|
The House will vote as soon as next week on bills that tighten regulation of oil futures markets and pressure oil companies to use millions of acres worth of currently nonproducing leases.
Votes are also planned on legislation that creates new penalties against gasoline "price gouging" and another measure aimed at boosting mass transit ridership. An aide said votes are possible as soon as next week, and if not, that they would occur shortly after the Fourth of July holiday recess.
House Speaker Nancy Pelosi's (D-Calif.) latest energy effort comes amid relentless GOP claims that Democrats have failed to respond to gasoline prices, which now average more than $4 per gallon nationwide.
As many Capitol Hill Republicans and President Bush call for opening more offshore areas to oil production to expand domestic supply, Democrats are highlighting what they say are large numbers of leases that industry is not using.
One recent proposal, dubbed "use it or lose it," would prevent companies from obtaining new federal leases unless they are already producing from their current leases or "diligently developing" them. Another would impose escalating fees on companies for nonproducing leases.
"Why should we be giving Big Oil additional leases to drill when they have 68 million acres under lease already that they're not drilling on right now?" Pelosi said at a press conference today.
Democrats spearheading these lease measures include House Democratic Caucus Chairman Rahm Emanuel (D-Ill.) and Reps. Ed Markey (Mass.), Nick Rahall (D-W.Va.) and Maurice Hinchey (D-N.Y.).
Industry officials say the proposals reflect at deep misunderstanding of how lease development decisions and investments are made.
"Leasing occurs at the beginning of an exploration process that is complex, expensive and that often lasts years or a decade or more before production can occur -- if it is successful. Companies have no incentive to delay the evaluation and/or drilling of leases having the possibility of economic production," notes a statement on the issue from the American Exploration and Production Council, an industry group that represents large independent oil and gas producers.
Focus on futures markets
Many Democrats -- and some Republicans -- want to give the Commodity Futures Trading Commission greater oversight of speculative trading by hedge funds, big banks and other investors. These lawmakers say increased speculative trading is driving up prices far beyond what supply and demand fundamentals dictate.
Details of the bill Pelosi plans to bring to the floor were not available, but lawmakers in recent weeks have focused on areas such as boosting CFTC oversight of trading in U.S. crude oil contracts on overseas exchanges; further closing the "Enron loophole" to ensure regulation of oil trades on exchanges currently exempt from regulation; and raising margin requirements for traders, among others.
Rep. Bart Stupak (D-Mich.) plans to introduce legislation tomorrow that would "close multiple loopholes allowing energy speculators to drive up energy prices," his office said, and a Democratic leadership aide pointed to Stupak as one of the lawmakers who will have input into the bill that comes to the floor.
But investment companies are fighting back against some of the proposals from lawmakers, such as banning speculation in some markets, calling them counterproductive and claiming they would drive investment to less transparent venues.
"Liquid and efficient energy and commodities markets are essential to the economy, and speculators play a crucial role in these markets," states a letter to Congress yesterday from six investment industry trade groups. "Without speculation, consumers would likely pay more for energy and commodities."
The letter was sent by the International Swaps and Derivatives Association, the Futures Industry Association, the Managed Funds Association, the Investment Company Institute, the Securities Industry and Financial Markets Association and the Financial Services Roundtable.
 |
Subscribe to this comment's feed