Washington (Platts)--15Sep2008

The American Petroleum Institute, an oil industry association, warned
members of the House of Representatives and Senate Monday that two of the main
energy proposals the chambers are considering this month would have negative
affects on domestic fossil fuels production.

The House this week plans to take up a bill crafted by Democrats under
the auspices of Speaker Nancy Pelosi. It would roll back oil and gas tax
incentives to pay for renewable energy investment while opening large new
areas to energy production. The measure, which has yet to be formally
introduced, would also pressure oil companies that hold royalty-free leases in
the Gulf of Mexico to renegotiate the terms of their leases with the federal
government.

"New, punitive taxes and higher fees targeting the oil and natural gas
industry could push investment overseas, reducing US production, US jobs and
US revenues," API president Red Caveney warned Congress.

In a separate letter, he criticized a proposal by a bipartisan group of
senators, known as the "Gang of 20," which would likewise roll back some tax
credits, levy an excise tax on royalty-free gulf leaseholders, and invest in
renewables. The measure is one of three that Senate Majority Leader Harry Reid
plans to bring to the floor of the Senate this week.

API announced last month that it opposed the bill, even though the
measure would open new parts of the eastern seaboard and eastern Gulf to oil
and gas production.

"These measures create an environment that will virtually assure a future
with less, not more, domestic production than could otherwise be realized,"
said Caveney.
--Jean Chemnick, jean_chemnick@platts.com