bill will undergo un-dergo many changes before it clears the Senate Finance Committee and goes to the Senate in the fall. The House Ways and Means Committee Com-mittee started mark-up on July 31 on the Administration's proposal to provide tax incentives to increase energy production. They include a tax credit of $3 a barrel on shale oil which is domestically produced up to year 2000. It could be phased out earlier as the price of imported oil, adjusted for inflation, in-flation, roseabove$22 a barrel, phasing out completely when the adjusted price exceeded $27.56 per barrel. Cost of the proposal in taxes foregone is estimated at about $1 billion. The oil shale industry, in-dustry, when asked by Rep. James P. Johnson, R-Colo., last year as to what incentive would most likely stimulate oil shale development, replied unanimously: the $3-a-barrel tax credit on shale oil, Johnson testified before House Ways and Means on July 24. And the $3-a-barrel tax credit has widespread support among the Members of Congress from Colorado, Utah and Wyoming, where the bulk of our oil shale deposits are located. But Ways and Means gave a hard time to the various proposals on July 31, and the mark-up was suspended. |