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The U.S. House last week passed a bill intended to limit the energy secretary’s ability to tap the Strategic Petroleum Reserve (SPR) without opening up more — up to 10% — of public lands to the oil and gas industry.
The Strategic Production Response Act (H.R.21) stipulates that anytime the administration uses the SPR for non-emergency purposes, oil and gas production on federal lands and offshore waters must increase by an equivalent amount.
Rep. Katie Porter (D-Calif.), who said the bill would allow oil companies to “double dip, to profit off of the American people,” proposed an amendment to the bill to prevent oil companies from profiting twice.
Porter’s amendment was defeated — but not before she ripped the oil industry for what she called “corruption, bought and paid for by the fossil fuel industry.”
“Taxpayers should not be a piggy bank for Big Oil to line its pockets,” Porter told House members.
Oil and gas companies get a tax break when they tap into their reserves, she explained, which amounts to a “$2 to $3 billion handout each year.”
Under H.R.21, they also would get new government contracts to replenish the reserve.
“Without a change in policy, polluters get tax dollars once in the form of a government contract and again in the form of a special tax break,” she said.
Big Oil has too much influence in Washington. Last week, House Republicans passed legislation to give 10% of our public lands to special interests. I voted against the bill, and wrote an amendment that would have eliminated a special tax break that lets polluters cheat taxpayers. pic.twitter.com/m537SKShXQ
— Rep. Katie Porter (@RepKatiePorter) February 1, 2023
In her speech to the U.S. House, Porter said:
“When the federal government negotiates a contract with oil companies to buy their product with tax dollars, they do it at a fair price. That is capitalism.
“But to turn around and then give them a tax break, that is corruption, bought and paid for by the fossil fuel industry, which spends $100 million each year on lobbying.
“As a consumer protection attorney, I have never met any American — Democrat, Republican, Independent — who likes to be cheated.
“Consumers should get what we pay for. Big Oil should not get to double charge taxpayers for the same oil.”
Representatives backed H.R.21, 221 to 205, with support from only one Democrat. President Biden is set to veto the legislation should it pass Congress, the White House said last week. The bill is expected to face an uphill battle in the Senate.
What H.R.21 would mean for public lands
Approximately 36.5 million acres of public lands, including 11.6 million offshore acres, are currently leased for oil and gas production. Those acres produced almost 988 million barrels of oil in fiscal year 2021.
Under the new bill, if the White House were to draw 10%, or about 40 million barrels from the SPR — which currently holds 398 million barrels of oil — the number of acres leased from public lands and waters would also increase by 10%.
That would mean roughly 3.6 million more acres would be opened — 2.4 million onshore acres and 1.2 million offshore acres.
If that new area had wells at a rate similar to existing public lands under lease, the onshore area alone would likely yield 8,000 new wells and 800 million barrels of new oil production over their lifespan — more than the entire SPR.
Opening the public lands would have significant environmental impact, according to Brett Hartl, government affairs director at the Center for Biological Diversity.
“Sacrificing millions more acres of public lands for oil and gas leasing shows just how beholden the Republican majority is to its special interest benefactors,” Hartl said.
Republican supporters of the bill accused the Biden administration of acting recklessly in selling 180 million barrels from the reserve last year, or 1 million barrels a day for six months, in the biggest release ever.
That drawdown and others Biden approved have pushed the level of the SPR to its lowest level since 1983, according to Reuters.
The Biden administration said it sold the oil to counter gasoline prices that had risen to $5.00 a gallon.
Oil and gas lobbyists fill top staff positions in the House leadership
The oil and gas industry ramped up its lobbying efforts in 2022, spending more than $12.4 million on lobbying just in the first quarter of 2022 — about $1 million more than in the first quarter of 2021 — Open Secrets reported. By the end of 2022, that number climbed to $122,873,864.
A report published last week by nonpartisan watchdog Accountable.US found in the new Republican-controlled House, the Natural Resources Committee and the House leadership both filled top staff positions with several oil industry lobbyists.
“As the Republicans majority begins the new Congress, former oil industry lobbyists will have new and growing influence as top staffers for congressmen on key committees,” according to the report.
The report highlighted the client list of former lobbyist Nancy Peele, now chief of staff for House Committee on Natural Resources Chairman Bruce Westerman. Peele lobbied on behalf of several companies implicated in the oil spill in the Gulf of Mexico, including Taylor Energy Co., Hercules Offshore, Hornbeck Offshore Services, and Free-port McMoRan Energy.
She will join eight other former oil industry lobbyists in high-ranking staff positions on the Natural Resources Committee or working for House leadership.
“These lobbyists are not getting hired to advocate for American energy consumers — they will push an agenda that benefits the new majority’s donors no matter what it costs taxpayers,” Accountable.US energy and environment director Jordan Schreiber said.
In the last two weeks, the oil industry reported 2022 windfall profits.
Last week, Texas-based ExxonMobil reported record 2022 earnings. Exxon posted a $55.7 billion profit last year, breaking not only its own previous company record — $45 billion in 2008 — but setting a historic high for the Western oil industry, according to Reuters.
The company’s profit is a 144% increase from 2021.
Agreed! “Enough is enough. It’s time to fight back against the politicians and Big Oil CEOs who put their billions before the health and safety of our families, our communities and our climate.” @StopBigOil https://t.co/AksHboGFHE
— Robert F. Kennedy Jr (@RobertKennedyJr) February 2, 2023
Marathon Petroleum — the top U.S. refiner — said that it made $16.4 billion in profits last year while approving a $5 billion stock buyback, and Phillips 66 reported $8.9 billion in adjusted 2022 profit, a 253% increase from 2021.
Big Oil giants Shell and ConocoPhillips also reported their profits from the fourth quarter of 2022 last week. They made a combined $13.7 billion in the final quarter and $61 billion in profit for the year — a 121% increase compared to 2021.
Last week’s earnings reports came just days after Chevron announced 2022 profits of $35.5 billion, a company record.
On Tuesday, BP said it made $27.7 billion last year, more than double its 2021 profits.
BP also announced it was scaling back its climate goals and increasing its investments in oil and gas. It changed its emissions reduction goal from 35% to 20-30% by the end of the decade.
Meanwhile, American consumers faced historically high gas prices at the pump.