Real work begins following Senate's defeat of climate change, oil tax bills
US Senate rejection of punitive oil taxes and a global climate change bill within days of each other does not mean the ideas are dead. They simply have moved behind the scenes where oil and gas industry lobbyists expect intense negotiations to take place.
"Our real work has begun. We are busier two days after the Senate votes than we were for a month before. There are still some very pernicious ideas out there," said William F. Whitsitt, president of the American Exploration & Production Council, when I met him at a Canadian oil sands conference on June 11.
"I tend to think there's a good chance that Congress will be up to some sort of mischief. With oil prices at $135 and the prospect of their reaching $150, that's what they're hearing about from their constituents," Lee O. Fuller, vice president of government relations at the Independent Petroleum Association of America, told me two days earlier.
He said that he expected the global climate change focus to shift to the US House Energy and Commerce Committee. "It seems to be looking more at the big issues that need to be addressed rather than simply trying to write a bill," Fuller said.
He suggested that the committee's chairman, Rep. John Dingell (D-Mich.), may feel less pressure to quickly produce global climate change legislation after the Senate's experience debating its bill which Joseph I. Lieberman (I-Conn.) and John W. Warner (R-Va.) introduced last October.
Likely in 2009
But Fuller added that a bill seems likely in 2009 since the two major parties' apparent presidential nominees, Sens. John McCain (R-Ariz.) and Barack Obama (D-Ill.), support some kind of cap-and-trade program.
A few days later, the committee made its first move when Rep. Rick Boucher (D-Va.), the chairman of its Energy and Air Quality Subcommittee, introduced a bill aimed at accelerating the availability of carbon capture and storage technology, a key climate change program component.
Boucher's bill, which has nine Democrats and five Republicans as co-sponsors, would establish a $1 billion annual fund for awarding grants to large-scale projects advancing CCS technology. It would be financed from taxes on the generation of electricity from coal, oil and gas. Residential consumers would pay an estimated additional $10-12 annually.
"Today, 58% of US homes are heated with natural gas, and numerous industries are heavily reliant on it. If large-scale switching by utilities from coal to natural gas occurs, tens of millions of Americans would experience deep economic pain, and many domestic industries would be dislocated. The early arrival of CCS is essential to prevent this economic disruption in a carbon-constrained economy," Boucher said as he announced the measure's introduction on June 12.
Punitive proposals
Meanwhile, many congressional Democrats continue to demand punitive measures for the oil and gas industry. Proposals range from repeals of tax incentives to giving federal regulators more authority to investigate and prosecute oil market manipulation allegations.
Some federal lawmakers also want to re-impose the windfall profits tax. Fuller and Whitsitt separately said that idea may be growing harder to sell.
"Some blogs suggest that not everyone accepts the idea that a windfall profits tax will reduce energy prices. Whether they make a difference will be depend on the congressional office's sophistication," Fuller said.
"We're starting to hear that more of the public recognizes that major oil companies aren't responsible for these higher prices. They're beginning to get it," Whitsitt indicated.
Contact Nick Snow at [email protected]