Patrick Crow
Washington Editor
The winds of change clearly have chilled the prospects for U.S. incumbents in the November general elections and may blow energy policy in new directions.
The next president, whether George Bush or Arkansas Gov. Bill Clinton, will face some persistent energy policy questions.
Congress also will be working on those problems after experiencing unusually deep changes in November elections, probably the deepest since World War 11.
The U.S. economy will be the No. 1 one issue for the administration and lawmakers. That should help the oil industry, which is among the sickest sectors of the economy.
In the economic debate, the main energy policy question may be independent candidate Ross Perot's call for a 50 cents/gal increase in gasoline taxes, a move Bush and Clinton oppose.
But even though the U.S. went to war last year to protect oil supplies and preserve the world balance of power, energy is of no particular concern in the election campaigns.
In fact, Congress has worked 2 years on an omnibus energy bill that would not directly increase domestic oil and gas production or directly limit oil imports.
As one administration official has noted, "Energy itself is not a hot button issue for most Americans, but the interaction of energy and environment is."
The familiar array of energy questions facing the administration and the new Congress next year has an environmental tinge: offshore drilling, exploration of the Arctic National Wildlife Refuge (ANWR), and how to renew environmental legislation that could further limit energy production.
PRESIDENTIAL POLITICS
The presidential contest is central to the November elections and to the direction of the next Congress.
The next president's energy goals will be reflected in actions of his departments and will greatly influence the congressional agenda.
Although Congress is autonomous and initiates most legislation without the prompting of the administration, it seldom undertakes major bills without the tacit support of the executive branch.
For example, it was the Bush administration--not Congress--that proposed omnibus energy legislation.
Assuming Ross Perot is not electable as an independent, Clinton appears to offer more potential for change than Bush, simply because Clinton would have a different energy agenda while Bush has largely accomplished his.
Little will happen on energy in 1993 no matter who wins.
Congress will have to confirm either man's nominees for critical cabinet posts, and those new secretaries will need months to decide and act on their priorities. Historically, Congress also is slow to organize in the first year of a presidential term.
Not only would Clinton have to staff his cabinet, Bush could have several replacements. William Reilly, Environmental Protection Agency administrator, is expected to leave at the end of Bush's first term, Energy Sec. James Watkins reportedly has considered resigning, and Interior Sec. Manuel Lujan also might depart.
CLINTON'S PROGRAM
Like many facets of energy policies in recent years, Clinton's energy program has been shaped from an environmental perspective. When oil and the environment clash, Clinton will be likely to come down for the environment.
He advocates the maximum possible use of natural gas, the cleanest burning fossil fuel. He favors expanding natural gas use in homes, businesses, industry, electrical generation, and transportation. He vows to speed construction of gas pipelines.
Clinton flatly opposes ANWR exploration and would oppose offshore drilling in current moratorium areas.
Sen. Albert Gore (D-Tenn.), his vice-presidential choice, said in a California television interview he opposes drilling off California, and "I think a ban on offshore drilling ought to be extended ... to all coastal waters of the U.S."
In his keynote environmental speech, Clinton said, "We would make energy conservation and energy efficiency central goals in every field of policy--in designing our offices, planning our communities, designing our transportation systems, and regulating our utilities. My goal is to improve America's overall energy efficiency by 20% by 2000."
The Arkansas governor favors increasing automakers' corporate average fuel efficiency (CAFE) standard to 40 mpg from 27.5.
He would champion research, development, and commercialization of renewable and alternate energy techniques. He has proposed establishing an advisory research agency for renewable technologies.
Clinton recently advocated congressional approval for the North American Free Trade Agreement--a vote will occur next year--but urged addendums to the pact for environmental protection and more training for American workers.
Although Gore has advocated a carbon tax on fossil fuels, Clinton neither supports that nor an increase in the federal excise tax on gasoline.
He advocates taxing income U.S. companies earn and reinvest overseas on the theory that it would prompt them to invest in the U.S. instead.
INTERPRETATIONS
Jim Hoecker, an energy lawyer and adviser to the Clinton campaign, told a Washington meeting of Women in Government Relations, "We have a good energy policy. We are not the economic bogeymen some have portrayed."
He said the Bush administration's "cheap foreign oil" strategy has increased oil imports, has not staved off a recession, and "has decimated the domestic oil and gas industry."
Hoecker said, "And this is a sector of the economy from which George Bush came and supposedly understands."
He said Clinton opposes gasoline taxes as regressive and opposes a carbon tax.
Hoecker said Clinton opposes ANWR exploration because it would be "an easy, short term solution to a lot of problems" for less than 1 year's supply of oil, and the wilderness values in that area would be destroyed.
"The fact that we oppose ANWR should not be taken as a desire to shoot down the oil and gas industry."
He said Clinton also would work to increase gas production and improve enhanced oil recovery. "But you also need a dose of conservation. It's the zero cost option. It's one of the basic objectives we have. We're not foolish enough to believe we can eliminate oil imports."
Hoecker said Clinton did not oppose the omnibus energy bill "even though it does not contain all the answers." He said the bill does not adequately promote conservation, does not increase CAFE standards, and would not lower U.S. reliance on oil imports.
Bill Burton, energy policy coordinator for the Clinton campaign, said, "Clinton views energy policy as part and parcel of economic policy. Cheap oil has been the Reagan-Bush policy. We want an energy policy that puts people back to work.
"This industry has been taken apart. More than 470,000 jobs have been lost. The public doesn't know this because they don't see pictures of oil and gas workers leaving a closed factory in a long line. They just walk away from a stacked rig.
"We can have an environmental policy and energy policy that work together and not have to make a choice between jobs and the environment."
BUSH'S RECORD
There are no surprises in Bush's energy program. His administration would continue with its present objectives.
His Department of Energy's National Energy Strategy calls for more production from all sources. Implementation requires a number of regulatory changes, as well as legislative changes.
Bush would promote conservation and renewable fuels, perhaps to a lesser degree than Clinton and through the working of markets rather than government intervention.
Bush's reliance on the free market means the petroleum industry can expect no special help to raise prices or to limit imports.
That approach, as well as Bush's willingness to forego offshore lease sales, has disappointed the oil industry.
But he will help the industry in other ways. The Federal Energy Regulatory Commission will continue its push to break down barriers in gas transportation, and the Energy and Interior departments will continue to make small changes to help the industry.
For example, DOE has embarked on a program to demonstrate enhanced recovery techniques for reservoirs commonly found in the U.S., and Interior has taken steps to facilitate offshore production, block unwarranted appeals against drilling on public lands, and ease royalties on stripper oil.
If reelected, the Bush administration would continue to advocate ANWR leasing, although congressional opposition seems to preclude any hope of legislation.
Despite release of the administration's 5 year offshore leasing plan (OGJ, May 11, p. 22), continual congressional moratoriums appear to have cemented that issue.
ADMINISTRATION DEFENDED
W. Henson Moore, Bush's assistant for intergovernmental affairs, told a New Mexico Oil & Gas Association meeting last week, "The president has an excellent record on energy issues.
"He promised decontrol of natural gas wellhead prices, and he delivered. He promised access to transportation for gas producers, and he delivered. He asked for repeal of the 'windfall profits' tax and he delivered. In all of these cases, the president has come through for the U.S. energy industry."
Jay Stone, an energy adviser to the campaign, says a reelected Bush administration would work to increase industry's access to public land, help the formation of risk capital for drilling, and promote alternative fuels development.
He said the Clinton campaign appears to favor natural gas production--unless it comes from the Outer Continental Shelf. Stone said, "They either favor one or the other. They can't have it both ways."
Election rhetoric also has the Bush administration citing its energy conservation efforts.
Deputy Energy Sec. Linda Stuntz said, "The key to conservation is trying to build on our strengths: technology and a free market economy, rather than trying to shame or tax people into changing the lifestyles that derive from our culture, climate, geography, and work ethic."
She said it is a myth "the maintenance of a robust domestic supply industry is somehow inconsistent or incompatible with a vigorous conservation program" or that conservation must be based on the "old command and control approach." She said the administration's goal is to balance "the supply and demand sides while relying on the entrepreneurial spirit of Americans."
Stuntz said, "We believe a healthy domestic independent oil and gas industry is critical to the future of the oil industry and for our economy. But we have to rely on market forces. Every time the government intervenes to try to manipulate the market, someone gets hurt. We think the way to help the oil industry is to expand markets. Propping up or pushing down prices is a road to failure."
CHANGES IN CONGRESS
Despite what happens in the White House, the Nov. 3 polling clearly will be a one of the watershed elections of the century, propelling many new politicians into Congress.
All members of the House of Representatives and a third of the Senate face reelection this year. However, there's not much chance the Democratic party will lose control of Congress.
Due to retirements, deaths, and primary election defeats, at least 86 members of the 435 seat House will not be back in January.
The same factors have opened an additional nine Senate seats: one each in California, Colorado, Idaho, Illinois, New Hampshire, Utah, and Washington, and two seats in North Dakota. Of the nine, seven are open due to retirements, one due to an election defeat, and one due to a death. Most of the other Senate seats up for reelection are considered safe.
A record number of women, blacks, and Hispanics are running for Congress.
Rep. Newt Gingrich (R-Ga.) said, "Even if it doesn't result in our gaining control of the House in nominal terms, there is no doubt the turnover will be invigorating for Democrats and Republicans."
But turnover in Congress will affect energy legislation very little in the next few years--or even in the next 10 years. Committee leaders shape legislation, and the chairman of the panels with jurisdiction over energy issues will be unchanged.
The last time Congress saw such major changes was in 1975, when the Watergate scandal helped oust many incumbent congressmen.
But only recently have those "Watergate babies" risen through seniority to positions of power.
For example, Rep. Phil Sharp (D-Ind.) chairs the House energy and power subcommittee, and Rep. George Miller (D-Calif.) heads the House interior committee.
PROSPECTS FOR LEGISLATION
Congress will face a familiar slate of energy issues next year, all left over from this session.
If the omnibus energy bill does not pass, it likely will resurface regardless of who sits in the White House. After all, the bill is the product of Democratic energy committee leaders, and the basic battles have been fought.
Whether or not there is an omnibus energy bill, Congress will be asked to consider natural gas provisions and OCS measures stripped out of it.
Offshore drilling opponents may try for long term leasing bans. Oil lobbyists will seek bills to require the federal government to share its offshore revenues with coastal states and to reduce royalties on deepwater OCS production. The issue of higher CAFE standards is not dead, either.
Should the Bush administration return to power, it will continue to advocate leasing of the ANWR Coastal Plain but is unlikely to make much headway.
Congress also will have a full slate of environmental bills left over from the current session, including reauthorizations of the Resource Conservation and Recovery Act (RCRA) and the Clean Water Act.
The oil industry does not want tougher regulation of drilling muds and produced fluids under RCRA.
Petroleum marketers can be expected to again push a bill to prohibit refiners from charging wholesale customers more than the price at their company operated stations.
DIFFICULT CHOICES
The Bush-Clinton choice will be a difficult one for the oil industry.
Bush, a former oilman, has been a disappointment to the industry in many respects.
Robert Stewart, president of the National Ocean Industries Association, said last week he would give the Bush administration only a C grade.
"But if you ever see anyone rate an administration A or F, you had better take a hard look at who's doing the rating. My rating scale runs only from B to D." Stewart said although the Bush administration's achievements have been "a mixed bag," at least its energy policy is well known. "After 4 years, we have a fairly good fix on the administration's attitude on exploration and development."
He said the Clinton presidency would entail many unknowns. Despite "some warm, fuzzy assurances" from the Clinton campaign staff, NOIA has lingering fears regarding Clinton's position on offshore drilling.
The main thing to remember, Stewart said, is that the industry should not rely too much on what either candidate says during an election campaign.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
