House Republicans want record oil profits used for new refineries

Washington (Platts)--25Oct2005

Republican leadership of the US House of Representatives, worried about a
voter backlash over high energy prices, Tuesday urged the oil industry to use
record profits to build new refineries or expand existing plants. 

     "Oil and gas companies are enjoying record profits and that's fine,"
House Speaker Dennis Hastert (Republican-Illinois) said at a press briefing.
"But they need to do more and can do more to inform the American public what
they are going to do to bring down the cost of oil and natural gas. When are
new refineries going to be built? When is the Alaska (natural gas) pipeline
deal going to be signed?"

     Hastert noted that it has been 30 years since a new refinery was built in
the US. "We need to do it again," he said. "We expect the oil companies to
ease the pain Americans are feeling due to high prices." He added it was time
for the companies to "invest in America."

     Rep. Eric Cantor (Republican-Virginia) said, "We're seeing record profits
by oil companies and questions are being raised by constituents asking how
such a situation exists. Our purpose is to urge industry to take advantage of
the incentives we provided."

     Cantor was referring to legislation sponsored by House Energy Committee
Chairman Joe Barton (Republican-Texas), intended to shorten the refinery
permitting and review process, curtail local and state oversight authority,
ease environmental regulations and make it easier to site new refineries. 

     Barton told the briefing that the "House leadership is trying to do
something." He pointed out that his bill passed the House (by a vote of
212-210) without any Democratic support. "If (Democrats) don't like what we're
attempting to do, I'd like to see their plan," Barton said. Barton's bill was
also opposed by several House Republicans and has received a chilly reception
from Senate Republicans.

     "This is not about coercion," Barton told reporters. "We're not telling
industry they have to do this; we're urging them to do it."

     Some of the language used by the Republicans was reminiscent of
Democratic complaints about the industry. However, unlike some Democrats, the
Republicans did not call for a windfall profits tax on the industry.

     Conservative observers were highly critical of the Republican comments.
"What Hastert is proposing is nothing less than central planning for our
economy; politicians telling private companies what to do with their money,"
Iain Murray, a senior fellow at the Competitive Enterprise Institute, said in
a statement. "Energy companies have a much better idea of how to invest their
profits to improve businesses than pork-barrel politicos in Washington."

     Myron Ebell, director of global warming and international environmental
policy of the Competitive Enterprise Institute, said the main reason companies
are not investing in rebuilding and enlarging America's "aging and inadequate
infrastructure is because they are hindered and blocked by regulatory
obstacles created over several decades by Congress."

     Murray called on Congress to get rid of "pettifogging environmental
laws," and Ebell said Hastert "should stop threatening private citizens" and
schedule regulatory reform legislation.

     While refiners have cited costly environmental regulations and the
lengthy permitting process among the reasons for not building new refineries,
they acknowledge that the low profitability in the refining sector, at least
until recent years, has been the primary factor.

--Gerry Karey, gerry_karey@platts.com

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