It may be stating the obvious, but the essential Washington, DC, 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 interviewed for the US Energy Politics special report were unanimous on that point (OGJ, Jan. 14, 2008, p. 20).
The executives also agreed that development of alternative fuels will be necessary, but American Petroleum Institute Pres. Red Cavaney and several others said funding research using new oil and gas taxes is still 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, Cavaney said. “When we decided to go to the moon during the 1960s, we didn’t tax the airline industry.”
Independent Petroleum Association of America Pres. Barry Russell said 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,” warned National Petrochemical & Refiners Association Pres. Charles T. Drevna. “If they put domestic producers and refiners at a disadvantage to global competitors, it will hurt the US economy,” he said.
Much will depend on what US President George W. 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 2 years ago when he announced that America was addicted to oil.
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?