“Instead, both houses have passed bills that some describe as ‘no-energy legislation.’ That means that the bills do virtually nothing to meet the nation’s increased need for oil and natural gas in the years ahead. These are anti-oil and natural gas bills that API and its members have no choice but to oppose.”

Ford says that the Senate passed its energy bill in June. “The good news is that the Senate rejected Finance Committee proposals that would have imposed a $30 billion tax increase on our already heavily-taxed industry to pay for alternative fuels development. That was the most positive action taken by either house during the energy bill debate.”

That’s the message that API and its members, working through the industry’s Educational Advocacy program, has been communicating, Ford explains. Efforts have included print, radio and TV ads; outreach to print and broadcast news media; websites; and other activities.

Ford said that Congress has ignored recent studies and analyses that have reiterated how oil and gas will continue to be the dominant energy sources for the nation well into the 21st century. “The Department of Energy projects that the U.S. will consume 25 percent more oil and 19 percent more natural gas in 2030 than was consumed in 2005,” he states. “Our energy security requires policies that promote greater supplies of these fuels, not policies that hinder our industry’s ability to provide American consumers the energy they need.”

Ford says that the bad news is that the Senate bill imposes a 36 billion gallon renewable fuels mandate, which places a risky bet on unproven technology without allowing adjustments if the bet goes wrong. It imposes a severance tax on 1998 – 99 royalty relief leases not containing price thresholds. In addition, the bill provides the federal government with authority to prevent “price gouging,” setting restrictions that would act like price controls. And history has shown that price controls can cause disruptions in supplies that would harm consumers. Ironically, while the bill would curtail domestic oil and gas production, it provides that the Attorney General bring antitrust suits against OPEC for doing the same thing.

The House bill isn’t any better, Ford says. The House approved a $15 billion tax increase on the industry by repealing the 2004 manufacturers tax credit for E&P and refining, and changing the tax treatment of foreign oil-related income. The bill also repeals provisions of the 2005 Energy Policy Act designed to facilitate and encourage E&P on federal lands; imposes a $9 conservation fee on 1998 – 99 deepwater royalty relief leases that do not contain price thresholds; prohibits issuance of OCS leases to holders of such leases; and enacts a new system of fines and penalties for paperwork violations of royalty requirements. Finally, the bill imposes restrictions on franchisor-franchisee agreements with respect to E85 infrastructure installation.

Ford notes that the industry is opposed to the royalty-related provisions of both Senate and House bills. “The federal royalty relief program has had much success in stimulating offshore production,” he says, “and we are concerned that proposed changes could reverse that progress. Royalty issues are primarily contractual in nature and are best resolved by the parties involved, not Congress.”

As of early September 2007, Senate and House conferees had not been appointed to work out differences between the bills, and the likely schedule for conference committee deliberations is uncertain. “The Democratic leadership has assigned a high priority to sending an energy bill to the President,” Ford says. “However, partisan wrangling has been on the upsurge and could get in the way. If faced with a contentious conference, the leadership could opt out of a conference committee and bring a blended energy bill directly on the floor—or they could try to add energy provisions to other pending legislation, such as the farm bill, during floor debate.”

In any event, Ford says that there are strong political pressures favoring passage of energy legislation. “Labor Day is the traditional start for presidential nomination campaigns and all of the candidates are strong renewable fuel supporters. Moreover, many members of both houses have a political interest in seeing legislation enacted, particularly farm state members committed to increased renewable fuel use, and advocates of improved energy efficiency.”

However, Ford says that the industry is not alone in opposing the energy bills. The utility industry is strongly opposed to a House provision requiring utilities to produce 15 percent of their power from renewables. The auto industry and the United Auto Workers oppose the Senate bill’s provision to significantly increase the CAFÉ fuel efficiency standard. And some farm and consumer groups have expressed concern about the disincentives to energy production in the bills.

Ford says that Bush administration representatives have said publicly that they would recommend that the President veto the energy legislation. They have expressed concern about the oil tax, price gouging and OPEC lawsuit provisions and have noted the injustice of having the oil and gas industry pay the cost of the entire legislation. However, Ford also points out that the President has urged Congress to pass energy legislation and has advocated going even further on renewable fuels than the pending bills provide. Thus, it is uncertain if the President would veto the legislation.

Ford concludes: “At the start of this year, we saw the industry facing a ‘perfect storm’ in Washington: the worst political climate in 35 years, shaped by high gasoline prices, high earnings, a partisan Democratic Congress, a weakened Republican President and a fast-approaching election year. Unfortunately, 2007 has more than lived up to these expectations. API and its members recognize that the industry is in an uphill fight, but we are not in any way letting up on our efforts. We will not give up hope that reason and common sense, not partisan politics, will prevail in Congress and prevent the passage of legislation that is so harmful to America’s future energy security.”