In matters of money, petroleum, and the environment, state and federal governments act more alike all the time.
States yield nothing to Washington, D.C., at the pork barrel. Nebraska recently trumped the U.S. Senate's April promise of manna to ethanol producers. In their Clean Air Act reauthorization bill, senators specified that gasoline sold in nine U.S. cities with the worst ozone problems contain at least 2.7% oxygen. For those cities that also have carbon monoxide problems, the oxygen standard would rise to 3.1% in high CO periods. The requirement helps heavily subsidized fuel ethanol.
But that's not enough for Nebraska lawmakers. They passed a bill requiring that all reformulated gasoline sold in the state contain at least 3.1% oxygen, apparently all the time. Nebraska doesn't have a CO problem. Its politicians are just promoting a corn product, regardless of the effect on fuel costs and supplies. Sound familiar?
Another familiar menace is astir in Louisiana: a government in search of money. Gov. Buddy Roemer needs about $700 million/year for an ambitious spending program. The legislature wants no part of a personal income tax hike. So lawmakers have filed bills to base the gas severance tax on value instead of volume and raise the bite on producers, to extend the sales tax to industry items that until recently were exempt, to make Louisiana's depletion rules no better than the federal government's, and to restrict future writeoffs of net operating losses.
Some of Louisiana's 150 or so environmental bills this year also would pick industry pockets. They call for a 5/bbl levy on oil movements to build a $10 million spill liability fund, a 20/bbl levy on nonhazardous oil field wastes other than saltwater, and a link between industrial tax exemptions and environmental behavior. Some nonmoney environmental bills are worrisome, too, such as transfer of oil field waste regulation to the sometimes cranky Department of Environmental Quality, cleanup prescriptions for abandoned well sites, and pit cover requirements.
Not all states hit industry this year with as many challenges as Louisiana did or with ideas as cockeyed as Nebraska's ethanol charity. But most have become as aggressive as Washington, D.C., on issues involving oil and gas. The state legislative season will end soon, about the time the federal clean air debate begins a new round and congressional leaders meet with the Bush administration over fiscal policy. For oil companies and their customers, there's never any rest.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
