Three recent political developments in Washington, DC, hold potential implications for the oil industry.
An unusual compromise between bitter adversaries has saved legislation that would earmark some US federal offshore oil revenues for conservation programs. Although the bill doesn't directly affect oil companies, it may give many inland states a financial incentive to ensure that offshore drilling continues.
Rep. Don Young (R-Alas.), House resources committee chairman, and Rep. George Miller (D-Calif.), the ranking Democrat on the panel, struck the deal despite their diametric opposition on almost every issue. The said their compromise on the offshore revenue bill took months to negotiate and is so finely balanced that they oppose any amendments to it.
The deal earmarks $3.025 billion of the $4 billion/year of revenues from offshore leasing and production. Coastal states would get $1 billion/year to "mitigate the various impacts of OCS activities" and finance coastal ecosystem conservation programs. The federal Land and Water Conservation Fund would get $900 million/year of stable funding. Other urban park, historic preservation, endangered species, and wildlife refuge programs would get the rest.
If the compromise holds, the House of Representatives could pass the bill next year. And that may encourage the Senate to rescue a similar bill stalled there.
Smith ascends
What happens when a maverick senator takes over a powerful committee? That's what oil and environmental lobbyists are wondering following the Senate's election of Robert C. Smith (R-NH) to the chair of the environment and public works committee.
Smith replaces the respected Sen. John Chafee (R-RI), who died last month. The new chairman was a presidential hopeful who bolted the Republican Party in July for the Independent Party but returned to the GOP after his campaign foundered.
Smith said, as chairman, he wants to reduce the Environmental Protection Agency's stranglehold on policy-making, giving state and local governments more power.
The oil industry would welcome that development, if Smith can pull it off. The problem is, EPA bureaucrats always outlast environment committee chairmen.
Utility lawsuit
A recent EPA attack against US coal-burning utilities could forebode bad news for refineries but good news for natural gas producers, if operators of coal-fired plants switch to the cleaner fuel.
EPA sued seven utilities, claiming that 17 of their power plants have unnecessarily polluted air on the Eastern Seaboard. It also ordered the Tennessee Valley Authority, a federal agency, to improve operations at seven of its plants.
The suit alleges the utilities failed to install the "best available control technology," as mandated by the Clean Air Act, when they made major modifications to their plants in recent years. It says that failure resulted in the illegal release of tens of millions of tons of sulfur dioxide, nitrogen oxides, and particulate matter.
The Department of Justice said the seven lawsuits seek civil penalties of up to $27,500/day per plant for violations.
EPA is investigating emissions from eight other power plants and reportedly is considering similar lawsuits against paper mills and oil refineries.
