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Avoid complacency from oil glut, experts say. Producers urge US to use cheap-energy `window' to form long-range policy

With energy supplies abundant and prices unlikely to rise dramatically in the coming years, the stage is set for an extended period of security around the world from destabilizing shifts in energy markets. That ``margin of security'' must not be squandered, however, United States energy experts say, but rather used to formulate a comprehensive energy policy for the coming decade. Such a policy should take into account not only energy production and needs, these experts say, but also such factors as national security, taxation, conservation, and the environment.

``The outlook worldwide is for the continuation of a surplus,'' says Daniel Yergin, president of Cambridge Energy Research Associates, in Cambridge, Mass. ``But as we look toward the mid-'90s, our [oil] imports could go up quite substantially, and environmental concerns will grow in importance. In 1989,'' he adds, ``we have a window for thinking in terms of 1995 and 2000.''

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At an annual oil and natural gas conference sponsored here last week by the accounting firm of Arthur Andersen & Co., energy producers, suppliers, and researchers said they were encouraged by the election of a former oilman, George Bush, to the presidency. Most of them added, however, that while they expect the energy sector to be heeded and better understood under Mr. Bush, they do not expect energy to figure at the top of the new president's agenda.

Their hope is that the need for an energy policy is not lost in the complacency brought on by low prices.

``President Reagan was a significant disappointment to this industry, but I believe Bush will be much more of an activist in the energy area,'' says Bud Scoggins, president of the Independent Petroleum Association of America. ``But we have to acknowledge that he'll have other problems higher on his list of priorities.''

Mr. Scoggins and others said they saw good signs in several of Bush's appointments. Former Treasury Secretary James Baker III, named to be secretary of state, also has roots in Houston's energy sector, as does Robert Mosbacher, tapped by Bush for commerce secretary.

Most industry observers here expect oil in the short term to remain in the $15-a-barrel range, despite the recent accord by the Organization of Petroleum Exporting Countries to boost the barrel price to $18. There is some disagreement over prospects for prices and volatility of the market a little farther out.

Right now the world's oil-production surplus capacity is at 10 million barrels a day. Only 3 million barrels of that surplus capacity is outside the Middle East. Scoggins is one who sees potential danger in that fact.

``The Mideast always has been an unstable area, and at some point in the next four years I think we're going to see the unexpected occur,'' he says. ``After so many bad years in our industry, we don't have the infrastucture left to respond.''

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The US imports about 41 percent of its oil; some experts predict that could rise to 50 to 60 percent by the mid-1990s. The number of independent producers in the US has fallen from 165 in 1985 to 117 in 1987.

But many others don't agree with Scoggins, stating that the Middle East appears more stable than 15 years ago. They add that the small effect the Iran-Iraq war had on the oil market indicates, in any case, the reduced threat from Mideast turmoil.

``What's the scenario that would lead to the cutoff of Mideast oil?'' asks James Miller, former director of the Office of Management and Budget, and a chief advocate under Mr. Reagan for low energy prices. ``I don't see the likelihood of any cataclysmic event. And even if it occurred, we'd be able to respond better than we did [to the oil embargo] in 1973.''

Any talk of new or higher taxes on energy consumption is not greeted warmly among this group. But word that some members of Congress are suggesting a 10- to 20-cent increase in the federal gasoline tax, now at nine cents a gallon, to help trim the budget deficit - as did US Rep. Dan Rostenkowski (D) of Illinois, chairman of the House Ways and Means Committee, last week - raises the prospect of new incentives for domestic oil and gas exploration.

``I'm certainly not advocating'' a gas-tax increase, says Robert P. Hauptfuhrer, chairman and chief executive officer of Sun Exploration and Production Company. ``But if it happens, I'd like to see some small part of it recycled back to the production end of the industry.''

Each penny hike in the tax would generate about $1 billion. Mr. Hauptfuhrer says a half-cent of any total increase, or $500 million, ``seems reasonable'' to dedicate to offsetting tax credits for oil and gas exploration - ``especially when we just extended $3.5 billion to Mexico largely because of low oil prices.''

Oil executives like Hauptfuhrer would like to see new tax incentives, such as George Bush alluded to during the presidential campaign, part of any national energy policy. But there are other points they consider just as important:

Deregulation of natural gas transportation and use. Still abundant in the US, and preferable in its effect on the environment to other energy sources, natural gas now makes up 19 percent of US energy use. With deregulation that could climb to 26 percent, studies suggest; otherwise it could drop to 17 percent.

Access to public lands. Hauptfuhrer and others say the industry's record in developing environmentally sensitive areas has been good, so exploration and production in the Alaska Wildlife Refuge and off the California coast, for example, should be allowed.

Research and development. Technologies developed over the past few years have already proved that many of the nation's mature oil fields can still produce profitably, even during a low-price era. More research is also needed in cleaner and more efficient energy production and use.

Energy conservation. ``In the 1970s and early 1980s, security and cost were the driving forces for conservation,'' Mr. Yergin says. ``In the 1990s environmental concerns could provide the driving rationale.''

Filling the nation's Strategic Petroleum Reserve, from its current 500 million barrels to about 750 million barrels.

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