04-08-2000

LOBBYING: All Pumped Up

Motorists may have been grumbling, but Washington's energy lobbyists
cheered the news last month that the price of crude oil had soared to a
nine-year high of $34 a barrel. The lobbyists, representing both big oil
and the renewable-energy industry, are using the energy-price spike to
push a wish list of proposals that gathered dust during the cheap-energy
days of the 1990s.


Even the recent decision by the Organization of the Petroleum Exporting
Countries to boost production by 1.7 million barrels a day is unlikely to
diminish the wide-ranging lobbying efforts.


Take the American Petroleum Institute. API President and CEO Red Cavaney
says today's energy woes could be resolved if oil companies were given
access to the billions of barrels of domestic petroleum reserves that are
off-limits because of environmental regulations. "Why do we deny
ourselves access to large quantities of oil and gas in Alaska, in parts of
the Gulf of Mexico, and in the Rocky Mountain states?" Cavaney wrote
in a recent USA Today column. "Maybe, just maybe, this current season
of motorist discontent will move us beyond old rhetoric into a new era,
which produces both environmental protection and energy
self-sufficiency."


The API has gained support on Capitol Hill for one key initiative. Senate
Energy and Natural Resources Committee Chairman Frank Murkowski, R-Alaska,
has introduced legislation that would enable petroleum companies to drill
in the Arctic National Wildlife Refuge. The U.S. Geological Survey
estimates that oil pools in the refuge hold 16 billion barrels of oil,
enough to replace daily imports from Saudi Arabia for years. Clinton
Administration officials and environmentalists have vowed to protect the
refuge. But a Senate budget measure projects $1.2 billion in royalties
from the Alaska refuge in 2005.


Alaskan oil is not the only item on the API's agenda. The 500-member trade
group is also using consumer fear that gas will be $2 a gallon to bolster
its fight against government regulations that restrict domestic drilling.
The API wants the U.S. Forest Service to rethink its refusal to allow
road-building in vast stretches of the federal lands, said Mark Rubin, an
API policy expert. It also wants to ensure that the Bureau of Land
Management's rewrite of oil- and gas-drilling rules doesn't impose tougher
requirements on the industry.


U.S. sanctions barring companies from doing business with several major
oil-producing countries should also be reviewed, according to the API. The
trade group would "like to see a re-examination of sanctions against
countries such as Iran, Iraq, Libya, and Azerbaijan," said Genevieve
Murphy, a Washington representative of the API. "A lot of sanctions
affect our firms operating overseas, so they lose opportunities to
overseas competitors," she added. "We have the potential to
re-examine policies that had been made in the past under very different
circumstances."


The Independent Petroleum Association of America, which represents the
8,000 drillers who produce about 40 percent of America's crude oil and
about 66 percent of its natural gas, shares many of the API's concerns. At
the top of its wish list are tax law changes proposed by Sen. Kay Bailey
Hutchison, R-Texas, that would make it more economical for domestic wells
to keep producing oil.


The IPAA's Virginia Lazenby, a Nashville, Tenn.-based petroleum executive,
told the Senate Energy and Natural Resources Committee in late March that
these tax breaks would cost one-tenth of the amount that the
Administration has proposed spending this year on energy efficiency and
alternative fuels.


Advocates of renewable energy are used to these kinds of slams from oil
and gas producers. Supporters of hydroelectric, solar, and wind power have
also ratcheted up their lobbying efforts. They maintain that more federal
funding for energy research, additional tax credits, and decreased federal
regulation would help reduce U.S. dependence on oil imports. "We use
every opening we can: every oil price hike, every oil spill, every new
report about global warming," said Scott Sklar, the executive
director of the Solar Energy Industries Association.


Sklar's group has endorsed legislation sponsored by Sen. Wayne Allard,
R-Colo., and Rep. Matt Salmon, R-Ariz., that would give tax credits to
homeowners using solar power. The group also supports a bill sponsored by
Reps. Roscoe G. Bartlett, R-Md., and Jay Inslee, D-Wash., that would
reduce regulatory burdens on solar power.


Meanwhile, hydroelectric power interests also intend to capitalize on
higher oil prices. Hydro groups are pushing legislation sponsored by Rep.
Edolphus Towns, D-N.Y., that would ease federal licensing rules for new
power producers. Hydropower development is limited because of the feds'
complicated licensing process, said David Tuft, a spokesman for the
National Hydropower Association.


The trade group is also pressuring the Clinton Administration to include
hydropower in any electricity deregulation legislation that promotes
utilities' use of renewable energy sources. Many environmentalists
distinguish between renewables and hydropower, contending that the dams
kill too many fish.


The American Wind Energy Association wants the federal government to up
its research and development spending on wind power. Jaime C. Steve, the
association's director of government and public affairs, praised the
Clinton Administration proposal to boost R&D spending on wind energy
from $32.5 million in 1999 to $50.5 million this year. "People
haven't paid attention to energy prices in 10 years," Steve said. The
high price of oil, he added, "is putting an intense focus on
alternatives."


Ethanol lobbyists from the Renewable Fuels Association have also sought to
capitalize on the oil-price spike. Ethanol cannot replace oil as a source
of gasoline, but it can act as an octane enhancer, said association
President Eric Vaughn, thereby mitigating price increases for premium
gasoline. Vaughn estimated that ethanol production could double in two
years. But he said the Administration must reject California's request for
a Clean Air Act waiver and maintain federal oxygen requirements for
reformulated gasoline. The oxygen rules could be met by increased use of
ethanol.


The association is backing an effort by Sen. Richard J. Durbin, D-Ill., to
provide an extra $15 million for research on ethanol. The group has teamed
up with the National Corn Growers Association and the American Farm Bureau
Federation to push the measure.


Members of the Business Council for Sustainable Energy, which includes
companies-such as Honeywell Inc.-that manufacture conservation equipment,
also back spending on renewable energy. All of these groups work through
the Sustainable Energy Coalition.


Environmental groups have also joined the skirmishing. They say that the
way to combat higher gasoline prices is to raise the mile-per-gallon
standards for automobiles, especially for the light trucks and
sport-utility vehicles that now make up a majority of new cars sold in
this country. The Sierra Club is circulating a letter endorsed by
approximately 60 House members that urges the President to increase the
mileage standard.


Daniel Becker, the director of the Sierra Club's global-warming and energy
program and a supporter of solar and wind energy, emphasized that
utilities don't use much oil to produce electricity. The pain caused by
high gasoline prices can best be alleviated over time by improving
automobile efficiency, he added. The group is pressuring U.S. automakers
to promote the use of electric vehicles and vehicles that use a
combination of gasoline and electricity. But efforts appear to be lagging.
For example, California may relax its requirement that 10 percent of the
cars sold in the state by 2003 be powered by electricity.


Automakers have opposed mandates that they sell a certain number of
electric vehicles, but they are using the oil issue to push for additional
federal subsidies. The Electric Vehicle Association of the Americas, which
represents many U.S. and Japanese automakers, backs congressional efforts
to expand a tax credit for purchasers of electric vehicles. The electric
vehicle group also supports an upcoming proposal by Rep. Sherwood L.
Boehlert, R-N.Y., that would provide federal matching funds to communities
willing to experiment with new electric vehicle technologies.


Despite these efforts by environmentalists and fans of renewable energy,
an aide to Sen. Allard has been surprised by the groups' low profile,
especially compared with the oil industry's new visibility on Capitol
Hill. "They're not taking advantage of the situation like they
should. They're fractured and splintered, and they just don't have the
resources of the oil guys."


Solar energy lobbyist Sklar says his team is outgunned. "The oil
people have political action committees. We don't. They use law firms in
town. We don't," he said, "but we think the public is with
us."


For all of the hullabaloo, David Nemtzow of the Alliance to Save Energy,
an energy conservation group, questions whether Congress will take any
action this year. "With a divided government and a big election year,
I just don't see much happening," he said. The alliance, he added,
will remain active on these issues. "Our goal is to get exposure and
advance the debate," he said.


Louis Jacobson and Shawn Zeller

National Journal