In Washington, DC, it's been one step forward, two steps back on energy policy, industry officials say.
The White House energy blueprint was a giant step forward. It aimed to cut back redundant regulations through more interagency cooperation. But the document was widely criticized by other groups, such as the environmental community, which has more sway with voters than the often-vilified oil industry.
And many of the controversial items in President George W. Bush's proposal fell in the lap of Congress; so far, successes have been few.
Spending riders
Industry was dealt a major blow last month under the ongoing budget process. While considering the Interior appropriations bill, the Republican-led House of Representatives June 21 voted to postpone a contested eastern Gulf of Mexico lease sale until April 2002. The House also voted to ban drilling in national monuments and limit conditions under which Minerals Manage- ment Service could take federal royalties in-kind (OGJ Online, June 22, 2001). Five days later, a coalition of coastal state Republicans and Demo- crats in the House Committee on Appropriations considering a different spending bill forbade the Federal Energy Regulatory Commission from issuing approvals for the Gulfstream gas pipeline project. The 750-mile pipeline would supply up to 1 bcfd of gas from Offshore Alabama to the Tampa Bay, Fla., area.
Meanwhile, House GOP leaders still want a full debate over exploration of the Arctic National Wildlife Refuge coastal plain under another pending draft bill. But that battle is expected to be protracted and ultimately fruitless.
One bright spot where there is expected to be bipartisan agreement in both the House and Senate is for oil and gas research. Ignoring the White House, the House recently restored funding to historical levels, and the Senate has signaled it will follow suit.
No taxman
Next on the congressional agenda is taxes. There are encouraging signs there will be support from both sides of the aisle to expand tax breaks for US marginal production. The White House energy proposal is silent on the issue. Meanwhile, tax rules designed to make US oil companies more competitive overseas may have less backing, because it benefits major oil companies, currently persona non grata on Capitol Hill.
Under consideration is an entire menu pushed by independents. These include tax credits for marginal production, election to expense geological and geophysical expenditures and delay rental payments, 5-year net operating loss carryback for losses attributable to operating mineral interests, temporary suspension of limitation based on 65% of taxable income and extension of the taxable limits suspension, and modification of the definition of "small refiner" for purposes of the exception to oil depletion deduction.
Those measures are expected to be part of an energy tax bill that House Republicans plan to offer later in the month. Also expected in the bill is a provision extending the fuel ethanol subsidy to 2007 and expanding tax incentives for energy-efficient construction and renewable-fuels production.
Still to be determined is the timetable in which the full Congress will present something to the president. House GOP leaders favor moving energy legislation piece by piece; the Democratic Senate majority wants to consider tax and energy policy bills separately.
