“Petroleum industry attacks ‘Gang of 10′ energy plan” is perhaps the least surprising headline in the history of E&E News (subs. req’d). After all, the last thing conservatives and their Big Oil donors is an actual “all of the above” compromise (see “The Big Energy Lie“).
American Petroleum Institute President Red Cavaney calls the proposal “a classic case of one step forward, two steps back — or in this instance ‘light on new production/heavy on new taxes.’ ”
At issue is the plan unveiled Aug. 1 by the “Gang of 10″ senators, led by Democrat Kent Conrad of North Dakota and Republican Saxby Chambliss of Georgia, that is aimed at breaking a partisan stalemate on energy policy.
“New taxes on … U.S.-based energy companies would drastically cut capital that otherwise could be invested in domestic oil and natural gas production and expanded refining capacity,” API says. “The net result could be to stifle high-risk, capital-intensive projects in the U.S., leaving Americans more dependent on foreign sources of energy, while jeopardizing U.S. jobs and economic growth.”
Well, it would certainly drastically cut the staggering 55% of profits that Big Oil executives are currently devoting toward buying back their own stock and hence boosting the value of their options (see “Follow your money“).
I will discuss my thoughts on the details of the Gang-of-10 plan next week, though, I have previously endorsed the general idea of compromise (see “Since offshore oil is de minimis, why shouldn’t Obama and the Dems make a deal?“). Here is the rest of the E&E News story
The Gang of 10 plan is emerging as a rallying point for lawmakers who say Congress should try to pass new energy legislation this year, despite a highly partisan pre-election climate.
The plan would scale back leasing bans in the eastern Gulf of Mexico by allowing drilling as close as 50 miles from Florida’s shores.
It also allows drilling in the Atlantic Ocean at least 50 miles off the coasts of four Southeastern states, if they allow it. These states — Virginia, North and South Carolina, and Georgia — would get a sizable share of the royalties. But API is calling for a much wider expansion of leasing.
The proposal includes more than $80 billion in alternative energy and conservation measures, paid for with $30 billion in revenues from oil companies and other as-yet-undisclosed offsets.
Industry revenues would come in part from repeal of major oil companies’ ability to claim the Section 199 domestic manufacturing deduction, and provisions to ensure federal revenues from flawed late 1990s deep-water gulf leases that currently allow royalty waivers regardless of energy prices.
Mixing new drilling with renewable energy and conservation programs is also part of a bipartisan House plan sponsored by Reps. John Peterson (R-Pa.) and Neil Abercrombie (D-Hawaii). Their drilling plan is more aggressive. It would lift all moratoria to within 50 miles of states’ coasts and would allow drilling within 25 miles if states agree. The proposal steers clear of repealing industry tax breaks.
About a quarter of the House bill’s 120 backers thus far are Democrats.
Easing leasing bans nonetheless faces heavy opposition from Democrats, and party leadership in both chambers has rebuffed calls to ease the moratoria.
However, some Democratic opponents of easing offshore leasing bans, put on the defensive amid high gasoline prices, have softened their stance — especially if wider drilling is part of a broader energy package that is heavy on renewable energy and other priorities.
House Speaker Nancy Pelosi (D-Calif.), who supports the current restrictions, said she is open to allowing a vote on wider drilling if it is paired with other energy measures. But there are no specifics on the energy package that aides say she is planning to bring up after the August break.
Pelosi said this week that releasing oil from the Strategic Petroleum Reserve, expanding regulation of futures markets and boosting federal investment in renewable energy are the best ways to address high energy costs and cure oil “addiction.”
A Democratic leadership aide said one candidate for inclusion in the plan would be a renewable electricity standard, which would require utilities to supply escalating amounts of power from sources like wind and solar.
But packaging drilling with these other provisions could create a logjam despite Pelosi’s apparent openness to allowing votes on the issue. The renewable electricity standard, for instance, has strong GOP opposition and has drawn White House veto threats.
A renewable electricity standard was included in a major House-passed energy bill last year but was eventually dropped in negotiations with the Senate, where Republicans blocked a version of the bill that included the standard.
Republicans — who say Pelosi should cut short the August recess to vote on energy legislation — called her comments an effort to create political cover in a climate where the public increasingly supports wider offshore drilling.
House Minority Whip Roy Blunt (R-Mo.) this afternoon declined to take a position on the Democrats’ potential legislation, saying he would wait until there was an actual bill.
“I haven’t seen anything that resembles a bill,” Blunt said. “When they have a bill, I’m glad to talk about it.”