WASHINGTON, Nov 8, 2006 (Dow Jones Newswires)
With the ouster by California voters of U.S. House Resources Committee Chairman Richard Pombo, R-Calif., energy policy changes are expected next year when Democrats control the House of Representatives.
Analysts are already predicting that a Democrat-controlled House will put energy companies on the defensive as lawmakers seek to tax oil companies' profits while boosting renewable energy, climate change and energy efficiency policies. Large energy company stocks, particularly Big Oil, appeared unaffected, however.
Shares of Exxon Mobil Corp. (XOM), the largest U.S. oil producer, were trading 83 cents higher Wednesday at $73.36. ConocoPhillips (COP) shares were up $1.38 at $62.36, while Chevron Corp. (CVX) shares were 40 cents higher at $69.31, as of 1:15 p.m. EST.
Pombo's loss of California's 11th District is symbolic of an expected shift in energy policy. The staunch oil drilling proponent will be replaced by Democratic wind energy expert Jerry McNerney. McNerney heads a start-up wind turbine manufacturing company and has pledged to make clean energy his signature issue on Capitol Hill. He has worked as an energy consultant for San Francisco-based utility holding company PG&E Corp. (PCG) and the Electric Power Supply Association, a nonprofit research center.
Environmentalists, who argue that Pombo has worked to gut the Endangered Species Act and criticize his efforts to open Alaska's Arctic National Wildlife Refuge to drilling, helped put the GOP leader at a disadvantage.
Defenders of Wildlife Action Fund, as of late September, had spent $500,000 to defeat Pombo. The group even held a "Defeat Pombo Day of Action" to criticize what they see as an anti-conservation record.
The Sierra Club, another environmental group, Wednesday applauded voters around the country for voting for a change in energy policy.
"Voters clearly voted for big change, not Big Oil" said Carl Pope, the group's executive director. "A big part of that change concerns energy security and enacting smart energy solutions that decrease our oil dependence, clean up our environment, curb global warming and create jobs."
Jim Ford, vice president of government affairs at the American Petroleum Institute, called Pombo's defeat a loss, noting that the lawmaker had "a great deal of understanding about how the oil and natural gas industry work."
Still, Ford said changes in the House and Senate are unlikely to change lawmakers' plans to consider biofuel, trade, tax policy and land access issues in Congress next year.
"We're expecting those issues will be on the table regardless of the outcome of the elections," he said.
Analysts and industry sources pointed out that House Minority Leader Nancy Pelosi,D-Calif., who's likely to become Speaker of the House next year, has already promised to repeal oil industry subsidies authorized in a major energy bill signed into law last year.
Still, Ford said the industry is preparing for that.
"I take (her) at her word," Ford said of Pelosi. "We take her very seriously and expect she will have the House act on those plans to look at the tax title in (the Energy Policy Act) of 2005."
He argued, however, that of $14.5 billion in tax incentives in the law, the oil industry subsidies total about $1.4 billion.
The industry actually saw a net loss in tax incentives because lawmakers reinstated the oil spill liability trust fund tax on refiners and petroleum importers, he said.
Another Washington-based industry group voiced plans to reach out to lawmakers next year.
"We are confident that bipartisan support will continue into 2007 and beyond," the Natural Gas Supply Association said in a statement. "But in order for natural gas to achieve its full potential for the nation, lawmakers must continue the push for more access to the most economical supplies, while allowing markets to allocate that supply where it is needed the most."
The oil industry enjoyed a win in California, where voters Tuesday rejected a proposed tax on oil produced in the state to fund $4 billion in programs to cut the state's gasoline consumption. The initiative, Proposition 87 or the Clean Alternative Energy Act, would have charged oil producers a 1.5%-to-6% tax on each barrel produced in the state until the $4 billion, plus other costs, were paid off.
Copyright (c) 2006 Dow Jones & Company, Inc.
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