Oil Industry and Congress

Do Not Oil Probe Shaft
[Do Not Oil Probe Shaft]

Oil Industry and Congress: Bitter friends and fast enemies, err, something like that. Both sides of the aisle have an interest in appearing to do something about the ginormous oil industry profits, and subsequent high gas prices for consumers. Fortunately, they managed to avoid actually making any changes.

A package of measures targeting oil-company profits and market speculators failed to reach a vote in the Senate Tuesday, as Republicans blocked Congress’s first effort to address a record surge in oil prices.

Congress and the oil and financial industries are locked in an escalating public confrontation over where to fix blame for oil’s run-up. But industry lobbyists are also huddling privately with lawmakers to horse-trade over measures that could attack the oil issue and work to industry’s advantage.

One way the oil industry could be a winner in the end is through an easing of restrictions on domestic drilling. Republicans have long pushed for more domestic drilling as one response to high oil prices — although it could take years for any new U.S. oil find to have an impact on global prices. Industry lobbyists hope exploration will prove newly palatable to Democrats who are under pressure from voters as well as lobbyists from airline, trucking and manufacturing industries.

[From Lawmakers, Industry Clash And Cooperate as Oil Plans Take Shape – WSJ.com]

The NYT had a slightly different angle on the story, concentrating on the $17,000,000,000 worth of tax breaks the poor, poor oil companies require to conduct business. Without the subsidies, Big Oil would go bankrupt in a minute or two. Luckily for Big Oil, Congress is happy continuing the dole.

A Democratic proposal to impose heavier taxes on big oil companies stalled in the Senate on Tuesday as Republicans and Democrats offered different ideas on how to deal with soaring energy costs.

A bill that would have rolled back some $17 billion in tax breaks on Big Oil and pressured the companies to invest in new energy sources by hitting them with a windfall-profits tax if they did not failed to get enough votes to move forward. Fifty-one senators voted to bring the measure up for consideration, but that was nine short of the number needed under Senate rules. Forty-three senators, most of them Republicans, voted “no.”

The oil-tax proposal was one of two energy-related bills that failed to advance. The other was a proposal to amend the Internal Revenue Code by providing “incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes,” as the measure to promote new energy sources was officially described. The vote to take up that legislation was 50-44, or 10 “yes” votes fewer than necessary.

The votes were against a backdrop of $4-a-gallon gasoline and oil prices that have gone over $139 a barrel just at the start of the summer vacation season.

[From 2 Energy Bills, Including Windfall Tax, Stall in Senate – NYTimes.com]

Because the bill was so important, everyone didn’t bother to show up to vote:

Senate Democratic leaders were reportedly resigned to defeat on the oil-tax bill and did not ask Senators Hillary Rodham Clinton of New York and Barack Obama of Illinois, who just completed their months-long competition for the presidential nomination, to show up for the vote. The other four absentees were John McCain of Arizona, the presumptive Republican nominee for president; Lindsey Graham, Republican of South Carolina, and Edward M. Kennedy of Massachusetts and Robert C. Byrd of West Virginia, Democrats who have been ill.

Six Republicans voted “yes” on the oil-tax bill. They were Norm Coleman of Minnesota, Charles E. Grassley of Iowa, John W. Warner of Virginia, Gordon Smith of Oregon and Susan M. Collins and Olympia J. Snowe, both of Maine. Only two Democrats voted “no,” Mary Landrieu of Louisiana and Harry Reid of Nevada. Mr. Reid, the majority leader, may have voted “no” in a parliamentary move to preserve his right to bring up the proposal again.

Back to the Wall Street Journal, which notes both parties heavily depend upon lobbyists to help legislators make informed decisions. Well, informed in the sense of campaign contributions and three hour luncheons.

As the various proposals fly, lawmakers are choosing sides based partly on whether oil or finance companies contribute most to their home states.

Democratic Rep. John Dingell of Michigan, chairman of the House Energy and Commerce Committee, has investigators looking into the role of big Wall Street brokerage houses in oil trading. Other Democrats have focused their attacks on oil companies.

Oil- and finance-industry lobbyists have blanketed Washington with advertising deflecting blame for the crisis. In a letter to Senate Energy and Natural Resources Committee member Sen. Maria Cantwell (D., Wash.), Exxon Mobil Corp. blamed financial speculators for more than half the price of a barrel of crude.

The American Petroleum Institute is running newspaper ads depicting a crying baby, to imply that oil-company taxes will hurt consumers most. The API also is touting its study by Robert Shapiro, a former undersecretary of commerce for economic affairs under President Bill Clinton, showing that Middle America holds most “Big Oil” shares. The trade group declined to comment.

Outside of camera range, lawmakers are turning to industry lobbyists for guidance on problems rooted in the opaque economics of commodities markets.


Congressional staffers in both parties acknowledged the cooperation. “You do not want to do Band-Aid strategies,” said a House staffer. “We’re trying to talk to everyone we need to.”

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