Waiting game

Patrick Crow
Washington, D.C.
[email protected]

It's still unclear what the Clinton administration will propose to help U.S. producers survive the depression.

U.S. Energy Sec. Bill Richardson has been examining a laundry list of proposals for more than a month to determine what is doable, both politically and economically.

Action was expected in January (OGJ, Jan. 11, 1999, p. 24). But now February is here, and Richardson presumably is focused on his trip to Saudi Arabia this week.

The best bets are still that he will propose buying U.S. crude for storage in the Strategic Petroleum Reserve, and that Congress will enact tax credits to sustain marginally economic wells.

Richardson is convinced that the industry needs help. Apparently the White House is not.

Farmers, steel

In his state of the union address, President Clinton lamented how low prices have hurt farmers and steel manufacturers. He did not mention oil producers.

Clinton said, "As this Congress knows very well, dropping prices and the loss of foreign markets have devastated too many family farmers.

"Last year, the Congress provided substantial assistance to help stave off a disaster in American agriculture, and I am ready to work with lawmakers of both parties to create a farm safety net that will include crop insurance reform and farm income assistance."

On steel, Clinton said, "We must enforce our trade laws when imports unlawfully flood our nation. I have already informed the government of Japan if that nation's sudden surge of steel imports into our country is not reversed, America will respond.

"We must help all (steel) manufacturers hit hard by the present crisis with loan guarantees and other incentives to increase American exports by nearly $2 billion."

In Congress

Oil-state legislators are showing much more concern about the oil industry's plight than they did last year.

Rep. Lamar Smith (R-Tex.) filed a bill to let producers carry over 1998 losses to future tax returns, similar to what Congress did for farmers last year.

Reps. Ernest Istook, Tom Coburn, Wes Watkins, and J.C. Watts-all Oklahoma Republicans-have urged Clinton not to allow sanctions against Iraq to be lifted.

They cited Iraq's transgressions, adding, "If you allow Saddam Hussein to sell unlimited amounts of oil on a world market that is already awash in oil, you will bear responsibility for the collapse of America's domestic oil and gas industry and the loss of tens of thousands of jobs."

The Independent Petroleum Association of America noted that the Jan. 22 Baker Hughes Inc. rig count was 588, a record low for that tally, begun in 1940.

IPAA said, "The most strategic industry in our country is dying on the vine, and we need help fast. If policymakers don't step up to the plate and take immediate action, they are going to witness the meltdown of our U.S. production base and the demise of domestic producers."

Ironically, an upsurge in consumption of cheap gasoline will result in a windfall of up to $1 billion in federal gasoline taxes in the next fiscal year. Too bad the extra money is earmarked for highway and mass transit spending and can't be used to help oil producers.