Energy Policy:

American Chemistry Council's Cal Dooley reacts to lapse of moratorium on offshore drilling

As members of Congress head home ahead of the elections, many questions remain about the future of energy policy and climate legislation. During today's OnPoint, Calvin Dooley, the new president of the American Chemistry Council, reacts to Congress' decision to lift the moratorium on offshore drilling and discusses the possibility for future debates on the issue during the 111th Congress. Dooley lays out ACC's agenda for the coming year and responds to controversy surrounding the health impacts of the plastics additive, BPA. He also explains how the chemical industry may be affected if increased natural gas consumption is encouraged.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With us today is former Congressman Cal Dooley. Cal is the new president of the American Chemistry Council. Cal, thanks for coming on the show.

Calvin Dooley: Thank you, delighted to be here.

Monica Trauzzi: Cal, you recently took over the top spot at ACC, which is quite a jump from your previous work at the Grocery Manufactures Association. What made you make the switch and what are the issues at ACC that really compels you to go over to ACC?

Calvin Dooley: Well, the American Chemistry Council represents one of the most important sectors of our nation's economy. And they're faced with kind of a pretty broad range of policy challenges and I was intrigued by the opportunity to play a role and be a partner with industry leaders to respond to some of the challenges. You know, when we're looking to the future we are interested in how do we create a financial and regulatory environment that allows U.S. manufacturers of chemistry products to compete and win in this global marketplace. So we're going to be focusing a lot of our attention on how do we create a chemical regulation, a regulatory environment that provides us certainty in terms of how we can provide the information and the data which is important to assure consumers that our products are safe when used appropriately, so that we can continue to see our industry advance. We're also going to continue to spend a great deal of time on energy. How do we provide for greater energy security in this country? A lot of people don't really realize that the chemistry industry consumes almost 6 percent of our nation's energy supply. And it's not only important to the manufacturing, the energy required to manufacture our products, but energy products, be they natural gas or petroleum products, are the basic building blocks of so many of the products that we manufacture and provide to consumers.

Monica Trauzzi: So heading into the next session of Congress, what are the top, specifically the top issues that you see emerging that you'll be lobbying on?

Calvin Dooley: Well, on the energy piece, we were delighted that one of the few things Congress has done in their final few days here in Washington is that they passed a continuing resolution that will ensure that government has continued to fund it. But what they did, for the first time in over a couple of decades, is they eliminated a moratorium on offshore drilling for natural gas and oil. Now, there's a long ways to go before we will see responsible drilling off our shores. But this was certainly a step in the right direction to try to ensure that we won't continue to be so reliant for about 60 percent of our energy supplies coming from off our shores, a lot of it from the Middle East as well as Russia and Venezuela. So we're going to continue to focus on how can we even provide more certainty in terms of a reliable energy supply and how do we have a comprehensive energy proposal that insures that we put in place conservation programs and ensure that families and businesses are doing a better job in energy efficiency, but also ensuring that we're providing more domestic energy supplies, whether it be oil, natural gas, whether it be nuclear, whether it be hydro, whether it be solar, whether it be wind and other renewables.

Monica Trauzzi: There are several Democrats who have signaled that the debate on offshore drilling is not over. It could very well come back up for discussion in March. How concerned are you about future negotiations on this issue and where do you see the discussion going, especially if there's a Democratic president in office?

Calvin Dooley: That's right. Well, I think we have to look at the action that Congress took just in the last few days. It is a minor victory and a step in the right direction. Clearly, we're very well aware of some leaders in the Democratic Congress that are committed to reinstituting the moratorium. We not only think that the next Congress and the next administration should allow for responsible drilling off our shores, but they also ought to include some provisions that weren't included in the legislation that was considered earlier this year. Provisions that would ensure that a state would be able to share in revenue generated from the royalties of oil or natural gas that is secured off our shores. So that we ensure that there will be a vested interest in the states from, again, putting in place the appropriate regulations that allow for responsible development of energy supplies off our shores. And we also think that there's some merit in terms of us backing up too and finding a way where the private sector and public sector can join together to do a better job at inventorying where are the most viable supplies of energy off our shores so that we can have a better idea in terms of where would it be the most effective investment of private-sector dollars as well as public-sector dollars and, again, lessening our dependence on imported oil and energy supplies.

Monica Trauzzi: We're talking about a few years before offshore drilling projects get underway and before we actually see oil and gas coming out of these areas. When your predecessor Jack Gerard was on the show in the spring, he said that the chemical industry was suffering tremendously as a result of high natural gas prices. With all the focus that we've been seeing on expanding our use of natural gas and using it instead of oil, do we have adequate supplies to continue meeting all of our demands and any demands that we may add on top of that, even with the additional drilling?

Calvin Dooley: Well, we're very concerned about putting in place increased incentives for the use of natural gas. You know, if we just look over since the year 2000, the natural gas prices have increased on average about 300 percent. The increase in natural gas prices since the year 2000 are costing taxpayers today about $4500 per taxpayer. I mean this is a significant challenge and so we're very concerned that if you put in place even environmental regulations that result in some of our utilities moving from coal-fired generation to natural gas generation, when you have provisions that would encourage and provide taxpayer incentives to drive natural gas cars, is that we are going to be increasing the demand for natural gas. And unless that is coupled with increased supplies of natural gas, the chemistry industry, who relies on natural gas not only for energy, but, again, for the building blocks of a lot of the products that we provide are going to be put at a competitive disadvantage. And we only have to look at what has happened just over the last few years where we've seen the U.S. chemistry industry has lost about 120,000 jobs, in large part because of the disproportionate price of natural gas in the U.S. versus some of our other international competitors. So a sound policy going forward and we need to ensure that we're increasing supplies in natural gas and other sources of energy if we are going to provide incentives for natural gas being used throughout the economy.

Monica Trauzzi: The $700 billion financial bailout has really been the focus in Congress' last few days in session before they head out for the election. And it's clear that purse strings are going to be tight, whoever the next president is, when they come into office. What do you think this means for the future of a comprehensive climate package? And how likely passage is in the first one or two years of the next administration?

Calvin Dooley: Well, I think that if you look at the difficulty that the climate change legislation that was offered by Senator Warner and Senator Lieberman this year had in terms of even being considered on the Senate floor, it was defeated. And it was defeated in a bipartisan manner in that you had 10 Democratic senators who became increasingly concerned about the provisions that would have resulted in economic confidence country. And when you have, in the United States, looking out to the next year, when you look at an economy that is still going to be in a very tenuous state, the idea that we would impose additional costs to our economy that would inevitably result in additional job losses, I think we're not going to have a political environment that is going to be conducive in the next year and perhaps two, for comprehensive climate change legislation. Now, that's not to say though that we couldn't put together a very responsible package on energy development, energy supply that could be coupled with some provisions on climate change. That gives recognition to the economic cost and also gives consideration in terms of how to we approach this from a global perspective?

Monica Trauzzi: There's going to be a lot of international pressure coming at the end of next year.

Calvin Dooley: Yes and we have to be ensuring too that we're providing international pressure, that it's not only focused on our competitors in the E.U., but also in China and India and in emerging markets and making sure that they are participating in a responsible, constructive way to make the same accommodations in terms of reducing carbon emissions and greenhouse gases as we would be adopting here in the United States. If you don't have that balance, once again, I think the American people will do a calculation and will understand that we have to be very judicious about going down this path. And, in fact, we will oppose the United States adopting climate change legislation which is going to result in job losses, which are going to harm the welfare of our families.

Monica Trauzzi: Let's talk about BPA for a moment. There's been a lot of controversy and also conflicting reports on the safety of the plastics additives BPA. The FDA has said that BPA is safe in small amounts while the National Toxicology Program has raised questions about the safety of BPA. The fact is consumers are concerned. There's a lot out there, a lot to be read out there and consumers have expressed concern. There are certain companies that are taking steps to make sure that they don't have products with BPA on their shelves. Is this all PR? And if there is a legitimate health risk, what is ACC prepared to do in terms of BPA?

Calvin Dooley: Well, first let me say that ACC and all of our member companies will never put a product on the shelves of our stores if they are not absolutely convinced that the science supports the safety of those products if they're used appropriately. Right now, FDA, you know, the Japanese regulatory agency, the E.U. regulatory agency have all found that the exposure of consumers from the BPA is below levels that pose a risk to the health of those consumers. Looking forward though, I would say that what we are interested in is how do you create a regulatory policy and construct that ensures that the industry is able to provide the appropriate data, that there is a level of transparency in terms of how that data is provided to appropriate constituencies, that ensures that consumers have greater confidence in the safety of those products, whether it be BPA or any other number of chemical products that we're providing out there. What we are most interested in is that we shouldn't be taking a chemical-by-chemical approach here, is that we need to back up and have a science-based, fact-based, risk-based approach that can assure, again, that it has a transparency, that we give a lot of consideration to that data. That applies to all chemicals, be it BPA or whatever other product of chemistry that we are providing to consumers.

Monica Trauzzi: OK, final question here. We're sort of jumping around the board a bit. I want to talk about railroads for a moment because ACC has come out strongly against the railroad industry and wanting the Surface Transportation Board to address rate issues and competition issues associated with the railroad industry. Where do you hope to take this discussion in the coming months?

Calvin Dooley: Well, I would say that I don't want to have ACC considered as coming out strongly against the road industry.

Monica Trauzzi: OK.

Calvin Dooley: You know, the chemistry industry is responsible for almost 10 percent of the freight that is shipped on our rail lines. We have to be good partners with the rail industry. But that doesn't mean that we aren't very much interested and committed to ensuring that we have a more competitive marketplace in the rail lines. You know, we have so many of our chemistry companies that are only served by one rail line. And when you only have one alternative to ship your products, it gives an imbalance in market power. And that's where we want to have a very active and engaged Surface Transportation Board that is ensuring that we all have the appropriate pricing. And we're going to continue to work with the STB, with our railroad partners to ensure that we can achieve a more competitive environment. I think what ACC members are interested in, I think the rail lines as well, is that we need to have greater certainty in terms of our products being shipped in a timely fashion at a competitive price. And the rail lines need to have some assurances that their needs are going to be met too. And I'm hopeful that we will be able to create an environment where we can resolve these issues and both the rail industry and the chemistry industry can succeed and be financially profitable.

Monica Trauzzi: OK, we're going to end it right there. Thanks for coming on the show.

Calvin Dooley: Thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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