OVERNIGHT ENERGY: Oil industry to make economic argument against drilling fees

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STATE OF PLAY: Oil industry to lay out 2011 agenda

The American Petroleum Institute, the country’s most powerful oil and gas industry group, is planning to greet returning lawmakers Tuesday with new data outlining the economic consequences of any attempt to impose new taxes and fees on the oil industry.

At an event at the Newseum, API President Jack Gerard will release the group's “State of American Energy” report. Gerard is expected to say that the state of American energy is “strong.” But he will also call for a number of oil and gas policies meant to “help with the economic recovery, job growth, and increased revenues to the government,” the industry group tells OVERNIGHT ENERGY.

Gerard is expected to point to new data from the energy consulting firm Wood Mackenzie that say raising taxes and fees on the oil industry will harm the economy and result in significant job losses.

The event comes as the industry is dealing with a series of new Interior Department offshore regulations. The rules, API says, have lead to widespread uncertainty among oil and gas companies, as well as significant delays in future drilling.

NEWS BITES:

Industry cheers (sort of) for Interior’s drilling guidelines

The Interior Department’s plan to allow some deepwater drilling projects to resume without major new environmental reviews drew mixed reactions Monday. National Ocean Industries Association President Randall Luthi called it a “positive development for an industry that has been anxiously waiting to get back to work developing the resources that provide 30 percent of our nation’s oil and 13 percent of our nation’s natural gas.”

But he added that much remains unclear on the path toward actually getting approvals for projects to get going again. “The companies impacted will each need time to evaluate today’s announcement to determine what boxes remain to be checked in order to obtain final [Bureau of Ocean Energy Management, Regulation and Enforcement] approval to restart their projects,” Luthi said.

Another industry source was even more cautious, claiming that while it appears to be step in the right direction, it’s not clear how many companies will actually be able to proceed under the new guidelines. This source also called it another case of Interior Department regulators “changing the rules midstream.”

Deepwater projects have been on hold since shortly after the BP spill began, even though Interior lifted the formal moratorium in October.

Senior Republican says Interior should go further

Incoming House Natural Resources Committee Chairman Doc Hastings (R-Wash.) wasn’t hugely impressed. He said in a statement that he welcomes any new developments that will get Gulf of Mexico oil workers on the job again, but that Interior should go further.

“Today’s announcement ... only ensures the possibility that previous drilling activity can resume at some point in the future if certain requirements are met,” Hastings said. “The Obama Administration can prove it’s serious about resuming drilling in the Gulf by actually issuing permits and allowing people to return to work.”

Green group: Obama administration ‘reluctant’ to regulate oil companies

Miyoko Sakashita, oceans director for the Center for Biological Diversity, slammed Interior's policy.

“Allowing yet more deepwater drilling activities to continue without environmental review shows the government's continued reluctance to regulate the oil industry,” she said in a statement to E2.

“The type of drilling being allowed to go forward here without environmental review is the same that led to the tragic Deepwater Horizon spill. While safety improvements are important, there is still no commitment by the government to consider the environmental consequences of risky drilling offshore,” Sakashita added.

Energy Secretary hopes electric cars won’t just be niche market

Energy Secretary Steven Chu told CNN Monday that he’s hoping for an expanded market for electric cars like the new Nissan Leaf and Chevy Volt. But hurdles remain. “Well, the hope is that they can become more than a niche product in the near term future. By near term, I mean three, four, five years,” Chu said.

“Certainly the battery technology has to improve. But on the other hand, I'm seeing a lot of great ideas in the development of new batteries and companies like Nissan and GM and others are really betting that this battery technology will improve greatly. The electric vehicles they're introducing today are great, but in the coming years, we'll see even better ones,” he added.

More Chu: Oil will rise

With crude oil trading at its highest levels in two years, Chu said that long-term it will keep going up — and that the U.S. has to be ready. While prices are tough to predict in the immediate future, Chu said that increasing demand from countries like India and China and the difficulty of producing oil in more challenging physical environments will push prices upward in the mid- and long-term.

“And I think the United States should prepare for that and take the steps necessary to use the oil we need as efficiently as possible and also to begin to transition away from oil. For example, electrification of vehicles and things like that,” he said.

Refiners sue EPA over higher ethanol blends

A refining industry trade group on Monday filed suit to overturn EPA’s decision that allows higher amounts of ethanol in gasoline sold for use in late-model cars. It’s at least the second lawsuit challenging EPA’s decision last year to allow so-called E15 — which is 85 percent gasoline, 15 percent ethanol — in cars and light trucks from model years 2007 and onward. Auto and boating industry groups sued in December.

The National Petrochemical and Refiners Association — along with the International Liquid Terminals Association and the Western States Petroleum Association — filed the latest suit in the U.S. Court of Appeals for the District of Columbia Circuit. Opponents of the higher ethanol blends allege there hasn’t been enough testing and that there will be “misfueling” of engines that aren’t approved for the increased levels, leading to damage.

IN CASE YOU MISSED IT...
 
E2 laid out five stories that flew under the radar in 2010. We told you about a report by the Congressional Research Service that says we may never know the exact fate of oil in the Gulf of Mexico. And, in what’s certain to be the most bizarre story on the blog this week, thousands of birds fell from the sky in Arkansas on New Year’s Eve.

We also previewed the wind industry’s agenda for 2011. And we reported that the Interior Department may allow some projects halted by the moratorium on offshore drilling to go ahead without having to submit their updated plans for additional environmental reviews. 

AROUND THE WEB:

Report: Trauma killed falling birds

“The thousands of birds that fell from the sky just before midnight New Year's Eve in Arkansas likely died from massive trauma, according to a preliminary report released Monday,” CNN reports.

Study finds ‘alarming’ bumblebee decline

“Four previously abundant species of bumblebee are close to disappearing in the United States, researchers reported Monday in a study confirming that the agriculturally important bees are being affected worldwide,” Reuters reports.

“They documented a 96 percent decline in the numbers of the four species, and said their range had shrunk by as much as 87 percent. As with honeybees, a pathogen is partly involved, but the researchers also found evidence of inbreeding caused by habitat loss.”