While Congress considers restoring billions of dollars in green-energy subsidies, the Obama administration is tightening the financial screws on oil and gas companies.
President Barack Obama proposed a confiscatory $10.25-per-barrel tax on oil when West Texas crude was trading in the $30 range. Meantime, federal banking regulators are increasing their scrutiny of lenders doing business in the Oil Patch.
Bowing to pressure from the Federal Reserve, the Comptroller of the Currency and the Federal Deposit Insurance Corporation, “Banks will reduce most energy company credit lines by roughly 20-40 percent this month,” predicted Paul Tice, head of the Energy Capital Group at U.S. Capital Advisors Asset Management.
“This will lead to further cuts in financing for many cash-starved energy companies, turning a challenging credit situation into a potential liquidity crisis,” Tice said.
Other federal agencies are piling on.
The Environmental Protection Agency, seeking to curtail methane emissions from new oil and gas well, is now ramping up restrictions on existing wells.
The Interior Department has implemented stricter operating procedures on fracking on federal lands.
Tice says Washington’s “climate-change ideology” is chilling the energy sector’s bottom line.
“Many large U.S. banks have announced they will no longer finance coal mines or coal-fired power generation. Crude oil and natural gas productions may not be far behind,” he said.
While some $1.4 billion in so-called tax extenders for renewables were scrubbed from a measure passed in December, renewable-power operators are again feeding at the federal trough as they lobby to attach more green-energy subsidies to an unrelated Federal Aviation Administration reauthorization bill.
Not content with the $23.8 billion already approved for tax credits to build solar panels, renewable-energy groups and their allies in Congress want more.
Free-market groups assail what they called “corporate welfare of the left.”
“It’s unfortunate to see lawmakers sneak these provisions through the backdoor using unrelated must-pass measures — especially only months after extending major wind and solar subsidies in an end-of-year deal,” said Christine Harbin, director of federal affairs at Americans for Prosperity.
Kathleen Hartnett White, director of the Center for Energy and the Environment at the Texas Public Policy Foundation, says the green energy agenda, including the EPA’s contested Clean Power Plan, “turns economic incentives on their head.”
“In many cases, the green-energy credits are worth more than the actual power generated,” she said.
Pointing to a 40-year history of green subsides, White asked, “If renewable power is so good, why do you need them?”
The Senate is expected to vote on the FAA bill this week, and Republicans say the “green pork” will be stripped out. Democrats, however, may not support the measure without some subsidies, and could block passage.
This article was updated at 9:15 p.m. Kenric Ward writes for the Texas Bureau of Watchdog.org. Contact him at kward@watchdog.org and @kenricward.
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