CLIMATE:

Oil industry, green groups launch dueling ad campaigns

A new ad war erupted today pitting groups that support climate legislation against the oil industry.

Clean Energy Works, a coalition of about 60 groups, launched an ad campaign that seeks to tar the oil industry with the Gulf of Mexico oil spill. The effort comes two days after the start of a new ad blitz from the oil industry trade group American Petroleum Institute (API), which is funding spots that protest the possible loss of sector tax benefits.

The new ad from Clean Energy Works tags the petroleum industry as "Big Oil." The TV spot shows pictures of more than $4-per-gallon gas prices, former BP PLC CEO Tony Hayward, and the burning Deepwater Horizon oil rig before it sank in the Gulf. The spots advocate passage of "clean energy" legislation.

"What's next from the big oil companies?" the television ad from green groups asks. "A multimillion-dollar smear campaign to stop clean energy legislation from passing in the U.S. Senate."

Described by the group as costing "six figures," it will run nationally on cable networks CNN and MSNBC.

"What is clear is that API and its allies will continue to oppose moving America away from its oil dependence for one reason and one reason only: Big Oil's profits from our dependence," said David DiMartino, spokesman for Clean Energy Works. "They'll spend millions on smear campaigns and public relations efforts, yet they can't find enough money to ensure proper safety equipment is installed on their drilling rigs."

API has not stated a position on the leading climate bills in the Senta, saying that it is "neutral." The oil industry trade group, meanwhile, is running its ads opposing proposed tax policy changes, which it frames as new taxes.

"While the focus of our industry is on helping BP stop the spill and clean up the oil, we cannot ignore the fact that imposing significant new taxes on the oil and natural gas industry will have severe economic consequences and job impacts," said Jack Gerard, president and CEO of the American Petroleum Institute, in an e-mailed statement last week. The industry says it is connected to 9.2 million jobs and 7.5 percent of the country's gross domestic product.

The Obama administration wants to eliminate a series of tax benefits that oil and gas companies receive, including a tax deduction given to manufacturers, deductions for some drilling costs, and credits given for low-volume oil and gas wells. In addition, there would be new taxes on Gulf of Mexico oil and gas production and the reinstatement of taxes to generate revenue for cleaning up hazardous-waste sites.

Oil production tax breaks, many resulting from archaic acts to promote oil exploration, save the industry about $4 billion per year, according to government reports. Capital investments such as oil-field leases and drilling equipment see a levy of 9 percent, while other industries see an overall tax of 25 percent.

But the same Obama revenue-raising proposal stalled last year, and the proposal so far has received a cold reception from the Senate. That chamber last month in a 35-61 vote rejected an amendment that would have ended $35 billion worth of tax breaks for oil and gas producers over the next decade. The amendment that would have cut oil and gas tax breaks related to amortization, depletion of oil wells and domestic production income(E&E Daily, June 16).

Oil companies and their trade group have invested heavily in campaign contributions and lobbying. The oil and natural gas sector has bankrolled $347 million on lobbying since 2008, according to the Center for Responsive Politics. API said that the industry paid $280 billion in taxes from 2006 to 2008.

Oil industry ads

API on Tuesday kicked off a campaign featuring 15- and 30-second television ads running in Colorado, Michigan, North Carolina, North Dakota, Pennsylvania, Virginia, Maine, Missouri, Ohio and West Virginia. A radio version kicks off tomorrow in those states.

The TV ads will appear in Washington, D.C., starting next week. They feature what API called "working Americans" opposing new taxes on the oil and natural gas industry.

"Americans have historically been suspicious of taxes on the industry that produces most of the energy they consume," Gerard said. "They deserve to be informed about new proposals that would increase those taxes by many billions of dollars a year. "

Gerard said that API hopes the ads "will help ensure decisions affecting our economic and energy security are not made in a vacuum or based on incomplete information."

API has been running ads opposing tax policy changes for several months. In the spring, the trade group also funded spots (Greenwire, April 1).

Click here to watch the new API ad. (The new ad is the first one listed.)

Click here to watch the Clean Energy Works ad.

Want to read more stories like this?

E&E is the leading source for comprehensive, daily coverage of environmental and energy politics and policy.

Click here to start a free trial to E&E -- the best way to track policy and markets.