Democrats Playing Defense on Energy

Posted March 12, 2012 at 6:02pm

Senate Democrats and the White House are feeling the heat over rising gas prices and are preparing a legislative response to blunt GOP criticism.

After coordinating with the White House, Senate Democrats expect to consider, likely before the end of the month, legislation that would repeal tax breaks for oil and gas companies, a senior Senate Democratic aide said.

Details of the bill are still being decided, but the revenues could be used for consumer relief or to fund alternative energy initiatives, the aide said.

The aide said there are no easy energy solutions and that Democrats will continue to pursue the “all-of-the-above” strategy advocated by the White House.

Republicans, who see a political opportunity in the gas price issue, contend that raising taxes on energy companies would simply lead to even higher gas prices.

“If someone in the administration can show me that raising taxes on American energy production will lower gas prices and create jobs, then I will gladly discuss it,” Senate Minority Leader Mitch McConnell (R-Ky.) said in a statement from his office. “But since nobody can, and the president doesn’t, this is merely an attempt to deflect from his failed policies.”

A senior GOP aide also noted that the Senate last voted on a similar measure in May. The proposal — which would have eliminated a raft of tax breaks for the five largest oil companies — failed to win the 60 votes needed to clear a procedural hurdle to move forward. The 52-48 vote included three Democrats breaking ranks to go against the motion with Republicans and two Republicans voting with Democrats in favor of the proposal.

Talk of the move to take up the energy tax breaks repeal measure comes after the White House released a progress report Monday highlighting administration initiatives during the past three years that they contend have led to increased energy production.

Interior Secretary Ken Salazar said at a White House press conference touting the report, “I think it’s important for all of us to note that the domestic oil production is at an eight-year high in the United States of America. Domestic gas production is at the highest level that we have seen in recent memory. And … we are importing the lowest amount of oil that we have in 16 years to the United States of America.”

In 2008, the nation was importing 57 percent of its oil from foreign countries compared with 2011, when the nation was importing only 45 percent, according to the White House.

Republicans questioned the veracity of the White House report. A GOP aide said oil imports are down because the economy is so weak and not from any policies implemented by President Barack Obama.

With businesses of all sizes cutting back, fewer people working and fewer people commuting, that translates into “not as much oil needed,” the aide said.

The aide also said increased oil production is due to increased oil exploration occurring on private land and that while the White House has given out more leases, the pace of granting permits necessary to begin the work on federal land continues to be slow.

Asked about Republican characterization of the report, Salazar dismissed it.

“I would say that those attacks are simply wrong,” Salazar said. “The fact of the matter is that we are producing more from public lands — both oil and gas, both onshore as well as offshore — than at any time in recent memory.

“And the fact of the matter is: Just in the last 12 months, we’ve issued over 61 permits just to drill in the deep water, about 100 to drill in the shallow water,” Salazar continued.

The energy debate will continue Tuesday when the Senate will vote on a Republican amendment to a transportation bill, expected to pass this week, which includes a provision to approve the 1,700-mile Keystone XL pipeline. The proposal is being offered by Sen. Pat Roberts (R-Kan.) and includes other provisions, such as an extension of certain energy-related tax breaks that expire at the end of the year.

Republicans see the approval of Keystone as imperative to creating jobs, increasing energy production and helping reduce gas prices. They argue that Democrats should get behind the proposal’s approval instead of looking to raise taxes on energy companies.

“Instead of returning again and again to tax hikes that increase consumers’ costs, the administration and its Democrat allies in Congress should open their eyes to the opportunity presented by the Keystone XL pipeline,” McConnell said in the statement.

The Senate last week rejected, 56-42, an amendment to approve the Keystone project, with 11 Democrats voting with Republicans in favor of approving the project. The proposal needed 60 votes to pass.

A Senate Democratic aide said party members who voted against the amendment do not necessarily oppose the project; rather, it was the timeline they opposed, which would not allow for a proper review of the project.

But a growing number of Democrats on the Hill have publicly and privately questioned the wisdom of opposing Keystone XL — given that it seems destined to be built eventually and that blocking it has little upside, especially against the backdrop of rising gas prices.

The White House on Monday also said it is not holding up the project, saying it is waiting for TransCanada to resubmit an application for the northern portion, due to concerns from Nebraska officials over the initial path.

Heather Zichal, deputy assistant to the president for energy and climate change, said at the press conference that the southern portion of the pipeline, between Cushing, Okla., and Port Arthur, Texas, “will be going forward.”

“From our perspective, that’s certainly an opportunity to create jobs,” Zichal said, “but also to address an energy challenge.”