Washington (Platts)--16Mar2009

US Senator Lisa Murkowski, ranking Republican on the Energy and Natural
Resources Committee, said Monday that increasing taxes on the oil and gas
industry would have the unintended consequence of driving natural gas
producers and independent companies out of the country.

In his fiscal 2010 budget released last month, President Barack Obama
called for excluding the petroleum industry from a manufacturer's tax credit,
which might raise $31 billion in additional taxes from the industry.

"People get up in the morning to hate the oil industry," said Murkowski,
speaking at Platts Energy Podium in Washington. Murkowski represents Alaska,
which after Texas produces the most oil of any US state.

Still, if Congress approves the president's proposal to raise taxes on
the industry, that could reduce production of gas and its use as a
lower-carbon alternative to coal-fired electricity generation.

She said that the committee will likely not agree on a renewable energy
standard, although she said she could support a low-carbon electricity
standard which includes nuclear energy and hydroelectric generation.

"If your goal is reduction of emissions, why would you not want to
recognize those existing resources that aren't contributing to carbon output?"
she said.

Energy and Natural Resources Committee Chairman Jeff Bingaman of New
Mexico, a Democrat, plans to offer a renewable energy standard that would
require investor-owned utilities to draw 20% of their output from wind, solar
and other renewables by 2021. His proposal does not classify hydropower as
renewable energy.

Nonetheless, Murkowski said she is optimistic that she and Bingaman will
agree on a range of issues that could pass their panel with broad bipartisan
support, including increased federal authority over transmission siting, ways
to boost energy production on public lands and perhaps language creating a new
clean energy bank to finance new projects.

She also said the bill could include a provision addressing energy
futures market regulation, though that issue had lost some urgency as oil
prices have declined over the last several months. "The heat has been turned
down on the issue of market regulation," she said.

--Jean Chemnick, jean_chemnick@platts.com