Fri, Oct 24 2008, 19:27 GMT
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Green Energy Likely Winner, Big Oil Loser In US Senate Races
By Ian Talley
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- A strengthened Democratic majority in the U.S. Senate will likely boost the outlook for renewable-energy companies while large oil companies could be socked with a multi-billion dollar windfall profits tax next year.
Many polls predict Democrats will win a half-dozen or so U.S. Senate seats from Republicans in the Nov. 4 general election. This could give Senate Democrats a voting edge needed to approve a Renewable Portfolio Standard, or RPS, a requirement for greater alternative energy production from wind, solar and biomass.
Many Democrats promise a "new direction" in energy policy, supporting a move away from fossil fuels.
If elected, these candidates could allow Democrats to pass a windfall profits tax for Big Oil companies such as ExxonMobil (XOM), Chevron Corp. (CVX) and ConocoPhillips (COP), according to a Dow Jones Newswires review of campaign promises and polls.
There would also be more political mass to set stricter energy market regulations and to pave the way for congressional intervention of the Strategic Petroleum Reserve.
Given the polling numbers, "the RPS is almost a certainty," said Dave Hamilton, Sierra Club director of its Global Warming and Energy Program.
The Democratic presidential candidate, Sen. Barack Obama of Illinois, supports a 25% renewable portfolio standard by 2025. Obama, who leads in most major polls, also backs a windfall profits tax for the petroleum industry and tapping the nation's emergency stocks when oil prices are high.
Sen. Obama - as well as Senate Majority Leader Harry Reid, D-Nev., and House Speaker Nancy Pelosi, D-Calif. - believe spurring the renewable industry would help the country recover from its current economic crisis. Republican candidate Sen. John McCain of Arizona doesn't support a national renewable energy standard.
Southern utility companies, including Duke Energy Corp. (DUK) and Southern Co. (SO), have lobbied against a federal renewable portfolio standard. Wind turbine manufacturers such as GE Energy, a unit of the General Electric Co. (GE), India's Suzlon Energy (532667.BY) and Denmark's Vestas Wind Systems (VWS.OS), as well as solar firms such as Norway's Renewable Energy Corp. ASA (REC.OS), and U.S.-headquartered First Solar Inc. (FSLR) and Evergreen Solar Inc. (ESLR) would benefit under a renewable portfolio standard.
Based on previous votes, Capitol Hill watchers estimate the number of senators who are highly likely to remain in their seats and who would vote for a renewable standard is between 53 to 59. As the House has already passed such a standardseveral times, the Democratic leadership needs 60 votes in the Senate to overcome a Republican filibuster. Although support isn't strictly along party lines, the GOP has largely been opposed to a federally mandated renewable standard.
"We believe we will succeed in electing a pro-environment majority in the Senate, and there are several environmental champions poised to win," said Josh McNeil, spokesman for the League of Conservation Voters.
Some Republican senators who opposed the renewable portfolio standard are likely to be replaced by Democrats who support one.
Virginia is one example. Republican Sen. John Warner is retiring, and he's expected to be replaced by former Democratic Gov. Mark Warner (no relation). In New Hampshire, Democratic Gov. Jeanne Shaheen is several points ahead of Republican incumbent Sen. John Sununu. In North Carolina, Republican Sen. Elizabeth Dole is down in most polls in a tight race against Democratic State Sen. Kay Hagan. Former Saturday Night Live writer Al Franken has moved into the lead against his opposition, incumbent Sen. Norm Coleman, R-Minn.
"We are one senator away from passing the kind of renewable energy legislation our country needs," said Rep. Mark Udall, D-Colo., who has about a five-point lead on his Republican opponent, former U.S. Rep. Bob Schaffer.
Mark Udall's cousin, Rep. Tom Udall, D-N.M., is ahead by nearly 20 points in most polls against GOP Rep. Steve Pearce, who has championed the oil industry's cause in his tenure. Both Udalls are members of the House Peak Oil Caucus, which believes that oil production has reached its zenith and a rapid move to alternative energies is vital for the U.S. economy's survival.
New Mexico and Colorado are examples where candidates have made energy a top campaign issue, with Democrats painting their competitors as tied to the oil industry at a time of record-high energy prices that have gouged household budgets.
Environmental lobbyists say that if support for a renewable energy mandateis above the 60-vote threshold, any law would likely be more stringent than has already come to the floor. To win additional support, the leadership may also include energy-efficiency measures that would count toward the standard.
Adding political momentum to those races where Democrats are ahead in the polls are several other contests that, while either neck-and-neck or Republican-leaning, could push the Democratic vote counts for a renewable mandate and a windfall profits tax even higher - including Mississippi, Alaska and Georgia.
Almost all of the challengers also support cutting Big Oil's tax breaks, and several, including Shaheen, Hagan and Franken, support Obama's plan to tap the Strategic Petroleum Reserve should oil prices return to previous record highs.
The last vote in the Senate for a windfall-profits tax failed to gain the 60-vote margin necessary, at 51 for and 43 against. Analysts say Obama's proposal could mean revenue of $15 billion a year, based on estimated profit for the oil majors this year.But, add three votes for Democratic senators who were out on the campaign trail but who support the measure and the expected new votes, it could become law.
"We are certainly aware that some of the candidates are talking about a windfall profits tax...and we're going to try to convince policy makers that's not the right answer," Mark Kibbe, a senior tax consultant at the American Petroleum Institute.
The oil industry fears that higher taxes, combined with a global constriction in access to new resources as producer countries accelerate their nationalization policies, would squeeze profits and reduce domestic exploration and production growth.
Many Democrats have proposed swapping the more expensive grade of crude for the market's lower-grade barrels, and funneling the generated revenue toward topping off the emergency stocks in the future. But some economists say that while such a move might temporarily relieve price spikes, it would send a false signal to the market that could ultimately cause prolonged high prices.
-By Ian Talley, Dow Jones Newswires, 202-862-9285; ian.talley@dowjones.com
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(END) Dow Jones Newswires
October 24, 2008 15:27 ET (19:27 GMT)
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