Business | Oil & Gas
Producers applaud Obama victory
Oklahoma oilman Aubrey McClendon figures president-elect Barack Obama, who favours a windfall-profits tax on petroleum producers and resists allowing new drilling on federal lands, will help his business.
- Bloomberg
- Published: 23:32 November 5, 2008
New York: Oklahoma oilman Aubrey McClendon figures president-elect Barack Obama, who favours a windfall-profits tax on petroleum producers and resists allowing new drilling on federal lands, will help his business.
Like other energy companies focused on onshore gas wells in the US, McClendon's Chesapeake Energy Corp stands to benefit should Obama and a Democrat-led Congress push for use of compressed natural gas in automobiles.
"The Democrats have been very engaged about compressed natural gas in the last few months," McClendon, chief executive officer at Oklahoma City-based Chesapeake, said in an October 28 telephone interview. "A Democratic administration is more likely to pursue the use of CNG as a fuel."
McClendon cited a bill that Democrats Rahm Emanuel of Illinois and Dan Boren of Oklahoma introduced in the US House in July. The measure called for incentives to install CNG pumps at filling stations, build CNG-powered cars and induce Americans to buy them, fostering a new market for a fuel now used mostly for heating, power generation and the making of plastics and fertiliser. Chesapeake is among the largest onshore gas producers in the US. Other major independent producers, those that don't also own refineries or chemicals plants, include Devon Energy Corp., XTO Energy Inc., Anadarko Petroleum Corp., EOG Resources Inc., Southwestern Energy Co. and Ultra Petroleum Corp. Boren said the bill will be reintroduced in January. The goal is to have 10 per cent of vehicles in the US converted to CNG by 2015, he said. "I agree that an Obama victory would make it easier to pass this legislation," Boren said in an October 30 interview.
Natural-gas-fuelled vehicles displaced about 250 million gallons of gasoline use in the US last year, according to NGVAmerica, which represents companies lobbying for use of CNG as a motor fuel.
That's equivalent to about 0.2 per cent of US gasoline demand. The industry's goal is to surpass 10 billion gallons by 2020, according to the Washington-based trade group.
Obama plans Dh550.96 billion ($150 billion) in spending over 10 years to accelerate development of alternative energy sources and plug-in hybrid cars. Such investment will help create "the fuel-efficient cars of the future", he said in an October 28 campaign speech in Chester, Pennsylvania.
Republican candidate John McCain also called for investment in alternative energy sources, along with more drilling for fossil fuels to help reduce reliance on foreign oil.
Proposals
Billionaire oilman Boone Pickens met with both candidates in August to discuss his proposals for reducing petroleum imports and said Obama and McCain were "equally concerned about the problem".
Pickens is the largest shareholder in Seal Beach, California-based Clean Energy Fuels Corp, a supplier of gas for buses and other vehicles.
"Either way, there's going to be more support for natural gas as a fuel for cars," said Richard Kolodziej, president of NGVAmerica.
Any benefits to gas producers from the political push to increase use of CNG will take years to materialise, said Michael Kahn, who helps manage $1.3 billion, including Chesapeake shares, at A.R. Schmeidler & Co in New York. The companies also produce at least some oil, which could become subject to a proposed windfall-profits tax that would kick in when crude rises above $80 a barrel.
"I'm concerned about Obama's support of a windfall-profits tax on oil companies because it will hurt the same domestic companies this bill is depending on," said Boren, the lawmaker from Oklahoma.
Chesapeake's McClendon has promoted gas as an alternative to oil that's cheaper than crude and more plentiful in the US.
Other gas producers have been reluctant to push for legislation to spur use of the fuel in automobiles, a situation that may change if prices drop, McClendon said.
Gas futures in New York rose above $13 per million British thermal units in July, the highest since December 2005. The futures tumbled below $7 last month.
Business Editor's choice
-
Do unemployment figures flatter to deceive?
Jobseekers and recruiters give out mixed signals ranging from optimism to downright despair even as official data show recovery
-
Banks can increase their share
Longer opening hours, more locations outside cities and lower charges can help
-
Geepas idea blossomed in Dubai
The journey led from a small shop in Bahrain to a $1.27b company in the UAE
