WATCHING WASHINGTON YERGIN'S VIEW OF THE INDUSTRY

Oil industry observer Daniel Yergin thinks the Clinton administration is likely to opt for higher gasoline taxes. "In one form or another, some kind of higher energy taxation appears more likely than even 6 weeks ago, in the context of deficit reduction." Yergin, president of Cambridge Energy Research Associates, thinks Clinton will reject a carbon tax or an oil import fee because of the problems they present.

Jan. 12, 1993

3 min read

Oil industry observer Daniel Yergin thinks the Clinton administration is likely to opt for higher gasoline taxes.

"In one form or another, some kind of higher energy taxation appears more likely than even 6 weeks ago, in the context of deficit reduction."

Yergin, president of Cambridge Energy Research Associates, thinks Clinton will reject a carbon tax or an oil import fee because of the problems they present.

CLINTON CHALLENGE

Yergin said, "One of the critical challenges and opportunities for the Clinton administration will be to find new ways to integrate energy issues and environmental concerns in a way that is productive.

"There is a strong need to develop a new policy apparatus that will provide a framework for dealing with energy and environmental issues in a rational, coherent fashion, rather than in the piecemeal way that is often the case today."

He said the U.S. oil industry continues to contract sharply, resulting in high job losses and erosion of its world respected technological base.

"Can this process be slowed so that a healthy industry survives in the face of existing constraints?," he asked. "This can be tackled in the context of the larger Clinton administration focus on investment and its stimulation and in terms of its commitment to research and development. A proper investment climate is critical.

"Despite the Ewings of 'Dallas' and the familiar images, today's oil and gas industry is a rather high tech industry. It is the largest single consumer of computer technology. Continuing to improve its efficiency through R&D will contribute to its stabilization."

He predicted the U.S. refining industry will continue to consolidate but said gasoline will remain the overwhelmingly dominant transportation fuel.

Alternative fuels will continue to grow, but compressed natural gas will be only a "niche business" with perhaps a 5% share of the U.S. transportation fuels market in 10 years.

Natural gas, the administration's preferred fuel, is entering a new era. "The gas bubble has ended. The growth potential is extensive. But the natural gas resource base needs to be developed more."

TV DOCUMENTARY

Yergin's 1991 history of the oil industry, "The Prize," has been recast into an 8 hr television documentary that begins airing on public television stations this week.

Yergin set out to tell "a really good story" in the 780 page book. But he succeeded only too well.

When I mention the tome to oil industry professionals, two-thirds admit they abandoned it after 300-400 pages.

The TV version hits the high spots in a visually appealing manner. It will be a major, positive step in improving the American public's understanding of the oil industry.