 This is the third in a continuing series of communications from the Montana Petroleum Association intended to provide information of interest to Montanans. We encourage you to forward this e-letter to your friends.
— Dave Galt, Executive Director www.montanapetroleum.org
Climate Change Bill Will Strap MT Consumers, Industry:
Big hike in gas, heating and electricity costs seen
Montana relies upon energy. We need it to heat our homes during long winters, and to get from place to place in our large state. We also need the oil and gas industry—it is one of the top employers in the state, paying good wages that support thousands of working families, and contributing significant tax revenues to the state. That's why Montanans should know about the climate change "cap and trade" bill now before Congress and how it could mean higher energy costs and reduced development and production of Montana's valuable resources.
“Montana’s largest industry is agriculture, and it is highly energy intensive. In order for Montana agriculture to remain competitive globally we cannot afford to hamstring our producers with higher fertilizer, fuel and oil costs. As far as offsets, I fear that we will be stepping over dollars to pick up nickels.”
– Bob Hanson, President, Montana Farm Bureau
Climate change and how it relates to carbon emissions is a very serious matter that has been the subject of volumes of studies and much debate in Washington, D.C. and around the country. Recognizing a need to manage carbon emissions, the oil and gas industry is in the forefront of developing new technologies that reduce the environmental impact of finding and producing the energy that drives America. At the same time, energy companies are coming up with new ways to reduce the carbon emissions of the fuels we use for transportation, industry, agriculture and essential services such as home heating and power generation.
While we agree with intelligent policies that protect the environment, we are concerned the cap and trade proposal being advanced in Washington would threaten America’s domestic energy security while doing little to reduce the consequences of greenhouse gases.
In our view, this is a classic case of well-intentioned Congress cobbling together legislation to satisfy diverse agendas, without considering its effectiveness and the real cost to America in terms of dollars and economic impact. The Congressional Budget Office (CBO) has said the bill would cost households an additional $175 in 2020. This is an unrealistic projection of a new carbon tax that the CBO presumes is not a tax if the government spends the money. Let’s face it, how many of us have ever had all our taxes returned?
What is cap and trade?
Legislation passed by the U.S. House of Representatives in June would weaken U.S. competitiveness in the global market, raise costs for people who drive (nearly all of us here in Montana) rather than use public transportation, and will have the unintended consequence of increasing global air pollution as more manufacturing and jobs are pushed to unrestricted, overseas factories and refineries.
 “A lot of us are worried about what the cap and trade bill will do to oil industry jobs in Montana. My family and thousands of others depend on the industry’s ability to keep finding and producing oil.”
– Rocky Gorder, B & G Production Service, Sidney
The Waxman-Markey bill, known as the “American Clean Energy and Security Act,” is likely the basis for a bill scheduled for consideration by the U.S. Senate this fall. A draft of the Senate bill is due for release after Labor Day. The basic premise of cap and trade sounds reasonable: require all industries that produce carbon emissions to place a “cap” on their releases, with a provision that allows industries operating below their permitted release levels to sell or “trade” their allowances to companies that are above the limits. The problem: the bill singles out and places an anchor on oil and gas companies—the very companies that produce most of the energy consumed by Montanans and other Americans. Fuel producers are given only 2.25 percent of total volume of emission allowances, yet the industry is held responsible for 44 percent of all emissions, including those from autos, trains, and aircraft as well as from non-transportation activities, such as home heating.
What does this mean for Montana?
Montanans rely upon gasoline, diesel and aviation fuel to drive trucks, plant crops, haul livestock, and get from one place to another. The increased cost of producing these fuels will mean much higher prices at the pump. A study by the Heritage Foundation projects an increase of 58 percent in the price of gasoline—to more than $4 per gallon.
“U.S. refining production could drop 17% from today's levels if the climate bill is passed as currently proposed. The drop would have to be made up by foreign imports, the study says, meaning the U.S. could end up relying on other countries for 19.4% of its refined fuel—nearly twice the amount it imports today.”
– Wall Street Journal, August 24, 2009,
in a story on a new study by American Petroleum Institute.
Home heating bills would also rise sharply. The Heritage Foundation study clearly shows that false assumptions and fuzzy math in recent government estimates downplay the increase in annual home heating bills. Some supporters of the cap and trade bill rely on these flawed estimates to claim an annual increase of just $175 a year. In fact, annual household heating costs would jump by $1,500 or more over the next decade. By any measure, that's a big hit on a typical family's budget so it is important to recognize that the cap and trade bill will be hard on working families.
Consumers would not be the only ones hammered by rising fuel and heating costs. An important segment of our economy would be essentially kneecapped by this proposed climate change policy. Emissions allowances for the refineries that produce close to half of the fuel used in Montana would be severely limited, slowing the industry that pays good wages to 975 workers in the state—by as much as 17 percent, according to a study released this week by the American Petroleum Institute.
The Montana oil and gas industry is committed to Montana and it always has been. Last year, Montana’s oil and gas industry directly generated more than 4,500 jobs and indirectly another 7,500 jobs in communities across the state. We support efforts to conserve vital resources and protect the environment, but this proposal is not the answer. The MPA will continue to urge Congress to carefully consider how Waxman-Markey would weaken domestic security and energy independence, how it would damage Montana’s energy economy without addressing climate change and how it would threaten the mobile, independent quality of life Montanans treasure.
The Montana Petroleum Association, Inc. is a voluntary, non-profit trade association, serving a membership of oil and natural gas producers, gathering and pipeline companies, petroleum refiners, service providers and consultants.
montanapetroleum.org
|
Connecting to Facebook