US petchems warn Congress against energy taxes

24 April 2008 23:08  [Source: ICIS news]

WASHINGTON (ICIS news)--New efforts by congressional Democrats to raise energy taxes and mount a broad inquiry into alleged retail fuel price gouging will hurt consumers and drive refining and petrochemical industries overseas, industry officials said on Thursday.

 

The National Petrochemical & Refiners Association (NPRA) said that a renewed effort by House Speaker Nancy Pelosi (Democrat-California) to kill production tax credits for domestic oil and gas companies would discourage those companies from developing domestic energy resources, reducing oil and gas availability and raising prices for industry and consumers alike.

 

The US chemicals industry is heavily dependent on natural gas as a feedstock and energy source.  North American natgas prices have increased four-fold since 1999.

 

In a letter to Pelosi, NPRA president Charlie Drevna said loss of the tax incentives “would increase the cost of production and drive energy and petrochemical businesses overseas”.  That in turn would increase US dependence on foreign oil and gas, he said, threatening US competitiveness, employment and security.

 

Drevna was responding to a letter Pelosi sent to President George Bush, urging him to support various pieces of energy and tax legislation that Pelosi said would help relieve energy costs for American consumers.

 

Pelosi asked Bush to support a bill that would give federal officials authority to punish fuel retailers who “artificially” raise their prices.  She also asked the president to work with Congress to pass a conservation tax bill that would eliminate some $10bn (€6.3bn) in energy sector tax credits for development investments and commit that tax revenue to alternative energy research.

 

Bush has threatened to veto both measures if they clear Congress.

 

Drevna told Pelosi that repeated investigations by the Federal Trade Commission and other federal and state authorities have shown no price gouging or price manipulation by the US energy industry.  “Legislation to combat so-called price gouging is a solution in search of a problem,” Drevna said.

 

He urged the speaker to instead support measures in Congress to develop vast US onshore and offshore energy reserves that remain closed to drilling under a 26-year-old congressional ban.  “Such policies will lessen the burden on American consumers and reduce our dependence on foreign sources of energy,” he said.

 

In her letter this week to Bush and in earlier queries, Speaker Pelosi has urged the president to “use your considerable influence with OPEC nations to get them to increase their oil production to bring down prices”.

 

Representative John Peterson (Republican-Pennsylvania) has charged that Pelosi has refused to allow a vote on legislation he has sponsored to open US coastal areas to natgas development.

 

($1 = €.63)

By: Joe Kamalick
+1 713 525 2653

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