US Senate rejection of punitive oil taxes and a global climate change bill within days of each other doesn’t mean the ideas are dead; they simply have moved behind the scenes where oil and gas industry lobbyists expect intense negotiations.
“Our real work has begun. We are busier 2 days after the Senate votes than we were for a month before,” said William F. Whitsitt, president of the American Exploration & Production Council, when I met him at a Canadian oil sands conference on June 11. “There are still some very pernicious ideas out there. “
Two days earlier Lee O. Fuller, vice-president, government relations, Independent Petroleum Association of America, told me: “I tend to think there’s a good chance that Congress will be up to some sort of mischief. With oil prices at $135[/bbl] and the prospect of their reaching $150[/bbl], that’s what they’re hearing about from their constituents.”
Fuller said he expected the global climate-change focus to shift to the US House Energy and Commerce Committee. “It seems to be looking more at the big issues that need to be addressed rather than simply trying to write a bill,” he said.
Fuller suggested that the committee’s chairman, Rep. John Dingell (D-Mich.), may feel less pressure to quickly produce global climate-change legislation after the Senate’s experience debating the measure, which Joseph I. Lieberman (I-Conn.) and John W. Warner (R-Va.) introduced in October 2007.
Likely in 2009
Fuller added that a bill seems likely in 2009 because the two major parties’ apparent presidential nominees, Sens. John McCain (R-Ariz.) and Barack Obama (D-Ill.), support a cap-and-trade program.
Days later, the committee made its first move when Rep. Rick Boucher (D-Va.), the chairman of its Energy and Air Quality Subcommittee, introduced a bill aimed at accelerating the availability of carbon capture and storage technology—a key climate-change program component.
Boucher’s bill, which has nine Democrats and five Republicans as cosponsors, would establish a $1 billion annual CCS technology fund. It would be financed from taxes on the generation of electricity from coal, oil, and gas. Residential costs would be an additional $10-12/year.
Punitive proposals
Meanwhile, many congressional Democrats continue to demand punitive measures for the oil and gas industry. Proposals range from repeals of tax incentives to giving federal regulators more authority to investigate and prosecute oil market manipulation allegations.
Some federal lawmakers also want to reimpose the windfall profits tax. Fuller and Whitsitt separately said the idea may be growing harder to sell.
“Some blogs suggest that not everyone accepts the idea that a windfall profits tax will reduce energy prices. Whether they make a difference will depend on the congressional office’s sophistication,” Fuller said.
Whitsitt added, “We’re starting to hear that more of the public recognizes that major oil companies aren’t responsible for these higher prices. They’re beginning to get it.”
