U.S. Energy Industry's Lobbying Pays Off With $11.6 Bln in Aid
July 27 (Bloomberg) -- Oil and utility companies such as Exxon Mobil Corp. and Southern Co. spent $367 million over the last two years pushing the U.S. Congress to pass energy legislation. For many, the money was a good investment: lawmakers are poised to pass a measure providing about $11.6 billion in taxpayer subsidies.
House and Senate negotiators approved compromise legislation yesterday and President George W. Bush, who has been seeking an energy bill since the start of his first term, will have it on his desk by July 29, Senator Charles Grassley said. Supporters said the measure, the Energy Policy Act, would help secure energy supplies and ultimately lead to lower fuel prices.
The legislation includes subsidies for oil and gas exploration that benefit companies such as Irving, Texas-based Exxon Mobil, which contributed $935,266 to federal candidates for the 2004 elections, more than any other oil company. Southern, which contributed $1.1 million to candidates in 2004, more than any other utility, won repeal of a 1935 law prohibiting utility holding companies from using revenue from customers to subsidize non-regulated businesses.
Critics said the measure is a gift to industry that does little to address rising prices or environmental concerns. Lawmakers ``assembled wish lists from all of the energy industries and Congress gave each industry as much of their wish list as possible,'' said David Hamilton, director of global warming and energy programs for the San Francisco-based Sierra Club, an environmental group.
Chevron and Cnooc
Chevron Corp., which is trying to buy El Segundo, California- based Unocal Corp., benefits from a provision delaying a competing bid by China's Cnooc Ltd. The legislation requires the government to subject the Chinese offer to a 120-day review period. Unocal has accepted a lower bid from Chevron, deeming it superior because it would close quickly. Unocal shareholders are scheduled to vote Aug. 10 on the bid.
Chevron, the second-largest U.S. oil company, contributed $498,992 for the 2004 elections. Exxon Mobil, the world's biggest publicly traded oil company; San Ramon, California-based Chevron and Atlanta-based Southern each contributed the maximum $250,000 to Bush's 2005 inaugural committee.
In negotiating the final measure, lawmakers rejected an increase in fuel-economy standards for automobiles and a requirement that utilities generate 10 percent of their electricity through renewable sources of energy such as solar or wind. Bush said in April that the legislation wouldn't have an immediate effect on gasoline prices, which yesterday averaged $2.28 for a gallon of unleaded, close to the record of $2.32 a gallon set July 14, according to the AAA, the former American Automobile Association.
Ethanol
Senator John Cornyn, a backer of the legislation, said it was the product of discussions between Republicans and Democrats that didn't involve energy lobbyists. ``You can't get anything done in the Senate unless it gets bipartisan support,'' Cornyn, a Texas Republican, said in an interview. ``It's not a product of any interest group's work.''
The measure includes incentives for new technologies, authorizes a survey of potential oil deposits near U.S. coastlines and requires gasoline refiners to use more ethanol, a corn-based fuel mixed with conventional gasoline to reduce emissions. Decatur, Illinois-based Archer Daniels Midland Co., the nation's largest producer of ethanol, contributed $102,175 for the 2004 elections.
Energy lobbyists met with lawmakers and their staffs to push the legislation. Red Cavaney, the president of the Washington- based American Petroleum Institute, the trade group for energy companies such as Exxon Mobil and Chevron, wrote to lawmakers, urging them to ``quickly finalize a comprehensive energy bill.''
Representatives of the institute, Southern and Chevron also met with Vice President Dick Cheney's energy task force, according to Energy Department documents obtained by the New York- based National Resources Defense Council, an environmental group.
`Downward Pressure'
Industry officials say the measure could eventually lower gasoline prices.
``It's all about let's streamline the process, let's make things a little bit easier, and in the long term, if you put all that together, you're going to expand energy supplies and increase competition, and the hope is it will provide downward pressure on gasoline prices,'' said Mark Kibbe, Washington representative for the American Petroleum Institute.
``This is an important step toward providing consumers with reliable and affordable energy supplies, while addressing the need for conservation and energy efficiency,'' Exxon Mobil spokesman Russ Roberts said.
The two chambers of Congress passed separate versions of the legislation that were reconciled yesterday by House and Senate negotiators. The initial measures passed by wide margins, in the House by 249 to 183 and in the Senate by 85 to 12.
Campaign Contributions
House members who voted for the measure received an average of $43,389 from the energy industry for their 2004 campaigns, three times the $13,592 opponents received, according to a Bloomberg News analysis of Federal Election Commission data from Bristow, Virginia-based Dwight L. Morris & Associates.
Senators who backed the bill averaged $69,348 in donations from the energy industry between Jan. 1, 2003, and Dec. 31, 2004, 73 percent more than opponents, who averaged $40,143.
``The candidates we support are those whose philosophies most parallel our business interests and have high levels of awareness of the issues facing our industry,'' said Mike Tyndall, a spokesman for Southern.
The subsidies in the legislation coincide with increased profit for oil companies from high gas prices; Exxon Mobil said in April that its first-quarter profits were 44 percent higher than the same period last year, rising to $7.86 billion from $5.44 billion. Analysts expect Exxon Mobil to report second- quarter profits of $8 billion, up from $5.8 billion, according to a Bloomberg survey.
Lobbying
Energy companies spent $314.4 million to lobby Congress, the White House and federal agencies between Jan. 1, 2003, and Dec. 31, 2004, according to records filed with the Senate and compiled by PoliticalMoneyLine, a Washington-based organization that tracks lobbying expenses. During the same 24-month period, environmental groups spent $42.1 million.
In addition to their lobbying expenses, energy company political action committees and employees made $52.3 million in campaign contributions for the 2004 elections, according to the Washington-based Center for Responsive Politics, a research group that tracks campaign donations. Environmentalists gave $2.1 million.
``There has been plenty of time for everyone to weigh in,'' said Jim Owen, a spokesman for the Edison Electric Institute, the Washington-based trade group for investor-owned utility companies such as Southern and Hartford, Connecticut-based Northeast Utilities. ``The result is a bill that strikes a good balance in harmonizing expanded production along with conservation and efficiency.''
To contact the reporter on this story:
Jonathan D. Salant in Washington jsalant@bloomberg.net.
Last Updated: July 27, 2005 00:04 EDT |
