U.S ENERGY SECRETARY PROPOSES OIL TAX INCENTIVES

  Energy Secretary John Herrington
  said he will propose tax incentives to increase domestic oil
  and natural gas exploration and production to the Reagan
  Administration for consideration.
      "These options boost production, while avoiding the huge
  costs associated with proposals like an oil import fee,"
  Herrington told a House Energy subcommittee hearing. "It is my
  intention to submit these proposals to the domestic policy
  council and the cabinet for consideration and review."
      He said proposals, including an increase in the oil
  depletion allowance and repeal of the windfall profits tax,
  should be revenue neutral and promote domestic production at
  the least cost to the economy and the taxpayers.
      "The goal of the Administration policies is to increase
  domestic production. I would like to shoot for one mln barrels
  a year."
      The proposals were based on a DOE study released yesterday
  warning the United States was threatened by a growing
  dependence on oil imports.
      "We project free world dependence on Persian Gulf oil at 65
  pct by 1995," Herrington said.
      He said it was too soon to say what the Administration
  policy on oil tax incentives would be and indicated there would
  be opposition to tax changes.
      "Of course, to move forward with these kinds of options
  would require reopening tax issues settled last year (in the
  tax reform bill) -- an approach which has not, in general, been
  favored by the administration. I think what we need is to
  debate this within the Administration," he said.
      He said the proposals might raise gasoline prices.
      Herrington did not specifically confirm a report in today's
  Washington Post that he had written to President Reagan urging
  an increase in the oil depletion allowance.
      Asked about the report by subcommittee members, Herrington
  said various proposals were under consideration and would be
  debated within the Administration to determine which would have
  the most benefits at the least cost.
  

