WASHINGTON — Over the past decade, Lion Oil has spent millions of dollars upgrading its operations, adding to the miles of piping that snake through its El Dorado refinery. But for the past two years, the company - and the oil industry as a whole - has seemed just as focused on bills flowing through the chambers of Congress as the crude coursing through its pipes.
The oil and gas industryhas dramatically increased its lobbying efforts, reacting to climate-change legislation that would increase its costs and the legislative response to last spring’s Deepwater Horizon oil spill in the Gulf of Mexico.
So far, it seems to have worked.
Several attempts to increase oil companies’ tax liability have failed. Lawmakers have talked about, but not removed, a cap on companies’ oil-spill damage liability. And perhaps the biggest item of concern to the industry, global-warming legislation that would limit greenhouse-gas emissions, passed the House but ran aground in the Senate.
Both contenders in Arkansas’ U.S. Senate race, Democratic Sen. Blanche Lincoln and Republican Rep. John Boozman, defended the industry in similar terms in interviews Friday.
Both said they support ending a moratorium on drilling in the Gulf of Mexico. Both characterized tax incentives for oil companies as necessary for the companies to wean themselves off foreign oil and as a national security interest. And both said they would fight against tax and regulatory changes they felt put comparatively smaller Arkansas companies, such as Lion Oil or Murphy Oil, at a disadvantage to global energy giants such as BP or Shell Oil.
The increasing focus on the oil and gas industry “sort of changed my career,” said Lion Oil’s Steve Cousins, who was shifted from refinery operations to his new spot as vice president of governmental affairs, a newly created position, this summer.
While it’s possible Congress will try to push energy-related items after the elections and before the new Congress convenes, in a “lame duck” session, Cousins doubted that major global-warming legislation or tax changes would be addressed.
“At this point, there’s not enough time left,” before the end of the current session of Congress, he said.
He didn’t make a specific prediction, but Cousins said it was likely that Republicans would make gains in Congress.
“I would expect the administration to be less aggressive” next year, Cousins said.
Doug Heller, executive director of Consumer Watchdog, a California-based consumer advocacy group, said that over the past decade, the oil and gas industry has enjoyed wide profit margins and relatively lax regulatory oversight.
By spending money on ad campaigns, lobbying and directly funding candidates, Heller said, the industry has beaten back attempts by theObama administration and Congress to change tax laws and enact global-warming legislation.
“The oil industry has generally succeeded in maintaining the status quo. And for them, the status quo is a major victory.”
In his budget request earlier this year, President Barack Obama suggested repealing several tax incentives used by the oil industry. They include blocking the oil industry from using “Section 199” tax breaks that allow companies to deduct income from domestic manufacturing, prohibiting oil and gas companies from claiming drilling costs as an expense and changing how they account for inventory.
According to the American Petroleum Institute, an industry membership group, Obama’s proposals would raise $80 billion in tax revenue over 10 years - all coming from oil company coffers.
The tax-increase proposal didn’t gain traction.
Efforts to increase companies’ potential oil-spill liability have also stalled.
Both Boozman and Lincoln said they are open to changes in the current $75 million liability cap for oil spills, but said that smaller companies would not survive if it was removed entirely.
“The only people who are going to be able to be insured and stay in business are going to be the mega-gigantic companies,” Lincoln said.
Boozman said the cap and the current system of tax incentives are necessary to wean the United States off foreign oil.
“We need to support our domestic industry,” he said.
Despite several tries, Congress has not passed legislation on any of the White House proposals.
Sen. Bernie Sanders, a Vermont Independent who caucuses with the Democrats, attempted to repeal some of the oil industry’s tax incentives in June. His amendment, attached to a broader tax bill, failed 35-61, with both of Arkansas’ Democratic senators, Lincoln and Mark Pryor, voting against it.
The latest attempt came earlier this month, when Democrats proposed offsetting some costs in a smallbusiness bill by increasing oil-industry taxes. Lincoln opposed the measure. She preferred offsetting the costs of the bill by cutting diseaseprevention programs in this year’s health-care overhaul.
Only two other Democrats voted with Lincoln on the amendment, which was offered by Sen. Mike Johanns, a Nebraska Republican. Both, Sen. Mary Landrieu of Louisiana and Sen. Mark Begich of Alaska, represent states with a large oil-industry presence.
“You can’t ignore the fact that a politician with as much oil-industry money as Sen. Lincoln has seems to be siding with the oil industry’s health rather than the public’s health,” said Consumer Watchdog’s Heller.
Lincoln rejected that characterization.
She said that prevention programs would have remained well-funded had Johanns’ amendment passed,and that she voted for it because it repealed large amounts of paperwork required of small businesses under the new health-care law.
According to the Center for Responsive Politics, a Washington group that tracks money in politics, Lincoln is the top recipient of campaign money from members of the oil and gas industry.
In the current election cycle, from Jan. 1, 2009, through Aug. 22, 2010, Lincoln collected $404,150 from the industry, the group reported. During the same time period, Boozman collected $18,989.
As the climate-change debate heated up in Congress in 2009, the industry increased its lobbying efforts.
In 2007, the industry spent $85 million lobbying members of Congress. That amount jumped to $175 million in 2009. This year, through July 26, the industry spent $75 million trying to get its message heard on Capitol Hill.
While debate on tax changes and climate-change legislation seems to be postponed until another day, some lawmakers are pressing for an immediate end to the drilling moratorium in the Gulf.
Louisiana’s Landrieu has put a “hold” on the nomination of Jacob Lew to be the director of the Office of Management and Budget until the moratorium is lifted, according to the Associated Press.
Both Lincoln and Boozman warned against overreacting to the Gulf spill.
“We risk running off smaller and independent companies,” Lincoln said. “You’ve seen that with Murphy Oil.”
In July, the El Dorado-based energy company announced that it was moving one of its deep-water drilling rigs from the Gulf of Mexico to a new site off the coast of the Republic of Congo in Africa.
Murphy declined to comment for this story.
Boozman agreed with Lincoln: “We’ve got to continue drilling.”
Front Section, Pages 1 on 09/26/2010