One hundred eighty-six Members of Congress have signed on to H.R. 1830, the New Alternative Transportation to Give Americans Solutions (NAT GAS) Act of 2011, better known at this Web site as the Pickens-Your-Pocket Boonedoggle Bill, in honor of its chief lobbyist and beneficiary, billionaire T. Boone Pickens.
The bill would provide targeted tax breaks to subsidize the manufacture and purchase of natural gas vehicles, installation of natural gas refueling infrastructure, and production of compressed and liquefied natural gas for use as motor fuel. The bill includes no overall budget authorization. Moreover, many of the provisions modify current sections of the tax code, which in turn refer to other sections, and the Congressional Research Service inexplicably has yet to provide a bill summary. So the total amount of the tax breaks is anybody’s guess.
Nonetheless, the final tab has got to be huge even by Washington standards. Each manufacturer could claim credits of $4,000 per vehicle up to an overall amount of $200 million per year. Each purchaser could claim credits ranging from $7,500 to $64,000 per vehicle depending on how much the vehicle weighs. Each property installing natural gas fuel dispensers could claim a credit up to $30,000 (or $100,000 – it’s unclear). Each maker of compressed or liquefied natural gas could claim a credit of 50¢ per gallon for every gasoline-equivalent gallon sold. With anywhere from 225,000 to 400,000 18-wheelers sold in the USA each year, the vehicle purchase credits alone could cost billions.
T. Boone’s lobbying for these tax subsidies is all about patriotism and energy security and has nothing to do with rent seeking or corporate welfare. Just ask him! “I’m sure not doing this for the money,” the Texas Gas Mogul told New York Times columnist Joe Nocera.
Only the Shadow knows what lurks in the minds of lobbyists, but the circumstantial evidence is rather overwhelming. Pickens and his wife have a 41% ownership stake in Clean Energy Fuels (CEF), the Wall Street Journal reports. CEF installs natural-gas-vehicle fueling stations. The company describes itself as the “leading provider of natural gas fuel for transportation in North America.” The NAT GAS Act would reduce CEF’s tax liability while pumping up demand for its services.
Anyone who can’t see rent-seeking in this picture presumably also believes that none of the bill’s 186 co-sponsors ever got a campaign contribution from T. Boone Pickens.
Investment analyst Todd Shriber finds that Pickens’s main company, BP Capital Management, held multi-million dollar stakes in several firms with major natural gas exposure at the end of last year. Below is a list of the firms, excerpts from their Web sites indicating their financial interest in natural gas, the dollar amount of BP Capital Management’s holdings, and the number of shares held.
Apache Corporation (“an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids”): $20.6 million, 165k shares
British Petroleum (“one of the world’s leading international oil and gas companies”): $48.2 million, 1.1 million shares
Chesapeake Energy (“America’s Champion of Natural Gas”): $31.0 million, 923.5k shares
Canadian Natural Resource (“one of the largest independent crude oil and natural gas producers in the world”): $15.7 million, 317.5k shares
Devon Energy (“a leading independent natural gas and oil exploration and production company”): $14.4 million, 157.2k shares
EOG Resources (“one of the largest independent [non-integrated] oil and natural gas companies in the United States”): $25.5 million, 215.0k shares
McMoran Exploration (“an independent public company engaged in the exploration, development and production of oil and natural gas in the shallow waters of the Gulf of Mexico Shelf and onshore in the Gulf Coast area”): $21.0 million, 1.2 million shares
Murphy Oil (“produces oil and natural gas in the United States, Canada, the United Kingdom, Malaysia, and Republic of the Congo and conducts exploration activities worldwide”): $14.7 million, 205k shares
Noble Energy (“broadbased assets include both crude oil and natural gas resources, with exposure in the U.S. and internationally”): $35.6 million, 781k shares
National Oil Well Varco (“worldwide leader in providing major mechanical components for land and offshore drilling rigs”): $14.3 million, 180.0k shares
Occidental Petroleum (“an international oil and gas exploration and production company”): $22.5 million, 215.3k shares
Plains Exploration & Production Company (“primarily engaged in the activities of acquiring, developing, exploring, and producing oil and natural gas”): $22.9 million, 631.7k shares
Sandridge Energy (“diversified oil and natural gas company”): $26.2 million, 2 million shares
Suncor Energy (“In Western Canada, across the East Coast of Canada and internationally, Suncor explores for, develops and produces conventional oil and natural gas — from both onshore and offshore developments”): $16.2 million, 360.5k shares
Weatherford International (“one of the largest global providers of advanced products and services that span the drilling, evaluation, completion, production and intervention cycles of oil and natural gas wells”): $25.1 million, 1.1 million shares
In total, then, in Dec. 2010, BP Capital Management held $354.9 million worth of stock in companies that would profit handsomely from a politically-contrived surge in natural gas demand. Pickens stands to gain hundreds of millions – perhaps billions — of dollars if Congress enacts his scheme to rig the motor fuel market in favor of natural gas.