The price of crude oil, now around $17 a barrel, is heading down - a trend that strengthens the case for repealing the windfall profits tax on petroleum.

When imposed eight years ago, this levy was supposed to keep producers from making "excessive" profits following decontrol of domestic petroleum prices.The upshot, though, was to divert money from the oil industry into other investments.

One industry official told Scripps Howard News Service that U.S. oil production would be one-million barrels a day higher if this tax had not been imposed. So the policy contributes to America's dangerous over-reliance on foreign oil.

Moreover, the conditions that inspired the tax - the soaring oil prices of the late 1970s - no longer prevail. A decade ago some observers forecast $70-a-barrel oil. Their crystal ball sure was cloudy.

Even though the windfall-profits tax raises no revenue when prices are low and the industry is struggling, it still imposes as much as $100 million yearly in paperwork costs on oil companies, according to Charles DiBona, president of the industry's trade association, the American Petroleum Institute. That expense discourages investment in new exploration.

The policy costs taxpayers, too. Washington pays $13 million annually in administrative costs.

The folly of this policy finally has become clear to many members of Congress, where an amendment to repeal the tax was tacked onto trade legislation.

But the trade bill contained some menacingly protectionist provisions, and the Senate sustained President Reagan's veto of the measure.

Congressional opponents of the levy owe it to both producers and consumers to continue their fight.

They should start looking now for a more worthy legislative vehicle for a repeal measure. Foreign oil suppliers are the only parties who have reaped a windfall from this tax.