Oilmen urge natural gas decontrol

While 3,000 top petroleum industry executives met here this week to chart their industry's future, demonstrators held their own meeting to attack ''profiteering Big Oil.''

Inside a downtown hotel, members attending the annual American Petroleum Institute (API) conference agreed that decontrolling natural gas prices immediately would duplicate the effects produced by last January's speeded-up decontrol of oil prices:

* Increased drilling for new supplies.

* Increased production from present wells.

* Increased energy conservation by consumers.

* Decreased reliance on overseas suppliers.

* Downward pressure on all energy prices, domestic and overseas, due to the first four effects.

To back up the argument for natural gas decontrol, the API (which includes natural gas producers) cites statistics showing that deregulation has led to an increased crude oil production in the lower-48 states for the first time in over 10 years. The increase is expected to continue, thanks to the petroleum industry's setting of all-time records for the number of seismic crews at work, rotary rigs in operation, and wells drilled and completed.

But in contrast to the 37.7 percent increase in domestic oil wells drilled during the first nine months of 1981 compared with last year, the number of gas wells drilled is up only 6.5 percent for the same period.

Decontrol natural gas prices now - rather than in 1985 - say the oilmen, and see a revitalization which will both spur new gas drilling and benefit the US economy as a whole.

Consumer groups, however, want natural gas decontrol postponed rather than speeded up. They charge that decontrol could double winter heating costs for many families at a time when federal budget cuts are already making the poor poorer. Under a variety of trade union and consumer group banners, angry demonstrators outside the API conference chanted ''Freeze prices, not people.''

The industry estimates that immediate natural gas price decontrol could raise the wellhead price from an average $1.80 per thousand cubic feet to $4.10. This hike would be offset by eliminating the vast differences in current wellhead prices, which range from 40 cents to $9 per thousand cubic feet. The wide price spread is based on a costly network of government regulation. Along with the cost of regulation itself, many feel that the artificial price differentials can encourage illegal practices.

One new source of embarrassment to the oil industry is an Oklahoma trial in which multimillionaire oilman Robert B. Sutton is charged with bilking consumers out of billions of dollars through overcharges between 1976 and the decontrol of oil prices last January. To consumer groups, the case is fresh evidence of how the oil industry cheats the public. For the industry, however, it only proves that problems can develop when the government imposes complex regulations on the free-market system.

Two Reagan administration Cabinet members won standing ovations here for pledging to reduce regulation and for endorsing the industry's call for natural gas decontrol.

Energy Secretary James B. Edwards denied that natural gas decontrol would mean steep price hikes. He told the API conference it was during the seven years when oil prices were regulated that ''we consumed more, produced less, and saw prices go up faster than ever.''

Transportation Secretary Drew Lewis took the same line, explaining that the Reagan administration policy is ''to remove any unreasonable obstacles'' to the oil industry's efforts to increase US oil and gas production. He praised the industry's achievement of new records for domestic production, drilling, and reserves and explained that ''these gains are the result of market forces, not government edicts, at work. . . . We have learned that government bureaucrats can't increase oil production one drop.''

The oilmen cheered Messrs. Edwards and Lewis for endorsing natural gas decontrol and saying the administration remains opposed to imposing a windfall profits tax as the price of decontrol. But the conference ended with a list of other Christmas presents it wants from President Reagan:

* Greater access to public lands for oil exploration and production.

* Revision of the Clean Air Act and other ''excessive regulation'' to encourage rather than discourage sensible energy development.

* Curbing new taxation on the oil industry which leads only to ''higher costs to consumers, less energy produced in the United States, and greater dependence on foreign oil.''

Idaho Sen. James A. McClure (R) told the API delegates that their objectives are shared by many congressmen. But he added that oilmen must take into account ''the human impact of higher energy costs'' and that ''you cannot ignore public perceptions of your industry.'' With those warnings in mind, the oil industry left the conference committed to getting the message across that the country as a whole ''will benefit from an energy industry less burdened by excessive regulation.''