Price Controls on Heavy Crude Oil White House Statement.

The President today acted to lift price controls from expanded volumes of heavy crude oil production. By signing an amendment to Executive Order 12153, the President decontrolled, effective immediately, heavy crude oil with an average specific gravity up to 20.0° API. In taking this action today, the President expressed his deep appreciation to Senator Cranston and the California delegation for their assistance in this effort.

This action follows a Presidential directive to the Department of Energy at the time Executive Order 12153 was signed (August 17, 1979). That order decontrolled heavy crude oil production below 16.0° API. The President asked DOE to review and hold public hearings on the advisability of expanding the definition of heavy crude oil above the 16.0° level. The action taken today responds to the findings and recommendations made by DOE as a result of the hearing and review process.

Both Executive Order 12153 and the amendment signed today apply only to current production of heavy crude oil or production from known reservoirs. Newly discovered supplies of heavy crude are covered under the President's April 5, 1979, decision to decontrol this category of oil effective June 1, 1979.

It is expected that decontrol of oil in the 16.0 degrees—20.0 degrees range will significantly accelerate production of this resource and will yield approximately 140 million barrels of additional supplies between now and 1986. Daily production should increase by about 65,000 barrels per day in 1981, and peak at an added 130,000 barrels per day in 1983.

The President does not recommend that oil in the 16.0°—20.0° range be exempt from the windfall profits tax, as he did for heavy crude oil below 16.0° API. The extra incentives provided by the decontrol action itself are sufficient to generate added production as well as to prevent heavy oil wells in this range from being shut in, because they are only marginally economic or uneconomic under price controls.