WATCHING GOVERNMENT PRODUCERS CONTINUE TAX RELIEF CAMPAIGN

Some things never change in the U.S.

As soon as a new Congress is seated on Capitol Hill, independent oilmen begin asking it for tax relief.

This time around, they're hanging their hopes on two recent developments: staunch industry supporter Bill Archer (R-Tex.) has unexpectedly ascended to the chairmanship of the tax writing House ways and means committee, and a Commerce Department study has found that oil imports threaten national security.

The Independent Petroleum Association of America asked for the Commerce study a year ago (OGJ, Feb. 14, 1994, P. 40) to support its request for import relief under Section 232 of the Trade Expansion Act.

The relief that IPAA wants is not an oil import fee but a package of tax incentives that includes tax credits for marginal production (OGJ, Sept. 19,1994, p. 21).

RESPONSE, NO RESPONSE?

IPAA Chairman George Alcorn of Houston said President Clinton is due to respond to the Commerce study by Mar. 30. Alcorn hopes Clinton's remedy will be tax relief.

Clinton also has the option of proposing no relief at all. That's what President Reagan did under the same circumstances (OGJ, Jan. 9, 1989, p. 20).

Alcorn said IPAA filed its petition as a reaction to low oil prices. Now, natural gas prices are half what they were a year ago, and producers are shutting in wells.

"Unstable prices are the industry's worst enemy," Alcorn said. "It's the reason we'll continue to push for tax initiatives that would serve as a safety net when prices fall to uneconomic levels.

"The tax initiatives, along with other legislative and regulatory measures being proposed, would go a long way toward keeping domestic wells on line and preventing the premature abandonment of our resource base."

Even if the administration supports tax credits for marginal production and Archer pushes it through his House committee, it still must survive the Senate finance committee.

A major problem is the cost. The proposal would come along at a time when Congress is under increasing pressure to reduce federal spending. It's even examining the sacred cow of agricultural subsidies.

BIPARTISAN CAUCUS

Meanwhile, oil state congressmen have launched a bipartisan caucus to help them coordinate their actions to help the oil and gas industry.

The Congressional Oil and Gas Forum will be cochaired by Sens. Bennett Johnston (D-La.) and Pete Domenici (R-N.M.) and Reps. Jim McCrery (R-La.) and Glenn Poshard (D-111.).

The caucus is an outgrowth of a 117 person congressional coalition that promoted but failed to pass an oil industry relief bill last year.

Johnston said, "Net imports of oil and gas cost the U.S. over $45 billion in 1994 alone. Our domestic oil industry continues to suffer from a downturn that began in the 1980s. We need to unite to deal with problems the industry continues to face."