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By Aman Batheja

AUSTIN — A bill requiring natural gas drillers to publicly disclose the chemicals they use in hydraulic fracturing passed the Texas Senate on Wednesday but only after an effort to delay part of its implementation was defeated.

Hydraulic fracturing — called fracking — pumps millions of gallons of chemical-laced water deep into the ground to break up rock formations and release trapped natural gas.

Among the concerns about the practice are whether it can contaminate groundwater.

The disclosure bill is a rarity in Austin this legislative session for attracting support of both industry groups and environmentalists.

Once the bill passed the House this month, its fate in the Senate was quickly was in doubt. Sen. Troy Fraser, R-Horseshoe Bay, chairman of the committee that oversees the energy industry, said he had just learned about the proposal and was working to formulate a position on it. But Fraser ended up the lead Senate sponsor of the bill.

A few other states already require some disclosure of fracking chemicals. On the Senate floor, lawmakers praised the Texas bill as a model that other states will follow.

“This is going to be landmark legislation,” Fraser said.

The House version of the bill requires companies to disclose the fracking chemicals for every new well to the Texas Railroad Commission and a third-party database starting January 2012.

Sen. Glenn Hegar, R-Katy, filed an amendment that would push back the starting date for disclosing carcinogenic chemicals to September 2012 and all other chemicals to September 2013. Hegar said the delay made sense because of fracking studies that are under way, including one by the Environmental Protection Agency.

Fraser backed Hegar’s amendment, but three North Texas senators — Jane Nelson, R-Flower Mound, Wendy Davis, D-Fort Worth, and Florence Shapiro, R-Plano — worked to kill it.

“I do think our communities have waited far too long for this information,” Davis said.

Nelson, a co-sponsor of the bill, said all sides support disclosure.

“I’m ready to go full-steam ahead. I don’t want to delay implementation,” Nelson said.

Hegar responded: “I want to move full-steam ahead, but I want to make sure we get it right. The oil and gas industry is very important in the state of Texas.”

The amendment died, 21-9.

Rep. Jim Keffer, R-Eastland, who guided the bill in the House, said “representatives of Devon Energy,” the largest natural gas producer in North Texas’ Barnett Shale, were behind Hegar’s amendment. Devon had publicly supported the bill that passed the House.

“They haven’t been negotiating in good faith,” Keffer said. Devon spokesman Chip Minty said the company’s position has always been clear.

“We continue to support the bill, or at least not oppose it, and we supported the amendment because we thought it made sense given the EPA study,” Minty said.

Davis unsuccessfully tried to amend the bill to include studies on the effects of hydraulic fracturing and the feasibility of requiring companies to add a tracer substance to fracking fluid to make it easier to settle contamination claims.

Hegar was able to amend the bill to include another piece of legislation — an overhaul of the Railroad Commission that got stuck in negotiations. Lawmakers have until the session’s end on Monday to work out differences between the House and Senate versions.

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By Nick Snow

WASHINGTON, DC, May 26 — The US Bureau of Ocean Energy Management, Regulation, and Enforcement and the National Oceanic and Atmospheric Administration signed a memorandum of understanding to jointly ensure environmentally sound offshore energy development.

The two agencies announced the MOU at the International Oil Spill Conference in Portland, Ore.

BOEMRE Director Michael R. Bromwich said the MOU will stimulate greater efficiency in developing US Outer Continental Shelf energy policy and conservation.

NOAA Administrator Jane Lubchenco said the MOU is consistent with recommendations from US President Barack Obama’s independent oil spill commission.

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By Juliet Eilperin

The numbers are startling: Hundreds of sea turtles have begun washing up into bays and onto beaches along the Gulf of Mexico. Six hundred of the mottled, soup-plate-shaped reptiles came ashore in just four states in 2010, six times the annual average. This year, 563 have been stranded.

Blame the oil that fouled those waters after the BP spill?

No, government scientists say, there is a more mundane local culprit: shrimpers who are ignoring regulations to prevent endangered Kemp’s ridley sea turtles from becoming ensnared in their nets.

The tale of the turtles illustrates the complexity of establishing cause and effect in assessing the ecological impact of the spill.

More than a dozen e-mails, obtained from the National Oceanic and Atmospheric Administration’s fisheries service by the advocacy group Oceana, provide extensive evidence that shrimping vessels operating in the wake of the oil spill routinely failed to properly install “turtle excluder devices,” aimed at keeping imperiled turtle species out of their gear.

The revelations put an uncomfortable spotlight on an industry that has struggled in the face of foreign competition and fishing closures imposed after the Deepwater Horizon disaster.

“This is a serious problem,” said Barbara Schroeder, national sea turtle coordinator at NOAA’s Office of Protected Resources, adding that federal scientists have established a connection between the recent turtle deaths and the shrimp fishery. “And it’s a problem that there’s a solution to.”

Elizabeth Griffin Wilson, Oceana’s senior manager for marine wildlife, questioned why federal authorities have not done more to curb the problem.

“New information is showing that the shrimp fishery is likely to be the cause of death for large numbers of sea turtles,” said Wilson, whose group obtained the documents under the Freedom of Information Act. “Now that we have a feel for the scope of the problem, we’re absolutely shocked that the U.S. government hasn’t taken steps to solve it.”

Ever since the federal government started requiring shrimpers to install the excluder devices in their nets in the early 1990s, they have complained about the safeguard’s economic impact. The device consists of a metal grid that must be angled between 30 and 55 degrees relative to the net’s opening so a turtle can push against it and make its escape. When installed properly, it is 97 percent effective.

David Camardelle, the mayor of Grand Isle, La., and the operator of a 28-foot shrimp boat, said his industry’s operations have no impact on sea turtles at this point but is still reeling from the regulations directed toward them.

“The only turtles that are being destroyed are the turtles in the oil spill,” Camardelle said. “It’s devastating, with the price of fuel and the turtle excluder devices. The environmentalists destroyed our living.”

But the e-mails show that shrimpers across the Gulf of Mexico are routinely failing to place the devices in their nets or installing them improperly. One e-mail describing a series of inspections in Louisiana called “compliance to be poor at best.” At the port of Cameron, one out of nine vessels were found in compliance with the law; in Intracoastal City, La., two out of 17 met federal requirements; and in four other areas where boats were boarded, three out of 29 met the legal test.

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By JAMES HERRON

LONDON—The U.S. summer driving season starts next week amid predictions that gasoline consumption in the U.S. will be lower than last year as squeezed motorists cut back due to high prices. Fear that this phenomenon will diminish overall oil demand has been a big factor in the recent fall in international oil prices from their April high of $127 a barrel.

However on the other side of the world, industry observers see the opposite situation due to the threat of electricity shortages in China. If power supply is tightly rationed this summer and the Chinese turn to backup oil-fired generators as they have in the past, oil demand may be significantly higher than previous predictions.

With the balance between global oil supply and demand seen increasingly tight, which of these countervailing trends proves stronger could have a significant impact on prices in the second half of this year.

“Chinese diesel shortages could, by themselves, mitigate all of the weakness possibly emanating from the OECD due to higher prices and still tighten global balances further,” said analysts at Barclays Capital.

The Chinese side of this equation is the more certain. A drought has seriously depleted many reservoirs that feed hydroelectric plants. Water in China’s immense Three Gorges dam has fallen below the level required to run its electricity turbines effectively, official news agency Xinhua reported Wednesday. High coal prices are also causing problems.

“Power outages are estimated at between 30 gigawatts, by the China Electricity Council and 50GW, by South China Grid,” said Eurasia Group analyst Robert Johnston. When the same thing has occurred in recent years, people have turned to back-up diesel generators to fill the gap.

Increased use of diesel generators has boosted Chinese oil demand by 400,000-600,000 barrels a day in previous summers, according to Barclays analysts. Many analysts, including the International Energy Agency, predict a more modest boost of around 300,000 barrels a day this summer as power shortages are are less severe than previous years, but still significant.

The picture in the U.S. is much less clear. The price of gasoline recently hit the $4 a gallon mark, which is widely seen as the point at which motorists start to reduce the number of miles they drive. But prices have fallen since then, and the strength of the U.S. economy remains difficult to assess.

For example, last month the influential analysts at Goldman Sachs were emphasizing the near-term weakness in the oil market due to “nascent signs of oil demand destruction in the United States.” This week, Goldman said that process was likely to reverse, following a drop in gasoline prices, and shifted to a more bullish outlook for oil in the second half of the year.

Data is mixed. Gasoline stockpiles have increased for three straight weeks and most analysis shows consumption down by a couple of percentage points compared with last summer. However, a survey by travel and leisure group AAA last week predicted a fall of just 0.3% in the number of Americans driving to a vacation destination this summer despite high prices.

Estimates for U.S. gasoline demand this summer are all over the map. The U.S. Energy Information Administration still expects a year-to-year increase in liquid fuel consumption of 109,000 barrels a day, although it has trimmed this figure recently.

Another well-respected provider of energy data, the International Energy Agency, recently cut 190,000 barrels a day from its 2011 oil demand forecast this month, citing weak U.S. fuel demand. “We believe U.S. gasoline demand will indeed disappoint this year,” it said in its monthly oil market report.

Until more data comes in it will be difficult to judge which of the two opposing forces will prove more significant. The most bearish view says current consumption trends, affected by the recent peak in prices, imply U.S. oil demand could fall by more than 1 million barrels a day, according to Petromatrix analyst Olivier Jakob. “The drop in US oil demand dwarfs the increase in oil demand from China,” he said.

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BATON ROUGE — The Louisiana House approved a $25 billion budget blueprint late Thursday after a series of closed-door meetings helped resolve a stalemate over the use of one-time money to pay for recurring government expenses.

The 93-4 vote came after lawmakers agreed unanimously, and with no debate, to cut next year’s health-care budget by $81 million. While the cuts would be directed at a new managed-care program for Medicaid recipients, members of Gov. Bobby Jindal’s administration said it would lead to lower payments to hospitals, nursing homes and other health-care providers that treat the poor and elderly.

By approving the cut, the House reversed a position it took just a day earlier, when  members twice rejected a similar proposal.

House Speaker Jim Tucker, R-Algiers, said lawmakers agreed to the cut after being assured by their staff that the cut would only delay the launch of a managed-care program in Medicaid and would not affect service delivery.

But administration officials strongly disputed that claim. Health and Hospitals Secretary Bruce Greenstein called the cuts “dangerous and reckless,” and said delaying the launch of the managed-care program until 2012-13 would only save $22 million. He said the department would have no choice but to impose the rest of the cut on health-care providers.

Greenstein said the cut would take $59 million from the state general fund, which would translate to a loss of $192 million when matching federal financing is included.

As it heads to the Senate, which will start reviewing the bill on Memorial Day, the bill cuts spending by $232 million below the levels proposed by Gov. Bobby Jindal, though that figure is higher when federal matching money is included.

Administration officials have said the cuts would force the layoff of state troopers, force prisons to close and limit the state’s ability to respond to natural disasters and other emergencies.

It would cut eliminate more than 4,000 state jobs, reduce spending in virtually every agency of government and limit the salaries paid to top education officials.

But in a break from tradition, the bill (House Bill 1 by Rep. Jim Fannin, D-Jonesboro) for the first time in memory does not include a slew of “member amendments,” which are earmarks that steer money to fairs, festivals, non-profit groups and other projects at the direction of individual lawmakers.

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By PETER FERRARA

Writing about Reaganomics the past three weeks, I have been asked what I would propose we should do today.  As discussed in those columns, the four points of Reaganomics on which candidate Reagan expressly campaigned in 1980, and which he implemented once elected, were:

1.  Reduce tax rates sharply, to dramatically increase incentives for savings, investment, job creation, business start ups and expansion, entrepreneurship, and work.

2.  Cut unnecessary government spending.

3.  Pursue anti-inflationary monetary policy to maintain a stable dollar.

4.  Enact deregulation policies to reduce costs for business and consumers, and increase efficiency.

The results of these policies were a quick end to inflation, and the restoration of booming economic growth; effectively a generation-long, 25 year economic boom from the end of 1982 to the end of 2007.  Last week I argued that the boom then ended and we fell into the financial crisis because we had abandoned every one of those four principles of Reaganomics.

Obamanomics, which has thoroughly pursued the opposite of every one of these four Reagan principles, has resulted in a stunted recovery that is way too little, way too late.  Even though recessions since World War II previously have lasted an average of 10 months, with the longest previously lasting 16 months, last month’s labor report 40 months after the last recession started showed unemployment rising again to 9%.

America has now suffered unemployment at nearly 9% for the longest period since the Great Depression.  The U6 unemployment rate, counting those marginally attached to the labor force who have given up looking in the Obama recovery, and those stuck in part time unemployment for economic reasons, persists at nearly 16%.

Unemployment among blacks was up again, to 16.1%; among Hispanics up again as well, to nearly 12%; among teenagers, also up again, to nearly 25%.  Black teenage unemployment was over 40%.  These Americans have been suffering precisely another Great Depression under Obama.

Meanwhile, with prices for food and gasoline in particular soaring, real wages for working people are falling.  Last year, the Census Bureau reported that the total number of Americans in poverty was the highest in the 51 years that Census has been recording the data.  A record 44 million Americans are now on food stamps as a result.

Historically, the worse the downturn the stronger the recovery.  Based on prior history, the U.S. should be enjoying the second year of a roaring economic recovery by now.  Instead, while the Reagan recovery averaged 7.1% economic growth over the first 7 quarters, the Obama recovery has produced less than half that at 2.8%, with the last quarter at a dismal 1.8%.

Moreover, President Obama offers only worse for the future.  Due to Obamacare and other tax increases already scheduled under current law to go into effect in 2013, President Obama would sharply increase the tax rates on the nation’s small businesses, job creators and investors for virtually every major federal tax.  They would see their income tax rates jump by nearly 20%, the capital gains tax rate increase by nearly 60%, the total tax rate on corporate dividends increase by nearly three times, their Medicare payroll tax rate increase by 62%, and the death tax rise from the grave with a 55% rate.

Unless reversed, these economic policies, along with the Obama EPA’s cap and trade tax, and other sweeping Obama reregulation burdens, threaten the coming crash of 2013.  With our deficit already at $1.6 trillion for this year, what will that mean for the U.S.?

What we need instead is to restore the four principles of Reaganomics.  The economy wants to recover and to boom naturally, like the body healing from a wound.  With the right policies, this economy has another, generation-long, 25-year boom just waiting inside it yearning to break out, once it is freed from the bonds of Obamanomics that have held it back.

Fortunately, we already have a real world example of precisely that from the 2012 campaign, in the economic recovery plan proposed by Newt Gingrich at Art Laffer’s National Investor’s Conference on April 13.  In the specific plan released at that conference, Gingrich first proposed repealing all of Obama’s 2013 tax increases, including Obamacare in its entirety.

Gingrich proposed as well to abolish the capital gains tax altogether, which is just an additional layer of taxation on capital income, in addition to the individual income tax, the corporate income tax, and the death tax.  That is why fourteen out of thirty OECD countries, plus China, Taiwan, Hong Kong, Singapore and others, already enjoy zero capital gains tax rates.

Gingrich also proposed corporate tax reform that would reduce the federal corporate tax rate to 12.5%, the same rate that in Ireland produced a a soaring increase in per capita income from the second lowest in the EU to the second highest.  Our own Treasury Department published a study showing that Ireland raises more corporate tax revenue as a percent of GDP with that 12.5% rate than we do with our much higher rate.

The U.S. today suffers from virtually the highest corporate tax rate in the industrialized world, with a federal rate of 35%, and the states pushing it to close to 40% on average.  Yet, much of the rest of the world, ironically, has learned the lessons of Reaganomics.  The average corporate tax rate in the European Union has been slashed from 38% in 1996 to 24% today.  Canada’s rate has been cut to 16%, scheduled to decline to 15% next year.  Lower corporate tax rates prevail among our major competitors in Germany, China and India as well.  How are American companies supposed to compete in the global marketplace with such a disadvantage?

Gingrich’s plan also provides for 100% expensing of investment in new equipment so American workers can work with the most technologically advanced tools in the most advanced factories in the world.  Gingrich proposes as well to end permanently the death tax and its double taxation of the lifetime savings of Americans.

Finally, Gingrich proposes individual tax reform with an optional flat tax of 15%.  That means that taxpayers would be free to choose to file their taxes under the current system with all of its complexity, or the new reformed alternative system, where their taxes could be filed on a postcard, saving hundreds of billions in unnecessary costs each year.

Beyond taxes, Gingrich proposed to return to the Reagan-era, stable dollar, monetary policies that halted the runaway inflation of the 1970s, never to be heard from again, until George W. Bush entered office, followed by Obama.  He also proposed fundamental Fed reform to provide for transparency of all Fed activities, and to permanently end bailout abuses.

On deregulation, Gingrich would end the EPA’s cap and trade tax policies, and replace the EPA entirely with an Environmental Solutions Agency to fundamentally change environmental policies from anti-growth confrontation with industry to collaboration with job creators to achieve better overall repeal results.

Gingrich also proposes to repeal Sarbanes-Oxley, which only adds unnecessary costs that have deterred job creating investment in the United States and undermined the international competitiveness of America’s financial industry.  He would do the same with the Community Reinvestment Act, which was abused to help cause the financial crisis.  He would also modernize the Food and Drug Administration, recognizing the need to get lifesaving medicines and technologies to patients faster, and to remove cost barriers to their rapid development.

Deregulation was also central to the U.S. energy policy Gingrich advocated.    Gingrich called for freeing the energy industry to maximize production of all forms of American energy, from oil to natural gas to clean coal to nuclear power to all forms of alternative fuels.  That would assure the reliable supply of low cost energy essential to fueling a booming economy.

Gingrich also called for a balanced budget, first through restoring booming economic growth that would revive surging revenues and itself reduce spending obligations.  But that would also involve sharp spending reductions and money saving reforms that were specified in detail in his 2010 book To Save America, similar to the policies adopted by the Republican Congressional majorities he led in the 1990s to balance the budget then.

That would also include fundamental entitlement reforms.  In To Save America, Gingrich explicitly called for each worker to have the freedom to choose personal savings, investment and insurance accounts eventually to finance all of the benefits now financed by the payroll tax, eventually displacing that tax entirely.  He also called for sending all federal welfare programs back to the states with the same welfare block grant reforms adopted in 1996.  The reduction in federal spending that would ultimately result from such reforms would be unprecedented.

These policies in my opinion would produce precisely another 25 year economic boom.  Art Laffer agreed, saying, “The combination of pro-growth tax reform, spending restraint, and sound money will restore robust economic growth with low unemployment and low inflation.”

Peter Ferrara is Director of Policy for the Carleson Center for Public Policy and Senior Fellow for Entitlement and Budget Policy for the Heartland Institute.  He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush.  He is the author of America’s Ticking Bankruptcy Bomb, forthcoming from HarperCollins, and was a contributing co-author of To Save America.

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NEW ORLEANS (AP) — A federal judge has given the Obama administration 30 days to act on six permits for deep water drilling in the Gulf of Mexico.

U.S. District Judge Martin Feldman on Tuesday ruled on a lawsuit filed by Ensco Offshore Co. and others. He rejected Interior Department arguments that the issue was moot because it already has resumed issuing permits following the moratorium that was imposed last year after the massive BP oil spill.

Three permit applications in the original lawsuit have been granted.

But Feldman said the government’s issuing of what he called “a scant few applications” does not provide the certainty Ensco needs to conduct its business in the Gulf. He said the law required the six remaining Ensco-related applications to be acted on within a reasonable period.

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By JEFFREY BALL

DALLAS—The oil-and-gas industry is embarking on a campaign to persuade Americans that drilling for massive new supplies of natural gas is safe, Exxon Mobil Corp. Chief Executive Rex Tillerson said Wednesday.

“There are risks” to the environment when the industry drills for natural gas in shale deposits, Mr. Tillerson said at a press conference following the oil company’s annual shareholder meeting. “We’re not trying to characterize this as an activity that does not have risk,” he said. “But we think there have been a lot of pretty casual statements about risks that are simply not backed up by facts.”

[bizworld]

Rex Tillerson

Exxon has polled the public to gauge attitudes toward natural-gas drilling, and the results suggest some concern about the environmental impact, Mr. Tillerson said. In response, Exxon is aggressively paying for advertisements to telegraph its sense that the industry can drill safely and can clean up any environmental problems that result, Mr. Tillerson said.

“The early detractors slap a label on something, and then it takes us a long time to get it peeled off,” he added.

The natural-gas drilling involves a procedure known as hydraulic fracturing, or “fracking,” which involves injecting millions of gallons of water laced with chemicals into the ground to crack open gas-bearing shale rock. Critics have raised concerns that the procedure could contaminate water with gases or with the chemicals used.

Shareholders of Exxon and rival energy giant Chevron Corp., meanwhile, failed on Wednesday to approve resolutions asking the companies to disclose more about the environmental, legal and financial risks of natural-gas production.

But the significant support for the disclosure resolutions—41% of Chevron shareholders were in favor—underscored how investors have become more engaged in the issue of hydraulic fracturing.

Mr. Tillerson said fracking critics are largely mistaken. “It’s not new to us,” he said of potential risks from the gas drilling, adding that the industry has dealt with similar risks in drilling before.

If the drilling did produce environmental contamination, Mr. Tillerson said, that contamination could be cleaned up. “There are ways to deal with that,” he said.

After the disclosure-resolution votes, Chevron spokesman Lloyd Avram said in an email, “Our board takes all proposals seriously and will give this one due consideration. However, given public concerns about water use and contamination, Chevron believes that the industry must continue to reassure the public that shale gas resources can be developed in a sustainable, safe and environmentally friendly manner.”

As You Sow, an advocacy group that backed resolutions at the two companies and at Houston-based Ultra Petroleum Corp., said in a statement that the votes “demonstrate that mainstream investors are concerned about fracking and want more disclosure on how these companies are dealing with the environmental, public health and financial risks associated with this practice.”

At Exxon, the country’s largest gas producer, shareholders voted 28.2% in favor of the disclosure resolution—about two percentage points more than what a similar resolution received last year. Ultra Petroleum shareholders voted against the resolution. The company wouldn’t release the vote results Wednesday.

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