30 • OIL
&
ENERGY
formation to Gulf Coast refineries has been a
challenge due to inadequate infrastructure.
The proposed north-tier of the TransCanada
Keystone XL (KXL) pipeline would help
relieve this bottleneck by delivering 830,000
bpd of crude oil to refineries - but has been
delayed for over four years. The President
rejected the initial permit on Nov. 10, 2011
due largely to election-year political pres-
sures but also due to logistical concerns in
Nebraska. The Nebraska issues have been
resolved, and TransCanada resubmitted its
permit request on May 4, 2012. It is cur-
rently pending at the Department of State
(DOS). On April 22, 2013, NEFI submitted
comments in support of a DOS study that
found minimal environmental impact
would result from the pipeline. Through
CapWiz we also generated 242 letters from
NEFI members and supporters.
A final decision on KXL is expected in
the coming months, unless the Congress
acts to unilaterally approve the pipeline.
Legislation passed the House 241-175
on April 17, 2013 and has the support of
at least 61 Senators but Senate Majority
Leader Harry Reid (D-NV) is doing all he
can to keep KXL legislation from reaching
the floor.
Climate Change/Carbon Tax Legisla-
tion –
NEFI was instrumental in defeating
cap-and-trade legislation in the Senate in
2010 by convincing several swing-vote
Democrats that it was unwise to turn
carbon into a commodity and subject it
to the same unregulated trading environ-
ment as crude oil and credit default swaps.
Combined with a sluggish economy, high
energy costs and booming U.S. energy pro-
duction, climate change legislation is dead
for the foreseeable future. However, that
hasn’t stopped some members of Congress
from trying. Many Democrats and even
some Republicans are pushing the idea of
a federal carbon tax. Carbon tax legislation
(S.332) was introduced in February by
Senators Sanders (I-VT) and Committee
Chairwoman Boxer (D-CA) that would set
a price on carbon starting at $20 per metric
ton in 2014, rising to $50 per ton by 2030.
While this legislation is unlikely to
become law, such a tax could be discussed
when Congress debates comprehensive tax
reform in the near future. NEFI strongly
opposes legislation to create a carbon
tax. According to one study, it could cost
a family of four $1,000 per year and over
40,000 U.S. jobs by 2016.
Maintaining Fuel Supply During
Emergency Events -
In the run-up to and
aftermath of recent Hurricanes Sandy and
Irene, the downstream fuel distribution
Government Regulation
Continued …
have reformed business practices and rules
and regulations in order to provide greater
security for customer funds. On January 14,
2013, NEFI drafted and submitted a com-
ment letter to the CFTC endorsing these
reforms and recommending additional
measures to increase consumer protections.
Some measures, however, will require new
legislation, which may be included in CFTC
Reauthorization (see below).
CFTC Reauthorization –
On March
7, 2013, NEFI was asked by Senate
Agriculture Committee Chairwoman
Debbie Stabenow (D-MI) and Ranking
Member Thad Cochran (R-MS) to submit
recommendations on behalf of its coalition
allies in the Commodity Markets Oversight
Coalition regarding the reauthorization of
the CFTC, which expires at the end of this
year. The process is expected to become a
battleground over Dodd-Frank Act regula-
tions. Many lawmakers also want to address
more recent market crises including MF
Global and high frequency (automated
computer) trading.
In its letter to the Committee on May
1, 2013, CMOC urged, among other things,
that these issues be addressed and that addi-
tional measures be included to strengthen
prohibitions on fraud, manipulation and
excessive speculation. Both the House and
Senate Agriculture Committees have held
preliminary hearings on CFTC reauthoriza-
tion and plan on taking up this legislation
after work on the 2013 Farm Bill is com-
plete later this year. NEFI will be intimately
involved as the process moves forward.
ENERGY PRODUCTION,
INFRASTRUCTURE & SUPPLY ISSUES
Off-shore Energy Production –
While
domestic oil production is on the rise and
imports are at an all-time low, it has been in
spite of Obama administration policies, not
because of them. An estimated 88.6 billion
barrels of undiscovered, technically recover-
able oil exists in the U.S. outer-continental
shelf (OCS), but half of this area is off-limits
to producers. The administration’s five-year
plan for oil and gas leasing released in August
2012 did not open any new areas to produc-
tion as urged by NEFI and others during the
comment period. Therefore, these areas may
remain off-limits until 2018 or later.
Bipartisan legislation is being drafted in
the Senate Energy Committee on sharing
lease revenue with the states. A hearing
on this legislation is likely in the coming
months. If the Senate bill moves forward, it
could pick-up other off-shore measures by
amendment and could be reconciled with a
House bill at some point in the future. We
are monitoring developments closely.
Keystone XL –
Transporting oil
imported from Canada or produced in ever-
growing U.S. reserves such as the Bakken
