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API opposes Waxman-Markey climate change legislation

The Waxman-Markey climate change legislation will drive up the cost of gasoline and other petroleum fuels for consumers and businesses and should be set aside, API President Jack Gerard said in a letter to Congress today. API opposes the legislation, as it appears time has run out to fix the proposal’s many flaws.

“As independent analysis suggests, this legislation will drive up consumer prices for gasoline and other fuels. At today’s prices, it would mean gasoline at more than $4 a gallon. It also will create huge disincentives for the production of America’s abundant natural gas resources, and force jobs and productive capacity overseas,” Gerard said.

“API supports legislation to reduce emissions of greenhouse gases in lieu of ill-suited federal and state regulatory programs,” Gerard said. “The oil and natural gas industry is responsible for 44% of the $133 billion in total public and private sector investments in low-carbon energy technology since 2000. Unfortunately, the approach taken by the Waxman-Markey bill is so fundamentally flawed that the House should reject it. Simply stated, the bill will cost Americans billions of dollars in higher costs, kill jobs and will not deliver the environmental benefits promised.”

The bill still includes an inequitable allocation of carbon allowances that would be responsible for higher fuel costs. An analysis of a Congressional Budget Office report indicates it could add as much as 77 cents to the price of a gallon of gasoline over the next decade.

And according to the Heritage Foundation, this legislation could cause gasoline prices to jump 74 percent by 2035. At today’s prices that means gasoline would be well over $4 a gallon. A recent study by CRA International for the National Black Chamber of Commerce also estimates a net loss of over 2 million jobs a year.

“This places a disproportionate burden on all consumers of gasoline, diesel fuel, heating oil, jet fuel, propane and other petroleum products,” Gerard said. “If you drive, fly, take the bus or the train, your costs are going up.”

While legislation was well-intended, it badly serves the goal of reducing greenhouse gas (GHG) emissions, Gerard said.

In the letter, Gerard noted that the bill compounds its inequities by barring U.S. refiners from receiving the same domestic protections granted to other industries exposed to foreign competition. “This approach will benefit foreign refiners, exporting domestic refining capacity and jobs, in many cases to countries that do not control GHG emissions,” he said.

Additionally, the legislation would discourage the use of clean-burning natural gas and does not sufficiently pre-empt existing regulations, leaving open the potential for overlapping and inefficient requirements, costs that also would fall on consumers.

“Given the scope and the breath of the Waxman-Markey bill, the House should take the time necessary to get this legislation right,” Gerard said. “It is too important to be pushed by an arbitrary deadline. Jobs and the health of the American economy depend on a more balanced approach.”

API stands ready to work with policymakers and other stakeholders on a comprehensive energy policy that would provide increased access to domestic resources, including oil and natural gas, and address climate change.

Updated: June 23, 2009

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