WATCHING GOVERNMENT: If Democrats win control…

Nov. 6, 2006
An Oct. 16 letter from Independent Petroleum Association of America Pres. Barry Russell to producers who are not IPAA members did not mince words.

An Oct. 16 letter from Independent Petroleum Association of America Pres. Barry Russell to producers who are not IPAA members did not mince words.

“Your business and the entire industry are under attack from antidevelopment groups, federal regulators, policymakers, and the news media!” it began. Then it neatly summarized five ways in which federal laws and regulations affecting US producers could change unless producers speak out.

Several possible changes will become likelier if control of the US House or Senate moves to the Democrats in the Nov. 7 elections. So I asked IPAA’s Vice-Pres. of Government Relations Lee O. Fuller for details, starting with a possible reimposition of the crude oil windfall profits tax (WPT).

“We’ve seen about 15 or more bills introduced,” he replied. “Many came when prices were high, with anger directed at big oil companies. But if revenues became involved, it would affect independents directly because most big oil companies’ revenues come from outside the United States.”

Fuller added that in the House Ways and Means Committee, where such a bill would originate, “clearly there’s a big difference when the chairman comes from New York City.” Charles B. Rangel of New York is the committee’s chief minority member.

In the Senate, Max Baucus of Montana would become chairman of the Finance Committee, where a WPT bill probably would land if the Democrats won control. Fuller said IPAA has worked well with him before.

Key differences

In fact, several producing-state Democrats led key congressional committees before control swung to the Republicans in 1994. There are key differences now, Fuller told me: First, more lawmakers from producing states are in the GOP. Second, the Democrats’ leaders aren’t from producing states and are less inclined to be sympathetic.

Third, “We’ve seen the Republican and Democratic agendas set by leadership caucuses instead of committees.” This gives oil and gas interests less chance to explain their case.

“There are several centrist Democrats we’ve worked with on some issues, but many of them are new,” he said. Others with whom IPAA has worked draw their primary support from nonoil and gas sources which command more attention.

There’s also the possible repeal of tax provisions covering intangible drilling and development costs, geological and geophysical expenditures, enhanced oil recovery, and percentage depletion-particularly to finance research and development of nonoil and gas alternative fuels, Fuller said.

‘The whole strategy’

“It can be particularly troublesome if someone believes the only way to accomplish this is by penalizing oil and gas. We also think that efforts to get more oil and gas domestically ought to be part of the whole strategy,” he told me.

Fuller said IPAA members at the group’s recent annual meeting were apprehensive about the election’s impact on Congress. “They continue to find opportunities to produce oil and gas. They also see that barriers need to be overcome.”