New offshore drilling leases in the Gulf of Mexico offer Rep. Markey a chance to revisit the terms of older leases. (image: mexico.vg)

Now that President Obama has announced plans to expand offshore drilling for oil and gas, Rep. Markey (D-MA) sees an opportunity to recoup 15 years of lost royalties from drilling in the Gulf of Mexico, reported the Boston Globe. Markey plans to introduce legislation this week that would require companies to begin paying royalties on old leases before they can be awarded any new leases, a move endorsed by the editorial board at the New York Times.

Markey objects to a 1995 law that waived royalties to give oil and gas companies an incentive to undertake expensive deepwater exploration. Since high oil prices provide their own incentive for expensive drilling, the law stated that royalties would resume if prices went higher than $28 a barrel—a pittance compared to 2008’s high of $147 a barrel or today’s price of around $85 a barrel—but only applied it to existing leases. While lawmakers claimed they intended for the $28 ceiling to apply to new leases as well, that specification was not included in the law and the Supreme Court ruled in October that oil companies did not have to pay royalties on new leases signed from 1996 to 2000, reported Reuters. The federal government now has to pay back roughly $2 billion in royalties that have already been paid by oil companies, and, according to the Government Accountability Office, could lose up to $53 billion in royalties over the next 25 years.

Markey’s plan aims to restore royalty payments by adding conditions to the bidding process for new offshore leases. Before they would be allowed to even make a bid, oil companies would have to resume royalty payments and negotiate the disputed royalties on existing leases. As Markey explained, this restores the balance intended by the 1995 law and erases a loophole abused by companies that are already profiting from high prices at the expense of consumers:

When the price of oil is above $80 per barrel, subsidizing oil companies to drill through royalty-free drilling is like subsidizing fish to swim—you don’t need to do it.

The American Petroleum Institute (API) objects to the unfairness of changing the rules of the game and the uncertainty it creates. “Sending the signal now that America changes its rules mid-game would discourage investment and potentially cost jobs,” said Cathy Landry, a spokesperson for the API.

The Obama administration is reviewing the proposal and has yet to take a position on it, but David Hayes, the Deputy Secretary of the Interior, told the Boston Globe that his department has “not been happy about” the loss of royalties and would welcome “congressional action.”

While any decision on royalties could affect how oil companies do business, neither Markey nor the API suggested that establishing royalties on existing offshore leases would affect retail prices of heating oil, gasoline, or other petroleum products. Any cost added to oil producers could be passed on to consumers, but growing fuel demand in the US as the economy improves and in developing nations as they industrialize are will play a much larger role in determining the price of oil in the global market than any royalties paid for drilling in the Gulf of Mexico.

In New Jersey, corruption in the heating assistance program took money from families in need. (image: blogtalkradio.com)

The local manager of a heating assistance program pleaded guilty on Friday to stealing more than $24,000 in state funds, reports NewJerseyNewsroom.com. As HeatingOil first reported in August of last year, Constance Campbell took advantage of her position as Home Energy Assistance (HEA) manager for Tri-County Community Action Partnership to file false applications for herself and five family members, all of whom have also pleaded guilty. Campbell and the involved relatives worked with a local heating oil dealer to cash HEA checks intended for purchases of heating oil.

Tri-County Community Action Partnership was contracted by the state of New Jersey to administer the state’s heating assistance program in Cumberland, Gloucester, and Salem counties. The program is part of the federally funded Low-Income Home Energy Assistance Program (LIHEAP), which is administered at the state level and is often referred to as HEAP or, as in New Jersey, HEA.

Campbell processed fraudulent applications for her own benefit that amounted to $4,089, and $19,921 worth of fraudulent applications for her family members, none of whom were eligible for HEA benefits. Campbell is responsible for full restitution for all funds, and her family members will share responsibility for restitution of the money they received.

In addition to restitution, Constance Campbell and three other family members face possible time behind bars. The state will recommend that Constance Campbell be sentenced to five years in state prison for the charge of official misconduct. A sister, Patsy Campbell, a brother, Dennis Campbell, and his wife, Hollyann Allen were charged with theft by deception and the state has recommended they be sentenced to 364 days in county jail. Two other sisters, Denise Campbell and Priscilla Campbell, pleaded guilty to misapplication of entrusted government property and do not face jail time. Sentencing is scheduled for May 27.

Of the $24,010 that the Campbell family diverted from New Jersey families in need of heating assistance, the bulk of it—$15,000—was converted into cash with the help of Thomas Harris, the owner of Harris Fuel Oil in Paulsboro, NJ. Last August Harris pleaded guilty to money laundering and misapplication of government property. By issuing cash for HEA checks instead of heating oil, he defrauded the HEA program of over $400,000 and could receive four years in prison.

The $24,000 stolen by the Campbells is a relatively paltry sum compared to the profits of international oil companies or the bonuses paid to Wall Street executives, but it was taken from a program already straining to help those in need. Rep. Ed Markey (D-MA) has called for more money to be made available, and LIHEAP applications have reached record numbers in each of the last three years. The typical LIHEAP award is only $500 per household, which is not enough to cover a family’s heating costs for the winter, and is only a stopgap measure. The $24,000 diverted to the Campbells could have helped roughly 48 New Jersey families in danger of being without heat in the winter.

Representative Markey receives his award from NEADA Executive Director Mark Wolfe. (image: markey.house.gov)

On Tuesday, Congressman Ed Markey (D-MA) received an award for his continued support of government heating assistance through the Low-Income Home Energy Assistance Program (LIHEAP), the Belmont Citizen-Herald reported. Markey’s award came from the National Energy Assistance Directors’ Association (NEADA), a private organization that bills itself as “the primary educational and policy organization for the state and tribal directors of the Low-Income Home Energy Assistance Program (LIHEAP).”

As the representative for a heating oil-dependent and populous cold-weather state, Markey has long been a champion of LIHEAP. Most recently, he sponsored the Energy Assistance for American Families Act, which would increase LIHEAP funding from 2011 to 2014 and expand the program to make more Americans eligible to receive help with their heating costs. The bill has not yet been brought to a vote in either house of Congress. Speaking at an award ceremony in Washington, D.C., Markey stressed the widespread need for heating assistance in the Northeast this season:

New England was the site of the perfect storm off our coast, the winds rising as the barometer dropped and temperatures plunged. This winter, rising heating oil prices, an economic downturn, and plunging temperatures have created an economic perfect storm onshore for millions of New England families.

This year is the third in a row in which requests for LIHEAP assistance set a new all-time high. In addition to introducing the assistance bill, Markey announced a four-part plan to continue expanding LIHEAP: requesting the release of $100 million in remaining emergency funds by President Obama this heating season, pressing Congress to pass a supplemental appropriation to ensure all those who need it get assistance this year, advocating an immediate increase in LIHEAP funding for next winter, and passing the Energy Assistance for American Families Act.

In his remarks, Markey gave special attention to the plight of heating oil users, indicating that he is well acquainted with the unpredictability of heating oil prices and the toll it can take on Americans. Although the troubled economy could prevent the significant increases in LIHEAP funding that Markey is pushing for from passing, his efforts will keep the issue of heating assistance in the minds of his fellow legislators.

Heating oil users who struggle to pay their bills can take comfort in knowing that they have a tireless advocate in Congressman Markey.

Congressman Ed Markey has introduced legislation to expand assistance to families who need help paying their energy bills. (image: katynally.wordpress.com)

GateHouse News Service reported on Tuesday that US Representative Edward Markey (D-MA) introduced legislation to increase federal funding for the Low Income Home Energy Assistance Program (LIHEAP), which provides energy assistance to needy families, by more than 30 percent.

Markey explained in a statement that he introduced the Energy Assistance for American Families Act in response to difficult economic times, falling temperatures, and rising prices for heating oil and other heating fuels, which combined to increase demand for heating assistance this winter. “Expanding LIHEAP’s funding and availability is absolutely vital,” Markey stated.

Markey’s bill would increase total annual LIHEAP funding from $5.1 billion to $7.6 billion from fiscal years 2011 to 2014. The FY 2011 start date means that, if the bill is passed, additional funds won’t be available until next heating season (fiscal year 2011 runs from October 2010 to September 2011). The legislation represents the possibility of a substantial medium-term increase in LIHEAP funding, following a short-term request for additional emergency funds put forth by six New England senators in early January of this year. President Obama responded to the request by releasing emergency funds two weeks later.

If the Energy Assistance for American Families Act becomes law, it would provide much-needed extra cushioning for LIHEAP next year, after a projected 20 percent increase in demand for heating assistance this winter. The big funding boost would allow LIHEAP to provide help to more Americans in need and increase assistance levels to many recipients.

Heating oil users in the Northeast would see increased chances of getting all of the assistance that they need next year and beyond.

Illustration of carbon cap-and-trade. (image: granitegeek.org)

On Sunday, the Washington Post published an opinion piece by Ralph Izzo, chief executive of New Jersey’s Public Service Enterprise Group (PSEG), in which he offered his support for a cap and trade system to reduce greenhouse emissions. Although many energy corporations are hesitant to throw their support behind cap-and-trade and climate legislation, Izzo pleads for Congress to pass a strong climate bill. While admitting that current climate change legislation requires changes Izzo asserts that the most important thing to do right now is to put a price on carbon via cap-and-trade. According to Izzo, the benefits of implementing a cap-and-trade system far outweigh the estimated costs of such a program.

Aside from the environmental benefits of limiting global warming, Izzo argues that Congressional approval of climate change legislation will allow the United States to keep up with the countries of Europe and Asia that have already made great strides in developing and implementing alternative energy sources. Furthermore, Izzo asserts that placing prices on carbon is the first step to making the United States less dependent on foreign energy and will promote the creation of green industries and jobs. Perhaps most important, Izzo notes that cap-and-trade should be thought of as “cap-and-innovate” as cap-and trade “will give companies an economic foundation for investments in energy efficiency and clean energy, unleashing the innovation that only a well-functioning market can provide.”

It should be noted that PSEG could stand to gain from cap-and-trade as nearly half of their power derives from nuclear energy. As previously reported by HeatingOil.com, nuclear power does not emit carbon dioxide or contribute to global warming. Therefore, if cap-and-trade does emerge, PSEG could profit from selling the carbon credits it does not use as a result of its nuclear energy generation.

Recently Democrats have used nuclear energy in an attempt to gain Republican support for cap-and-trade as many prominent Republicans such as John McCain, Lamar Alexander, and Lindsey Graham are supportive of increased use of nuclear power. Despite such compromises however, Republicans, like Big Oil, continue to oppose any emissions-reduction legislation.

One oil corporation that is not supportive of cap-and-trade regulation is Sunoco. On November 19 HeatingOil.com reported that Sunoco CEO Lynn Elsenhan complained that the American Clean Energy and Security Act sponsored by Representatives Edward Markey and Henry Waxman “did not establish a level playing field and clearly picked US oil refiners as ‘losers.’” Speaking directly to cap-and-trade, Elsenhan asserts that “asking US refiners to be responsible for their customers’ emissions puts them at ‘great peril.’”

While it remains to be seen whether or not a cap-and-trade system will be successful (if it is ever established), the current climate of debate surrounding carbon emissions suggests that Ralph Izzo is correct to note that no one “will be completely satisfied with the final legislation.”

Sunoco CEO Elsenhan (left) objects to the cap and trade measures proposed by Rep. Markey. (image: engineering.rice.edu and upi.com)

Sunoco CEO Lynn Elsenhan and Rep. Edward Markey (D-Mass.) exchanged words during a session at this week’s Wall Street Journal CEO Council in Washington, D.C., the Journal reported on Wednesday. As shown in the video below, Elsenhan said that the American Clean Energy and Security Act, which is sponsored by Rep. Markey and Rep. Henry Waxman (D-Calif.), did not establish a level playing field and clearly picked US oil refiners as “losers.”

She went on to say that the cap and trade measures in the ACES bill, also known as the Waxman-Markey bill, did not resemble the European measure they were modeled after. “Europeans got their cap and trade allowances for nothing,” she said, “and they are not responsible for the emissions of their customers.” They are only responsible for the own stationary emissions.

Elsenhan said:

I am very willing to have all of my stationary emissions be paid for by cap and trade” and be more energy efficient, but asking US refiners to be responsible for their customers’ emissions puts them at “great peril” and makes their ability to cap and trade more important than their ability to refine crude into products and deliver those products to customers.

In response, Markey said that the bill contained $2.5 billion to “deal with” the additional costs to the refining industry, and that this provision is still subject to negotiation as the bill moves through the Senate. He mentioned that the bill also contained a protective border tariff that is triggered in 2020 to protect energy-intensive, trade-vulnerable industries from exploitation by China, India, and other countries that are not engaging in the same reductions in greenhouse gas emissions as the U.S.

Markey continued by saying that these provisions to protect the US oil industry sent a “real signal” to the world—“We are not going to stand by and watch our steel, aluminum, cement, and other energy-intensive industries be exploited by us moving along with the Europeans.”

The Waxman-Markey bill has been a lightning rod for controversy since it narrowly (219-212) passed in the House on June 26, 2009. The cap and trade provisions of the bill, and its impact on both refiners and consumers alike, are particularly controversial.

However, the debate between Elsenhan and Markey may be moot. Nuclear energy has emerged as a new focus of climate change legislation. Steven Zweig wrote on HeatingOil.com on Oct. 9 that several key Democrats in the Senate, including Sens. John Kerry (D-Mass.) and Joseph Lieberman (I-Conn.) may support nuclear power in exchange for Republican support of cap and trade. As Zwieg wrote on HeatingOil.com on Tuesday, to get climate change legislation passed in the full Senate, Democrats must bargain to gain support of a “critical mass” of Republicans. Such Congressional backroom maneuvering should ensure that any bill that does make it to the president’s desk will bear little resemblance to Waxman-Markey.