April 11, 1986
By Milton R.
A SIX-POINT STRATEGY FOR ENJOYING LOW
before OPEC's extortionist oil prices. Now at last, the U.S.
enjoying the plunging prices at the gas pump and business is
the benefits of the oil price fall that forecasters are raising
Regrettably, of course, every silver lining has a cloud. Low
pain on U.S. oil producing regions. Experts caution that a
extended period could threaten the nation's energy industry and
halt. In addition, imports from Saudi Arabia have climbed from
Aggressive Saudi Arabian price cutting could wipe out
low Saudi prices force American drillers to abandon their
other high-cost wells. This could leave the U.S.
preserved, many proposed "solutions" would undermine the
Calls for an oil import tax are one example of grievously
and would send a shock wave through the economy, slowing growth.
could absorb an import fee and still undersell U.S.
Yet actions could be taken to enhance U.S. energy security
responding to the new era of lower and fluctuating world
1) Waive regulations that lead to early abandonment of
ceases production for more than 60 days to relinquish his lease
with concrete, often making it very uneconomic to restart the
Texas and Oklahoma already have modified some of their rules.
allow marginal producers to halt production only as long as the
their wells. This would give the U.S. a reserve of wells that
at any rate, the U.S. Treasury will collect no revenue from this
the tax law--as much as $1 per barrel for a small producer.
3) Restore the depletion allowance to its pre-1969 level. It
had and would spur new drilling.
4) Eliminate the minimum tax on so-called intangible
available to producers from oil well by-products, giving an
Strategic Petroleum Reserve. Allowing domestic producers to bid
again become vulnerable to the OPEC cartel. These dangers cannot
prices. To confront the danger effectively, the White House
premature abandonment of marginal wells. So doing would allow
flirting with either renewed dependency on the Middle East or
Senior Policy Analyst
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