It’s beyond question that the oil industry is down on its luck right now, and the black eye received from the Deepwater Horizon accident in the Gulf of Mexico is a shiner which will stay on its public face for quite awhile. And while radio host Stephanie Miller claimed the Gulf oil spill as proof that “God is a Democrat,” the Democrats who sit among us mere mortals in Congress are taking direct aim at what they sneeringly call “Big Oil” with two particularly punitive measures.
With Democrats’ first try at cap-and-trade (better known as Waxman-Markey) stalling in the Senate after a contentious House vote, last week Senators John Kerry and Joe Lieberman brought forth their version of energy legislation. Originally sponsorship crossed party lines when Senator Lindsey Graham, a Republican, agreed to back the bill, but Graham withdrew his support when Senate leader Harry Reid decided to press for passage of immigration reform rather than this measure.
That’s not to say Graham would be staunchly against the proposal. But the sticking point he sees is that, “problems created by the historic oil spill in the Gulf…have made it extremely difficult for transformational legislation in the area of energy and climate to garner bipartisan support at this time.” Predictably, Democrats representing waterfront states like Florida, New Jersey, and Maryland are already coming out dead set against the additional oil exploration included in Kerry-Lieberman, a tradeoff intended to get Republicans to support a bill which would levy taxes on greenhouse gas emissions and, as studies have concluded, be a net job loser.
Moreover, Kerry-Lieberman gives a rare nod to states’ rights from the liberal side, allowing affected states more liberty to curtail or cease oil exploration off their shores. It’s a complete turnaround in one month’s time – only a few weeks ago the oil industry was cautiously optimistic about the Obama Administration allowing exploration in certain leaseholds to go ahead beginning in 2012. Needless to say, those ambitious plans are on hold after White House adviser David Axelrod warned, “no additional drilling has been authorized and none will until we find out what has happened (with the Deepwater Horizon).”
A second Congressional attack on the energy industry in the accident’s aftermath comes from their bid to bolster a little-known federal fund called the Oil Spill Liability Trust Fund (OSLTF). Created by Congress in 1986, the OSTLF lay dormant until 1990, when in the wake of the Exxon Valdez tanker accident a per barrel tax was levied on petroleum produced or imported into the United States. Currently oil companies pay eight cents per barrel toward this fund. In addition, there is a limitation on liability of $75 million per incident for economic damages – companies already have to shoulder the actual cleanup costs.
But a new proposal would devastate small- and mid-size oil companies, forcing them out of business by increasing the prospective liability to $10 billion. Naturally, the OSTLF would be increased as well through the possible fourfold increase of the per-barrel tax to 32 cents, but the additional revenue may not necessarily go to the OSTLF – proceeds could be spent on other projects Congress deems worthy of funding.
These are just two of the more egregious examples of how Congress wants to punish Big Oil for the sin of having a tragic accident occur on an offshore platform. The federal government has done its part to assist British Petroleum in coping with the accident and its aftermath, so there’s no need for Congress to exert another pound of flesh from an apologetic industry.
Michael Swartz used to practice architecture but now is a Maryland-based freelance writer and blogger whose work can be found in a number of outlets, including Liberty Features Syndicate. This piece was made available to LFS clients on May 20.