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View Full Version : Big Oil Loses it's welcome in Washington DC



Nitro Express
11-08-2006, 08:14 PM
HOUSTON (Nov. 8) - After enjoying nearly unlimited access to Washington's biggest power brokers over the past decade, Big Oil will find the welcome mat has been swept out from underneath them following major Democratic wins in midterm elections.

According to the House Democrats' blueprint for governance, titled "A New Direction for America," a key goal will be working toward "energy independence."

Among the bullet points for 2006 Democrats is the following: "Free America from dependence on foreign oil and create cleaner environment with initiatives for energy-efficient technologies and domestic alternatives such as biofuels. End tax giveaways to Big Oil companies and enact tough laws to stop price- gouging."

Additionally, the oil industry suffered another loss when California's voters ousted U.S. House Resources Committee Chairman Richard Pombo, R-Calif. The staunch oil drilling proponent will be replaced by Democratic wind energy expert Jerry McNerney.

The industry's official voice box, the American Petroleum Institute, took a diplomatic stance on the election results. "We're a nonpartisan organization," said John Felmy, chief economist at the API. "We're committed to briefing new members in the House and Senate."

Other industry analysts feared that Democrats would use their positions to forge ahead with anti-industry measures. "Get used to words like energy tax, windfall profits, etc," said Dan Pickering of Pickering Energy Partners in Houston, in a note to clients. "[The results] are not good for energy... Question is, how bad is it?"

Energy stocks absorbed the election results, clocking solid gains following a bullish U.S. inventories report. The Amex Oil Index (XOI) was up 1.4% to 1, 166.73 points with less than an hour left in regular trading.

Industry watchers expect the Democratic-controlled House to tighten air- quality and emissions standards, as well strengthen drilling restrictions in places like the Arctic National Wildlife Refuge but noted that the numbers aren't there to translate into major policy reversals.

"While Democrat control of the House will change the tone of debate over U.S. energy policy, a deadlocked Senate and ongoing control of the White House by Republicans will limit the scope for radical shifts in direction," according to Robert Johnston, director of energy and natural resources at Eurasia Group, in e-mailed comments.

"Democrat priorities are likely to be tightening standards for mercury and carbon emissions by the power sector...and strengthening moratoria on energy exploration in ANWR and the outer continental shelf. All of these goals will face stiff resistance for Republicans," said Eurasia's Johnston.

According to the House Democratic blueprint, the road to achieving energy independence from the Middle East runs straight through the Midwest.

By extending tax credits for ethanol and biofuels and providing tax benefits to small ethanol producers, House Democrats hope to double the percentage of renewable fuels sold in America in six years, according to the blueprint posted on Rep. Nancy Pelosi's Web site, the San Francisco legislator who is expected to become the speaker of the House.

"American ingenuity can be put to work to achieve energy independence from Middle East oil in the next 10 years," according to "A New Direction."

At a recent industry event in Houston, Exxon Mobil Corp.'s Steve Pryor, the president of Exxon Refining and Supply Co., said that energy independence is an impossible goal.

"We have never been and never will be energy independent. We live in an interdependent world...and it is important to have policies that welcome that," he added.