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During the 2006 election cycle, no industry skewed more Republican in its political contributions than the oil and gas industry. Now that Congress is shifting to Democratic control, the incoming party in power already is boasting about its plans to roll back the industry’s tax breaks and other incentives. It would seem only natural that the next step for big oil companies and their lobbyists would be to come up with a fresh strategy that would make it easier to wade through the mudslinging. “Democrats have said they are going to make life more difficult for the oil and gas industry when they come back to Washington,” says Massie Ritsch, communications director for the Center for Responsive Politics. “If I were an oil company, I would find a lobbyist with strong Democratic ties and start writing checks from my PAC to Democrats.” But the Democrats’ promise to crack down on Big Oil when Congress convenes in January hasn’t rattled the nerves of all energy lobbyists. Some say they aren’t worried by such threats and don’t anticipate any change in their long-term agenda. Although Democrats complained about oil companies during this year’s congressional sessions, Scott Segal, an energy lobbyist at Bracewell & Giuliani, doesn’t think they will pass any significant anti-oil legislation. The Houston-based lobbying firm, which has an office in Washington, D.C., is renowned for defending energy interests and has a roster that includes several big oil and drilling companies and refineries, such as Shell Oil Co., Southern Co., BP Amoco Corp., and Valero Energy Corp. “Last summer, when the gas prices hit $3 a gallon, there was a race to the microphone to see who would blame which oil company the fastest,” Segal says. “But there is a difference between campaign rhetoric and actually implementing policy.” Even if the Democrats do make good on their promise to be Big Brother to the oil industry, it won’t be far-reaching, Segal adds. “Everybody says, �Oh, we’re going to repeal the tax break for oil companies.’ The problem with that strategy is that big oil companies like Exxon-Mobil really won’t care,” Segal says. “The tax break will affect the smaller companies. It won’t make that much of an impact other than making a small splash.” The energy bill passed by Congress and pushed by the Bush administration last year provides $14.5 billion in tax breaks to producers of oil, natural gas, coal, and nuclear power. Rep. Nancy Pelosi (D-Calif.), incoming speaker of the House, has already pledged to tackle what Democrats see as significant oil and gas issues by cutting back some of those breaks within the first 100 hours of the new Congress. From halting what Democrats see as price-gouging at the pump and repealing the tax breaks to pushing for alternative energy methods, Pelosi is already defining the Democrats’ strategy on energy issues. According to Pelosi’s plan, called “ A New Direction for America,” the Democrats “will energize America by achieving energy independence, and we will begin by rolling back the multibillion-dollar subsidies for Big Oil.” BEATING UP ON BIG OIL R. Bruce Josten, executive vice president for governmental affairs at the U.S. Chamber of Commerce and chief spokesman for the Alliance for Energy and Economic Growth, says the plan is the Democrats’ way of “beating up the oil industry.” He says he doesn’t see how a repeal of tax cuts will foster an opportunity for the country to stop relying on foreign oil. “Doing this won’t help achieve it,” Josten says. “We’re not drilling in [the Arctic National Wildlife Refuge] because the Democrats opposed it. We’ve been fighting that for years,” he says. “If they want to increase our dependency on foreign oil in unstable, foreign places around the world, then they should continue with what they’re trying to do. It really doesn’t matter who the president is or who’s in power; for the next 150 years we will remain fossil-fuel-dependent.” Mark Kibbe, senior tax policy analyst at the American Petroleum Institute, a lobby arm for the oil and gas industry that spent $3.6 million on lobbying last year, says that if Democrats adjust tax policies, smaller companies won’t be the only ones to bear the brunt. The effects will be felt, he says, by the entire oil industry as well as consumers. “All of the provisions that are currently in place help make U.S. oil projects competitive with those abroad,” he says, adding that many large oil companies have made investments in alternative fuels. “If we start peeling back all these things, it could eventually push production overseas.” Even so, Kibbe doesn’t foresee oil and gas lobbyists changing their plans. “Our mission to expand access to resources, including areas in the intercontinental shelf, doesn’t really change,” he says. But he admits that the industry’s goal now is to make sure they have a receptive audience on Capitol Hill. “We just plan to urge Republicans and Democrats to look at the provisions and understand why these tax rules are in place and how they benefit the U.S. energy situation,” he says. Last week, API President Red Cavaney sent a letter to members of Congress expressing how the Democrats’ plans to cut tax incentives would adversely affect the industry’s investments in alternative energies. “These investments are essential to ensuring America’s future energy security and are placed at risk by discriminatory tax regimes that hinder our ability to compete in the global search for, and production of, energy supplies,” the letter said. ALL TALK? Despite the fact that Democrats outnumber Republicans, Segal contends that energy legislation doesn’t fall along party lines but rather along regional ones, adding that Democrats from the Gulf Coast region view the energy industry more kindly than do those from other areas. This year, Sen. Kay Bailey Hutchison (R-Texas) was the senator who received the largest contributions from the oil and gas industry, raking in an estimated $258,461. Democratic senators on the top 20 list of recipients of oil and gas contributions included Sens. Ben Nelson (Neb.), Dianne Feinstein (Calif.), and Hillary Rodham Clinton (N.Y.). In the House, Rep. Joe Barton (R-Texas) was the top recipient of the industry’s contributions, receiving $141,450. The top Democrat was Rep. Dan Boren (Okla.), who received $72,500. Several top Republican recipients of the oil and gas industry’s contributions, such as Sens. Rick Santorum (Pa.), James Talent (Mo.), George Allen (Va.) and Conrad Burns (Mont.), were defeated by Democrats. Some lobbyists say that although Democrats have been touting their game plan in the House after their win, they will have such a slim majority in the Senate (51 to 49) that they won’t be able to veto or invoke cloture on any filibuster. “You have to have 60 votes in the Senate to do anything,” says one lobbyist who isn’t worried about Democrats taking on the oil industry. “The plan is that our agenda will be the same.” Numbers from this year’s elections, however, show that some in the oil and gas industry have already made adjustments to how they work politicians. For the 2006 elections, some traditionally Republican-leaning oil companies gave cash to Democrats who stood to be positioned in high-ranking spots. For example, statistics from the Center for Responsive Politics show that Occidental Petroleum contributed to Pelosi for the first time ever, giving her $17,000 and becoming the California congresswoman’s top contributor. The oil and gas industry as a whole was one of the top 20 industries to contribute to Pelosi. Overall, however, this year’s financial contribution from the oil and gas industry to Democrats was the lowest in years. According to the Center for Responsive Politics, 83 percent of the entire oil and gas industry’s campaign money for 2006 went to Republicans, and only 17 percent went to Democrats. The industry traditionally gives more to Republicans, but contributions to Democrats started dropping especially significantly after the GOP takeover of Congress in 1994. “When you give 83 percent of your money to the party that lost, you should be worried about what’s to come,” says Ritsch, adding that the idea of the oil and gas industry being regional and not partisan might be a bit of a stretch. “The few Democrats you have in Texas and Louisiana might be supportive of the oil industry, but the vast majority of Democrats don’t have oil productivity going on.” Given the recent congressional flip-flop, oil lobbyists might want to do some tweaking in their approach to the new Congress, Ritsch says.
Osita Iroegbu can be contacted at [email protected].

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