US oil industry, refiners blast House climate bill

15 May 2009 21:35  [Source: ICIS news]

WASHINGTON (ICIS news)--US oil companies and refiners on Friday blasted a House climate control bill as deeply flawed and likely to reduce domestic energy production, raise fuel costs sharply and increase dependence on foreign oil.

The National Petrochemical & Refiners Association (NPRA) said that known provisions of the still developing American Clean Energy and Security Act (ACES Act) are “deeply flawed”.

Association president Charlie Drevna said the climate bill contains “many provisions that unfairly stack the deck against domestically produced gasoline and diesel fuel”.

He warned that if passed by Congress as now drafted, the bill’s provisions “would lead to a future outsourcing of our nation’s energy needs to foreign countries”.

The massive climate bill is meant to accelerate development of alternative and renewable energy and fuels while imposing a carbon tax on conventional sources in hopes of reducing US emissions of carbon dioxide (CO2) and other greenhouse gases.

The American Petroleum Institute (API) also cautioned that the bill’s provisions “will have a disproportionate adverse impact on consumers and producers of gasoline, diesel fuel, jet fuel, crude oil and natural gas”.

In a proposal released on Friday by the House Energy and Commerce Committee - where the massive bill is under development - the legislation would grant certain allowances or free emissions permits to selected industries to ease the tax burden of the bill’s cap-and-trade mandate.

For example, electric utilities would be granted 35% of the free emissions allowances, but oil refineries would get only 2% of the no-cost permits.Chemical producers might be eligible for some allowances, although that is not yet certain.

API president Jack Gerard said those “emission allowances will be distributed inequitably, ultimately imposing greater costs on consumers and producers of oil and gas”.

Gerard said that independent studies indicate that under the ACES Act as drafted, “domestic [oil and gas] production will decline, increasing reliance on imports” and “would harm America’s economy and diminish our energy security”.

The pending ACES Act is to undergo final revisions early next week.

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By: Joe Kamalick
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