It may be stating the obvious. But the essential Washington energy question now is the extent to which growing concern about the general US economy will divert political attention from global climate change.
Conventional wisdom holds that the economy always trumps the environment, especially when consumers (many of whom vote) start to complain about high prices. Global warming is part of the national vocabulary, but concern about it still doesn't resonate as much at the polls as middle class economic hardship.
It also is going to remain a key energy issue. The oil and gas association executives I interviewed for my annual Washington outlook feature in the Jan. 14 Oil & Gas Journal were unanimous on that point.
They also agreed that development of alternative fuels will be necessary, but American Petroleum Institute President Red Cavaney and several others said that funding research with new oil and gas taxes still is a bad idea.
'Spread the tax'
"It would seem to me if you believe new forms of energy are a panacea for concerns over the present energy mix, the federal government should dedicate general revenue funds to make the breakthrough and spread the tax across the general economy. When we decided to go to the moon during the 1960s, we didn't tax the airline industry," he told me.
Independent Petroleum Association of America President Barry Russell said that many climate change models don't consider consequences and regulatory difficulties surrounding alternatives such as nuclear power. "Our members who produce it believe natural gas will need to be part of the solution," he said.
"Somebody would have to pay for fuel mandates. Some members of Congress keep coming back to the oil and gas industry. If they put domestic producers and refiners at a disadvantage to global competitors, it will hurt the US economy," warned National Petrochemical and Refiners Association President Charles T. Drevna.
Possible influences
Much will depend on what Bush says in his 2008 State of the Union address on Jan. 28 about measures to stimulate the economy. He previously has rejected new taxes as impediments to growth, especially when they've been directed at a specific industry. But he changed the political atmosphere dramatically two years ago when he announced that America was addicted to oil.
Crude oil prices also will be a major force if they stay high, especially if publicly-traded oil and gas producers report increased earnings for 2007. That probably will spur calls to tax supposedly excess profits, especially if retail regular gasoline prices approach $3.50/gal in May as the US Energy Information Administration forecasts in its latest Short-Term Energy Outlook.
Then there are the presidential and congressional campaigns. Remember Al Gore's comments late in the spring of 2000 when Chicago area retail regular gasoline prices climbed past $2/gal?
Bette Davis, portraying actress Margo Channing at a cocktail party in the 1950 movie "All About Eve", put it this way: "Fasten your seatbelts! It's going to be a bumpy night!"
Contact Nick Snow at [email protected].