WATCHING WASHINGTON U.S. ECONOMY IN THE SPOTLIGHT

Make no mistake about it: As Congress resumes work this week the main issue is the sick U.S. economy.

So you can expect Congress to give energy policy legislation an even lower priority than it formerly had. But the oil industry also may get an excellent opportunity to win some tax relief.

The broad Senate energy policy bill could be beyond help anyway. Nothing much has changed in 2 months, except the oil, auto, and environmental lobbies are finding still more reasons to conclude that reviving the omnibus energy bill presents more risks than opportunities for them.

THE SENATE SCENE

Sen. Bennett Johnston (D-La.) wants to bring the energy bill back to the floor, minus controversial provisions requiring greater auto fuel economy and allowing drilling on the Arctic National Wildlife Refuge Coastal Plain (OGJ, Dec. 30, 1991, p. 21). Republicans want the full bill resubmitted.

Senate Majority Leader George Mitchell (D-Me.), the man responsible for scheduling legislation for floor debate, mentioned only one part of the bill when he outlined the Senate's agenda last week.

Mitchell said, "Energy conservation makes every economic sector more competitive. Energy conservation and alternative fuels will promote growth in the future. We have shortchanged both far too long. This year, we will reverse that shortsighted policy."

The new economic focus is affecting the lingering debate over ANWR leasing. Oil lobbyists formerly stressed ANWR leasing would promote the nation's energy security, an argument lost on consumers enjoying bargain basement products and natural gas prices.

Now lobbyists point out that ANWR leasing would create thousands of jobs, and more Alaskan production would benefit the nations's trade balance deficit.

On the tax front, the Independent Petroleum Association of America officially has launched its campaign to eliminate intangible drilling costs and the depletion allowance from the alternative minimum tax (OGJ, Dec. 30, 1991, p. 32). The Interstate Natural Gas Association of America and International Association of Drilling Contractors are backing the effort.

DEPRESSED SECTOR

IPAA asks if Congress is so concerned about the poor economy, which sector is more depressed than small oil producers?

It will lobby the entire tax writing committees for AMT relief. The House ways and means committee, often hostile to the industry, will be more of a problem that the Senate finance committee, chaired by Lloyd Bentsen (D-Tex.).

Majors also are preparing a campaign for ATM reform, saying they are hurting just as much as independents.

The majors may suggest that AMT reform legislation allow companies to carry forward unused IDC credits.

The quality of the industry's AMT campaign may give crafty legislators a chance to play majors and independents against each other -- and stiff-arm both. It wouldn't be the first time for that.