Oil Giants Oppose Senate Energy Bill

Posted April 5, 2004 at 6:08pm

As President Bush and Sen. John Kerry (D-Mass.) spar over gas prices on the campaign trail, the oil industry is making a move on Capitol Hill that could scuttle any chance that Congress approves energy legislation before this fall’s election.

In the past few weeks, ConocoPhillips, ExxonMobil, Citgo, Sunoco and other oil and gas companies have quietly told Congressional Republicans that they will not support the low-octane energy bill that Senate Majority Leader Bill Frist (R-Tenn.) hopes to bring to the floor this spring.

“We are not pushing this abbreviated bill,” said Don Duncan, the chief lobbyist for ConocoPhillips, referring to a compromise bill crafted by Energy and Natural Resources Chairman Pete Domenici (R-N.M.) after a more comprehensive bill stalled in the Senate last year.

“We’ve waited too darn long for an energy policy bill to come about, and if you pass one now that is not comprehensive you haven’t really addressed most of the issues that are out there,” Duncan said.

Bob Slaughter, the president of the National Petrochemical & Refiners Association, added that the 450 U.S. oil refiners “are not able to support” the Domenici bill because it does nothing to limit liability for producing fuel additive MTBE.

“We happen to feel that the strategy should be to get the two extra votes” needed to approve the much larger House-backed energy bill that was blocked by the Senate last year, Slaughter said.

The new stance by the politically powerful oil and gas industry deals the latest blow to the prospects for energy legislation this year even as the issue heats up on the campaign trail.

Bush and Kerry traded jabs last week over the best way to solve the nation’s long-term energy problems and lower prices at the pump.

Bush allies charged that Kerry has contributed to higher gas prices by blocking the energy bill and supporting increases in gasoline taxes.

“We wouldn’t be in this situation right now if Congress had acted on what the president proposed some three years ago to pass a comprehensive energy policy,” said White House spokesman Scott McClellan.

Kerry countered that Bush’s energy plan is a giveaway to oil and gas interests who “met in secret with [Vice President Cheney] to set the oil policy of the United States of America.”

He added: “The United States of America can’t drill its way out of this predicament. We have to invent our way out of it.”

Kerry also rolled out the outlines of a national energy policy that relies heavily on promoting fuel sources that come from hydrogen, wind and the sun.

On Capitol Hill, the Bush administration’s original energy bill includes a lot of what both candidates have proposed.

But it has stalled over a relatively small provision that would give oil companies and refiners immunity from certain lawsuits that result from spills of MTBE, a fuel additive that has flourished in the past decade.

MTBE, a byproduct of the oil-refining process, is one of two leading oxygenates required by 1990 changes to the Clean Air Act to make cleaner-burning gasoline.

After the law took effect, the colorless, foul-smelling chemical was found to pollute groundwater — igniting a round of lawsuits against the petrochemical industry.

Because the use of fuel additives is required by Congress, MTBE now want legislation that would limit their exposure to MTBE lawsuits.

“What we are saying is, ‘Look, Congress, you are the ones who mandated it, you also have the requirement to protect us,” said Duncan of ConocoPhillips. “The language in the House bill that we are supporting says that you can be sued, but you cannot be liable just for using it. You must show that you have mishandled it.”

Because the Domenici bill does not include that protection, the oil companies have withdrawn their support.

The House voted to approve a far-reaching energy bill last year that has fallen two votes short of a filibuster-proof margin in the Senate.

To round up the necessary votes in the Senate, Domenici crafted a slimmer bill that jettisons the MTBE language.

But the refusal of the oil industry to support Domenici’s compromise makes it likely that the House and Senate will remain at loggerheads over the legislation.

“We have met with Domenici’s staff to explain our problems with the approach,” said Slaughter.

Added Duncan: “Right now we are trying to press on our friends in the Senate that this liability issue is too big and too important to try to move a bill just for the sake of moving a bill.”