DIVISION SEEN ON HOW TO HELP U.S. OIL INDUSTRY The U.S. Congress and the oil industry are deeply divided on ways the government should assist the industry, hurt by the sharp fall in oil prices, and the subsequent growth in oil imports, industry analysts said. "The industry is deeply divided between those who support an oil tariff and those who believe tax incentives are better," said Daniel Yergin, director of Cambridge Energy Research Associates, which recently completed a survey of the U.S. Congress on energy issues. Yergin said he saw mounting support within Congress for tax incentives rather than an oil tariff or import fee. Today U.S. Energy Secretary John Herington said he will propose tax incentives to increase edomestic oil and natural gas exploration and production to the Reagan Administration for consideration. White House spokesman Marlin Fitzwater said the proposal would be reviewed. Herrington said, "I would like to shoot for one mln barrels a day (addition) to U.S. production." U.S. oil output was off to 8.4 mln bpd in the week of March 13, down six pct from last year, the American Petroleum Institute said. Oil industry analysts have forecast oil prices to average about 18 dlrs a barrel for the year and many believe that a move above that level will be unlikey for the near term. Paul Mlotok, oil analyst for Salomon Brothers Inc said that "even with the rise in prices for the last week or two we've only altered our average price scenerio to about 17.50 dlrs for the year." Analysts said that at that price renewed drilling and exploration to reverse the decline in U.S. crude oil output will not take place as the companies are waiting for stable prices over 20 dlrs to renew exploration. John Lichtblau, president of the Petroleum Industry Research Foundation Inc in New york in recent testimony to Congress said "The continuing decline in U.S. oil production is virtually inevitable under any realistic price scenario. But the future rate of decline is very much a function of world oil prices and U.S. government policy." Lichtbalu said that tax breaks could be used to raise oil production but would only work over time. "Lowering the producing industry's tax burden would probably be a slower stimulant (to output) than a price increase but would not raise energy costs." Lichtblau said. But the small independent oil companies who do much of the drilling in the U.S. are looking for the more immediate relief which could be brought on by an oil import fee. Ronald Tappmeyer, president of the International Association of Drilling Contractors, said, "The members of our trade asssociation are convinced that only a variable oil import fee that sets a minimum price trigger can protect our nation." The association represents some 1,300 drilling and oil service companies. The CERA survey of Congress shows that the oil import fee will face a stiff uphill battle. Yergin said that the poll which was conducted in January by a former Congressman, Orval Hansen, showed support for the oil import fee from 22 pct of the Congressmen surveyed largely as a means of protecting the domestic petroleum industry. At the same time 48 pct of the Congressmen surveyed opposed the fee with the respondents saying the tariff would hurt consumers and some regional interests. But 80 pct of the sample said support for a fee could grow if production continued to fall and imports to rise. Yergin said that imports above 50 pct of U.S. requirements "is a critical, symbolic level. If they (imports) move above that level, a fee may not be legislated but there will certainly be pressure for some form of action." But Lichtblau, in a telephone interview, said, "a 50 pct rate of import dependency is not likely to happen before 1990. In 1986 U.S. oil imports rose to 33 pct of u.s. energy requirements and shopuld be about 34 pct in 1987, he added.