Industries Targeting Energy Bills
Thursday, November 29th, 2007Greg Edwards — Richmond Times-Dispatch
oil well
Some major national business groups, led by oil and gas producers, have stepped up efforts to kill congressional legislation that would promote efficient and renewable energy production.
Business groups say the legislation would reduce energy supplies and cost businesses and consumers money. It would discourage domestic energy production by eliminating incentives for oil and gas production and set unrealistic goals for the use of renewable fuels and improvements to auto fuel economy, they say.
With a final vote drawing near, business groups are running full-page, color newspaper advertisements in the Washington area and in other large markets across the country, including the Richmond Times-Dispatch. An ad in USA Today last Friday claimed the legislation would cost 5 million jobs by 2030 and a $1 trillion reduction in gross domestic product.
The Natural Resources Defense Council, on the other hand, cites an estimate that the legislation could save consumers $850 billion by 2030. The environmental group supports the legislation.
The legislation’s final form is being worked out by negotiators from the Senate and House of Representatives, which passed differing bills. A vote on a compromise version is anticipated around the middle of next week.
National groups behind the anti-legislation advertising campaign include the American Petroleum Institute, the U.S. Chamber of Commerce and the National Association of Manufacturers. Virginia business groups agree with the campaign against the legislation.
Hugh Keogh, president of the Virginia Chamber of Commerce, said he agrees with the criticism’s basic theme.
“I think the bill . . . has the impact of discouraging further energy development at a time when we need to be looking under every rock for opportunities,” he said.
Brett Vassey, president of the Virginia Association of Manufacturers, said the bills ignore the kind of diversity of energy sources, such as the nuclear, fossil-fuel and renewable energy, supported by Virginia’s state energy plan. The association’s top issue for a while has been energy.
John Felmy, the chief economist for the American Petroleum Institute, said the bills contain bad policy regarding oil and natural-gas production.
The House version would eliminate a tax deduction for oil and gas producers for any income attributable to domestic production and would cut the amount of royalty relief available to drillers of offshore wells.
“Lousy” is how William Kovacs of the U.S. Chamber described the proposed repeals of tax and royalty incentives. They will make domestic oil more expensive than foreign oil by about $9 per barrel, he said.
The U.S. Chamber could support some provisions for increased energy efficiency in appliances, Kovacs said. But a provision calling for 15 percent of electricity from renewable sources by 2020 could be a problem for parts of the country lacking adequate wind or sunshine, he said.
The renewable electricity provision could drive up electricity costs for Gulf Coast oil refineries, Felmy said. The legislation, he said, also calls for the use of more ethanol in fuel than can be produced with existing technology, and that could hit consumers with higher costs.

