Other big oil and gas issues loom beyond cap-and-trade

In a sense, some pressure was off American Petroleum Institute President Jack N. Gerard the morning of May 18. The House would be marking up a cap-and-trade bill, but the Senate had delayed action on two other measures.

In a sense, some pressure was off American Petroleum Institute President Jack N. Gerard the morning of May 18.

The US House Energy and Commerce Committee was scheduled to begin marking up HR 2454 that afternoon. The bill, co-sponsored by Reps. Henry A. Waxman (D-Calif.), the committee's chairman, and Edward J. Markey (D-Mass.), who chairs its Environment and Energy Subcommittee, aimed to address global climate change by establishing a carbon cap-and-trade system in the US.

But when API and Gerard originally planned to hold a teleconference with reporters that morning, they thought that the US Senate also would be considering bills which would impose new taxes on domestic producers and refiners, and possibly further restrict access to US supplies.

The two committees with jurisdiction on those proposals delayed consideration until after Memorial Day. So Gerard and the reporters who questioned him concentrated on the reworked Waxman-Markey proposal, which its sponsors had released the afternoon of May 15.

'Rushed quickly'

Waxman remained determined to complete markup before the holiday weekend. Gerard disagreed. "Our hope is that now the legislation is finally on the street, people will be able to take a good look at it and fully analyze it. Right now, they've rushed quickly to try and complete the process which hasn't allowed anyone to do this," he said.

He also found it ironic that the bill did not recognize the industry's contribution to global climate change research so far.

"When you look closely at investments in greenhouse gas emission technology by all US industries and the federal government from 2000 to 2006, 45% came from the oil and gas industry. That makes us the leading investor," he said.

Cap-and-trade may have been more immediate, but Gerard suggested that taxes and access still mattered. "What the president talks about is reducing reliance on non-US sources. But he also has indicated the need to produce more oil and gas domestically," he said.

Not consistent

The proposed taxes in the administration's fiscal 2010 budget request are not consistent with that strategy, API's president continued. "It's very difficult to increase domestic production when you're taking away incentives to do so. The best thing for economic development and increasing government revenue is to encourage more domestic oil and gas development," he said.

When it came to access, Gerard said he has spoken personally with Senate Energy and Natural Resources Committee leaders and members. "We continue to push hard with them as well as the Interior secretary," he said.

"We emphasize that today is the day to plan for the future, and that we need to put processes in place to address needs 15-20 years down the road. Too often, we look at this through a political process with two-year election cycles. These provisions are so important so we can make the necessary investments in the next decade," Gerard said.

Contact Nick Snow at nicks@pennwell.com

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