In The Pipeline 8/8/11

Real brave of you NYT to come out and say America can save money by raising taxes on oil and gas companies.How about we stop jerking energy producers around on a short leash and let them go back to work. New York Times (8/7/11) reports: If the Republicans are truly determined to slash the budget and end government waste, they will start with two obvious and long overdue cuts: ending the web of tax breaks enjoyed by the rolling-in-dough oil industry and terminating the ethanol subsidy. Together these cuts would save up to $100 billion over 10 years, without hurting the poor and middle class or slowing the economy.,, If only. The oil industry’s well-paid defenders — lobbyists and lawmakers in unison — will surely scream “tax hike” and claim that ending $4 billion a year in sweetheart subsidies will decrease production and increase prices at the pump. All of which is nonsense…In 2005, with oil nearing $60 a barrel, James Mulva, the head of ConocoPhillips, told the Senate that his industry did not need these breaks to keep exploring for oil. They need them even less when oil is $100 a barrel…According to the Congressional Research Service, ending the subsidies would have no effect on gas prices and a trivial effect on profits. The Big Five — Exxon Mobil, BP, ConocoPhillips, Chevron and Shell — reported combined profits of $35.1 billion for just the second quarter. Yes, you read that right…The ethanol subsidies are just as unnecessary. The big one is a 45-cents-per-gallon tax credit that costs between $5 billion and $6 billion a year and goes not to corn farmers, as commonly supposed, or to ethanol producers, but to the refineries that blend ethanol with conventional gasoline. Which is to say, the oil companies.

Alaskans’ response to the NYT time hit piece on Shell and energy workers — American business is business and our business is energy, now get out of our way Anchorage Daily News (8/7/11) reports: Shell can’t count on drilling in the Beaufort and Chukchi seas yet but the oil company got closer last week with a conditional federal permit for exploration in the Beaufort Sea beginning next summer. That’s good news… We need to be wise in where and how we go about the business — and make conservation and efficiency part of the process. As Sen. Lisa Murkowski said, “Produce more, use less.” That’s a good, succinct description of intelligent energy policy…Done right, Shell’s Arctic exploration fits that policy…BOTTOM LINE: Shell’s Arctic drilling should be a go in 2012.

For whom the bell tolls — the NYT rejoices on killing off those who have the least among us to spare New York Times (8/7/11) reports: As John Broder and I report in The New York Times, Shell won a big victory by gaining conditional approval from the Interior Department for its plan to drill for oil in the Beaufort Sea off the North Slope of Alaska. The decision takes the company a giant step closer to drilling oil wells in the Arctic after five years of trying to break through court and regulatory hurdles. But the battle is not over, and environmentalists will surely redouble their efforts…Shell executives say that their discussions with the White House, Interior Department, Environmental Protection Agency and other agencies have gone extremely well in recent weeks, reflecting a will by the Obama administration to move forward — perhaps because thousands of jobs are at stake and consumers are upset about high gasoline prices…Here is something of a road map for the fight ahead…Last year, drilling appeared to be on track until an E.P.A. appeals panel delayed an air quality permit because it wanted more time to consider the potential impact of exploration rigs’ diesel emissions on local indigenous communities. Shell decided six months ago to put off drilling until 2012, fearing it would not have time to get equipment in place for the summer drilling season…Complicating the political calculus was last year’s deadly accident and oil spill at a BP well in the Gulf of Mexico…Shell executives say that the climate for negotiations has since improved and that the E.P.A. is moving the process along at a faster pace. They also complimented the Bureau of Ocean Energy, Management, Regulation and Enforcement for moving quickly in submitting data to a federal court in Alaska in a lawsuit challenging Shell’s 2008 lease sale in the Chukchi Sea, west of the Beaufort in the Arctic.

Sagging Poll Reserve release fails; Washington tries sinking economy.  Memo to president:  You can’t grow with No-Growth policies Washington Times (8/8/11) reports: More than a month after the Obama administration said it would tap the country’s emergency oil reserve to try to combat supply disruptions in the Middle East, gas prices at the pump actually have risen 10 cents…President Obama had hoped the move, coming at the onset of the summer driving season, would temper the loss of supplies due to the ongoing civil war in Libya. Working with international allies, the U.S. said on June 23 that it would release 30 million barrels of oil over 30 days, while other countries with strategic reserves agreed to release another 30 million, in staggered sales during July…And prices at the pump did dip, at first, from a nationwide average of $3.61 down to $3.55, according to AAA. But by last week, they had rebounded and the price per gallon stood a dime higher than when the administration first made its decision…“Although it helped initially to pull down prices it was probably too little,” AAA Mid-Atlantic spokesman John Townsend said, pointing out that the nation consumes as much as 20 million barrels of oil a day. “This is just a drop in the bucket.”…Prices may be about to see some relief, though for unwelcome reasons. Last week’s stock market drop and fears of the lingering sour economy have already begun to put downward pressure on oil, which analysts said will translate to lower pump prices — potentially trumping even the administration’s oil release.

Sen Mark Warner of Virginia does his Cuba Gooding Jr. impression on the Senate Floor and yells, “Show me the Money!” National Journal The oil industry is courting a powerful new friend in the Democratic Party­—on the East Coast, no less—just when it needs one most…Sen. Mark Warner, D-Va., has no history of warm relations with Big Oil. Indeed, in past years he has been a vocal critic of the $4 billion in annual tax breaks that oil companies receive from the federal government—tax breaks that will be in the crosshairs this fall as the new congressional super committee looks for ways to slice $1.5 trillion off the federal deficit…But now Warner wants Virginia to become the first East Coast state to allow offshore drilling, which he sees as a pragmatic way to bring jobs and new revenue to his state, and perhaps a way to keep his job in the face of an increasingly red constituency…Warner is also vocally vying for a seat on the new super committee, which would give him an outsize influence on the fate of Big Oil’s corporate tax breaks. Even if he doesn’t land a seat, he is likely to continue to be an influential voice in shaping the debt debate, which oil companies say is sure to target their bottom line…Corporate oil currently has just two reliable Democratic friends in the U.S. Senate—Mary Landrieu of Louisiana and Mark Begich of Alaska—both from red states where offshore drilling provides thousands of jobs and millions of dollars to state coffers and local economies. Landrieu and Begich consistently break with their party to defend Big Oil’s tax breaks and to back bills that would expand offshore oil drilling and direct more offshore drilling revenues directly to states…But Virginia is taking fledgling steps toward joining the ranks of offshore drilling states, which could significantly change its politics. The federal government estimates that the waters off the coast of Virginia hold 130 million barrels of oil and 1.1 trillion cubic feet of natural gas. Republican Gov. Bob McDonnell has made a push for offshore drilling a cornerstone of his administration.