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Industry pundits hope lag time will lead to more rational rules.
In a move that cheered energy industry proponents, Senate Majority Leader Harry Reid decided Aug. 3 to delay a vote on the “Clean Energy Jobs & Oil Company Accountability Act,” dubbed CLEAR, until after the summer recess. The vote, which was planned for Aug. 4, was simply a procedural one gauging support for a full-blown debate, according to Reuters. The House of Representatives passed the act July 30. At this point a vote is not anticipated until mid-September at the earliest.
In his Simmons Morning Energy Note, Simmons & Co. analyst Bill Herbert went so far as to call Reid’s decision “Death of the Energy Bill.” While Herbert acknowledged that a “softened” version of the bill could emerge in September, he noted that “odds are not great for passage,” primarily because the bill was rushed through the House and didn’t have enough support from the Democrats because it lacked carbon controls and a nationwide renewable electricity standard. Also, “The right side of the aisle saw no upside in working with the left side to get a bill passed ahead of the election,” Herbert stated. “The electoral winds are blowing the Republicans’ way, and they did not want to do anything to aid the Democrats.” Finally, he said, the elimination of the liability cap for offshore drilling was not attractive to most Republicans.
Meanwhile, industry groups are breathing a huge sigh of relief. The Hill quoted American Petroleum Institute President Jack Gerard as stating, “The bill proposed by the Democratic leadership is not an effective or reasoned response to the spill. Instead, it will cost American jobs, threaten our fragile economic recovery, and jeopardize our energy security.” Gerard was particularly critical about the removal of the liability cap for offshore spills, the article stated.
The article added that Sen. Mary Landrieu and other lawmakers are negotiating an alternative liability proposal that would include a shared fund to allow companies to divide the cost of future spills.
“A robust, workable oil spill liability program – possibly including a mutual insurance element – is achievable and would cover the cost of a large spill without shifting huge costs to taxpayers,” Gerard was quoted as saying.
The Obama administration, not surprisingly, is disappointed with the delay. A Reuters article noted that the White House is blaming political opponents and quoted White House Spokesman Ben LaBolt as stating, “The president is disappointed that Republicans have stood in the way of holding BP and other oil companies accountable for the disasters they cause and creating jobs by investing in clean energy technology.” LaBolt added that Obama will push for the legislation to be passed this fall.
And naturally the finger-pointing has begun. Reuters quoted Sen. Lisa Murkowski, the senior Republican on the Senate Energy and Natural Resources Committee, as saying, “Senator Reid is predictably blaming Republicans for standing in the way of a bill that he threw together in secret and without input from almost any other member of the Senate.”
The US Chamber of Commerce sided with the oil industry. The Hill quotes its top lobbyist, Bruce Josten, as saying, “Provisions eliminating the cap on liability provided in the Oil Pollution Act of 1990 would discourage major integrated oil companies as well as independent producers from exploring in domestic waters as they would be unable to afford adequate insurance to cover the potential liability risk if they could obtain insurance at all.” And Karen Harbert, who heads the Chamber’s Institute for 21st Century Energy, was quoted as saying that the bill “would essentially shut down America’s oil and gas industry.”