Dems' energy-policy plans worry oil and gas industry

WASHINGTON — While Congress was home during the Memorial Day recess, the oil and gas industry was digging in for a fierce battle on Capitol Hill over congressional Democrats' plans to rewrite the nation's energy policy.

Already in the pipeline are plans to punish price gouging at the gas pump, boost fuel-economy standards, tighten regulatory control over oil and gas drilling, roll back industry subsidies, and tack on new fees to finance conservation programs.

Long protected by a Republican-controlled Congress and a White House eager to boost domestic production, the industry is now on high alert as Democrats are moving to capitalize on consumer anger about high gas prices and address global warming.

The industry and its allies in Congress are warning that Democratic legislation will slow domestic production, heighten the nation's reliance on foreign sources of fuel and force gas prices even higher.

"It really is a step backward for American energy production," said Dan Naatz, a lobbyist for the Independent Petroleum Association of America.

But Democrats, sensing growing consumer angst over high gas prices and a winning political issue in tightening the screws on "Big Oil," are moving ahead in the House and Senate to produce energy legislation — and to do it quickly.

The average price of a gallon of regular gasoline in the Seattle-Bellevue-Everett area on Monday was $3.34.

"Anyone who sees these prices has to say no more business as usual," said Sen. Chuck Schumer, D-N.Y. "No more tiny baby steps. It's hurting the consumer and the economy too much."

House Speaker Nancy Pelosi, D-Calif., said she would like to vote on an energy bill by July 4. The Senate Energy and Natural Resources Committee is expected to begin writing a bill soon.

Although the real battle is expected to be in the Senate, where Democrats control a narrow majority and rules allow individual senators to block entire bills, most of the action so far has been in the House.

In January, Pelosi pushed through legislation to repeal a valuable income-tax break for oil and gas companies and to pressure companies to pay billions of dollars on disputed leases in the Gulf of Mexico. Neither provision has advanced in the Senate.

Pelosi has now thrown her weight behind a bill crafted by Rep. Nick Rahall, D-W.Va., chairman of the House Resources Committee. Among other things, the bill would abolish the royalty-in-kind program, which allows oil and gas companies to give their product to the government in lieu of royalty payments; would assess a new conservation fee on production on federal lands; and would abolish the 30-day permitting deadline the government now faces for issuing drilling permits in wildlife habitats.

Rahall's bill "will absolutely slow the growth of domestic energy production," countered Rep. Bobby Jindal, R-La.

Jindal said the provision and others proposed by Rahall could serve up a double whammy for energy-producing states such as Louisiana, whose chemical, fertilizer and oil sectors have already been struggling to keep up with record high prices of natural gas and whose oil and gas sectors employ thousands of people.

Similar concerns have been raised by industrial consumers nationwide who said natural-gas production is down and prices have increased 156 percent in seven years — a cost increase that ripples throughout the economy.

"At a time when domestic production is down 4 percent [since 2000] and prices of natural gas and electricity are rising rapidly, consumers need congressional action that increases natural-gas production — not decreases it," Paul Cicio, who heads Industrial Energy Consumers of America, wrote in a letter to Rahall on Friday.