Industry feels chill from a new administration in Washington
January 19, 2010
Originally Post Here By Gerald Karey on January 19, 2010 11:35 AM
The Bush administration had to be a golden age for the oil and gas industry. The president, although a scion of New England Brahmins and a Yale-man, spoke like a Texan and once ran an oil company, albeit with only middling success.
President Bush's administration was sprinkled with officials with ties to the industry. Next door to the White House, in the Eisenhower Executive Office Building, Vice President Dick Cheney, who headed Halliburton between government jobs, invited oil and gas and other energy company executives to secret meetings to help formulate US energy policies.
And the Bush administration's climate change policies might well have been written by industry, and to some extent were shaped by former industry officials. The White House official, who edited government climate reports in a manner that downplayed the links between anthropogenic greenhouse gas emissions and global warming, was a former American Petroleum Institute lobbyist.
Certainly, there were lapses. The Bush administration canceled a sale much coveted by industry of promising acreage in the Eastern Gulf of Mexico. But that was at the behest of the president's brother, Jeb Bush, then Florida's governor, who was opposed to the sale. Blood is thicker than oil.
President Harry S. Truman once famously said that if you want a friend in Washington, get a dog. But the industry could hardly be faulted for believing it had a friend in the White House. Now, however, a former community organizer from Chicago is president, and the industry is not hearing many welcoming words from the administration.
"In the prior administration, the oil and gas industry essentially were kings of the world," said Interior Secretary Ken Salazar, whose western roots (in Colorado), are far deeper than President Bush's. "Whatever they wanted to happen essentially happened and the department, essentially, was the handmaiden of the oil and gas industry."
According to industry, the administration is guilty of a number of sins and missteps since taking office a year ago: slowing the pace of onshore leasing and withdrawing numerous parcels from sales; not moving ahead with a Bush administration plan to offer for lease offshore areas that were off-limits to development under congressional and presidential moratoria; and proposing to eliminate billions of dollars in industry tax breaks and credits.
The latest brouhaha is over the Interior Department's plans to take a much closer look at the impact of onshore development before parcels are offered for sale. The view of the previous administration "was that leasing should happen anywhere at any cost. That's not the way it ought to be done," Salazar said.
In 2005, the Government Accountability Office reported that rising US energy consumption and concerns about dependency on foreign energy "have prompted the [Bush] administration to aggressively pursue domestic oil and gas production, including production on public lands, which in turn has generated concern that the impacts of this activity may compromise the use of public lands for other purposes."
Senator Joe Lieberman, Independent-Connecticut -- who requested the report -- said "Irresponsible stewardship of public lands while the oil and gas industry profits is not an acceptable balance."
Many areas offered for leasing since 2001 were highly controversial, Salazar said, "because there seemed to be little rhyme or reason to which areas were leases." The result was a significant increase in litigation, from a little over 1% of onshore oil and gas leases being challenged in 1998 to 40% in 2008, Salazar said. "Court battles over oil and gas leases are now costing millions of dollars and are tying up resources," he said.
Industry has a decidedly different perspective. The changes will allow government bureaucrats to trump the expertise of geologists and engineers, the Independent Petroleum Association of Mountain States said in a statement. API President Jack Gerard accused the administration of "increasingly familiar double-talk" for speaking of the importance of domestic oil and natural gas, "while making it more difficult to produce American oil and gas." By imposing "these unnecessary additional hurdles, American jobs will be threatened along with the economic opportunities afforded by oil and gas development," he said.
That the Obama administration energy polices and its emphasis on alternatives and renewables represent a sharp departure from Bush administration policies should come as no surprise. Elections have consequences, which is why industry pours millions of dollars into the campaign coffers of candidates they believe will best serve their interests.
The Interior Department headed by James Watt in the first Reagan administration was a very different place than the department under Bruce Babbitt in the Clinton administration. President Bush's Interior Secretary, Gale Norton, clearly had a different perspective than does Ken Salazar.
IPAMS accused Salazar of "rhetoric and hyperbole." Much the same can be said about industry's response. The Obama administration may not be pushing ahead with oil and gas development as quickly as industry would like, but it is adhering to the offshore leasing program and continues to conduct onshore lease sales-- 35 in 2009 and 39 scheduled in 2010. "A Department of Interior that was bringing a slow walk or a moratorium to oil and gas development would have brought an end to much of that oil and gas leasing, and we did not," Salazar said in defense of his stewardship.
Despite "weeks of harsh attacks "by Salazar, IPMAS said it was making a "sweet gesture" by sending him chocolate
Actually, IPAMS was mocking Salazar for calling public lands in the West the "candy store for the oil and gas industry." The association sent 0.07 lbs of fudge, or 1.12 ounces, to remind Salazar "that natural gas activities occupy less than 0.07% of public lands in the West, while providing 27% of the nation's natural gas."
At least IPAMS probably did not violate government ethics rules about gifts to public officials.
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