Oil Lobby Responds to Change.org Questions, Defends Claims on Climate Bill Costs

by Emily Gertz

categories: Climate Security, Consumer, Fossil Energy, Greenhouse Gas, Jobs & Economy, Policy & Legislation, Politics

Published August 25, 2009 @ 08:13AM PT

Above: "Photo of caribou walking alongside the Trans-Alaska Pipeline, taken July 1998 by Stan Shebs." Source: Wikimedia Commons.

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Last week I asked the American Petroleum Institute questions about its criticisms of the American Clean Energy and Security Act -- the climate and clean energy legislation that was passed by the House of Representatives earlier in the summer.

Jane Van Ryan, New Media Coordinator of the American Petroleum Institute, has answered. I've added some extra paragraph breaks to make the text more readable on-screen, and links as relevant to the content.

Do Ms. Van Ryan's talking points hold up?  If not, why not?  There are a lot of them, so I'm asking the Change.org community to help me out:

Please pick a point or a few to check out, and post your findings in the comments.

More after the jump.

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As you correctly surmised, I was tweeting on a mobile device last Friday in Lima, Ohio, and I was unable to effectively see your questions. Thank you for giving me the opportunity to respond and to have a discussion with you about the Waxman-Markey bill.

Your first question addressed the cost of the House-passed climate bill. A new analysis by CRA International indicates the bill will cost much more than a postage stamp per day.

According to the analysis, commissioned by API, the Waxman-Markey bill would reduce the purchasing power of the average American household by $1,170 a year and result in a 1.3 percent decline in Gross Domestic Product by 2030. Plus, the analysis shows that the bill would result in a net loss of 2 million jobs nationwide after factoring in the new green jobs.

A separate study by the Heritage Foundation says the House bill would cause gasoline prices to rise by 58 percent. At today's prices, that would put gasoline at about $4 a gallon. When these impacts are added together, it's clear that the human and economic cost would be much higher than 44 cents a day per person.

You also posed a question about energy security. While you're correct in saying that oil is traded on the global market, producing more oil in the United States offers many advantages to American consumers. The country would be less vulnerable to disruptions caused by political unrest abroad.

Also, the United States has a very effective and safe network of pipelines that have been transporting oil from wellheads to refineries for decades. Using the U.S. pipeline network reduces the need to transport oil by tankers, which means less oil would be traveling across oceans. Furthermore, increasing domestic oil and natural gas production would create thousands of well-paying jobs, generate tax revenues for the federal, state and local governments, and provide a much needed boost to the economy.

In response to your question about API's position on climate change, it's important to note that API's membership is opposed to the Waxman-Markey bill. Therefore, API is encouraging the Senate to reject the bill, start over, and craft a climate bill that does not place an unfair burden on consumers of transportation fuels.

Consider this fact. The Waxman-Markey bill holds U.S. refiners responsible for 44 percent of carbon emissions, but it provides them with only about 2 percent of the carbon allowances. As a result, U.S. refiners would not be able to compete in the global market with foreign refiners that wouldn't need to purchase carbon credits, and the United States would import more refined products (gasoline, diesel, jet fuel, etc.) from other countries where the environmental standards often are not as stringent.

This means the bill would export jobs and pollution abroad to the detriment of American consumers and the environment. How would that help to address climate change?

The CBO study contains three major flaws:

It does not take into account the loss in GDP that is expected as a result of higher energy costs (this impact will ripple throughout the economy as energy impacts all goods and services).

It assumes a lower cost of carbon based on readily available international offsets. The Waxman-Markey bill includes 20 pages of restrictions on the use of offsets, so they will not be as readily available as their models predict (in fact, they could be quite scarce). If so, carbon costs would roughly triple, according to CBO.

And finally, CBO apportions all the free allowances given to government and businesses to individual households. This "trickle down" assumption is unlikely, especially in the case of government allowances, which would not necessarily go to reducing household taxes or costs.

I'm not familiar with Sen. Brown's bill [[U.S. Sen. Sherrod Brown (D-Ohio) has introduced the “Investments for Manufacturing Progress and Clean Technology (IMPACT) Act of 2009"]] so I'll have to gather some information and get back to you.

In the meantime, I think it's important to mention here that API believes that the United States needs a portfolio of energy sources, including alternatives and renewables. The oil and natural gas industry has invested more in emerging energy technologies than any other sector of the economy, including the federal government. The industry not only is preparing for an energy transition; it is leading the way.

I hope these comments will be helpful to you, and I welcome your feedback. I sincerely hope you and I can engage in an ongoing conversation about energy. Clearly, it is one of the most important issues of our time.