Strange bedfellows: Big Oil and Democrats

As drivers pay more by the day at the pump, political campaigns at every level are zeroing in on new energy policy hoping to find an easy answer about what can, or some cases, can’t be done to fix the problem.

Although most industry analysts and political experts agree there is very little politicians in Washington, D.C., can do to stop the rising cost of crude, that hasn’t stopped the oil and gas industry from lobbying Congress with tens of millions in campaign donations this election cycle.

The industry, which has enjoyed high profit margins in recent years, gives to Congress hoping to gain better tax incentives for domestic exploration and more comfortable regulation, often found in loosened environmental limitations to drilling.

The industry, which encompasses everything from multinational oil conglomerates to pipeline companies and refineries, historically donates more money to Republican candidates than to Democrats, but that trend is shifting as the power pendulum swings in Washington.

Through the first quarter of 2008, Republicans received 74 percent of total oil and gas donations, down from 82 percent in 2006, according to OpenSecrets.org, a nonpartisan group that tracks campaign finance reports.

Donations to Democrats this year, who control the Senate and U.S. House of Representatives, have already eclipsed 2006 totals by 18 percent, with Democratic candidates accepting $4,395,551 through the first quarter of 2008 compared to a 2006 total of $3,576,445. Republicans are still largely on the receiving end of oil and gas donations, though, accepting $12,650,059 in this cycle and a total of $16,570,858 in 2006.

Colorado Democrats in congressional races have accepted 24 percent of the total oil and gas donations this election cycle, up from 15 percent in 2006.

The last time Republicans received less than 75 percent of total oil and gas campaign donations was in 1994 when Democrats last held control of the House and President Bill Clinton was in office.

“(One) reason for the oil and gas industry to be giving more money to the Democrats and that is that they are, by most handicappers right now, going to be in power for the foreseeable future,” said Kyle Saunders, a political science professor at Colorado State University and an energy expert.

"Money follows power in this regard. However, as energy becomes more and more of an important issue in our politics, I think things are going to be very dynamic in this regard," Saunders said. As the price of crude escalates and more people feel the crunch, you can bet political groups will use that frustration to their advantage, Saunders said.

And, because Republicans historically have received a bulk of the oil and gas donations, they will be easier targets.

“Republicans who receive (oil and gas) money are going to be open to criticism from (political) groups, but I am not sure that trend will be universal,” Saunders said.

But, with advertising aimed to tie Colorado Republicans to Big Oil — most notably TV commercials that have already aired against U.S. Senate candidate Bob Schaffer and Rep. Marilyn Musgrave in recent weeks — it’s not hard to see a blueprint forming.

“In competitive races, these kinds of ads could matter quite a bit because no one wants to be affiliated with Big Oil right now … not with the controversies over their profits and such,” Saunders said.

Big Oil companies, politicians, and caribou in Alaska

Campaigns in both parties today face the same problem: The average voter doesn’t understand the complex nature of energy.

As the largest per-person energy consumer in the world, America imports 58 percent of its total gasoline annually, double the rate 20 years ago, leaving prices largely out of U.S. control. Globally, oil production has plateaued in recent years and surging demand, fueled largely by economic growth in Asia, has disrupted oil markets.

As the margin of the world’s oil reserves shrinks in the face of new global demand, the price of crude, once largely controlled by U.S. consumption, has become extraordinarily susceptible to natural disasters, a weakened dollar, geopolitical events and price speculation, most of which are largely out of U.S. regulatory control.

U.S. gasoline consumption increased 24 percent between 1983 and 2007, according to the Energy Information Administration, while at the same time domestic production has decreased. In fact, U.S. crude production has steadily declined since 1970 when the country produced 9.6 million barrels of oil per day, according to the EIA. In 2007, domestic production average 5.1 million barrels a day, its lowest point since 1949.

The result is an election season dominated by voters demanding cheaper food, affordable gas for their SUVs and a way to fly across the country with wild abandon. When good campaign banter about increased drilling in Alaska or an "Apollo Program" to foster renewable energy doesn’t produce immediate results, voters look for someone to blame.

“The population does not understand why their gas prices are high, and they do not understand how little control the federal government has over oil prices,” Saunders said. “All they know is that there is a problem and they want it fixed.”

That simple and easy fix voters seek is one reason both parties have tap-danced around energy policy this election cycle, Saunders said, contrasting it with an issue such as immigration, where members within the same party disagree on the best approach.

When the topic is energy, sometimes having a realistic dialogue and winning political votes don’t mix.

“Energy, especially oil and gasoline, over the long term, is a very complex, tough to explain, uncertain mess,” Saunders said. “Voters do not get that we are in a fix. In the end, they want cheap energy and politicians have to decide whether to do the right thing or the politically expedient thing. I think we will have a very difficult problem agreeing what the to do is if (prices continue to rise).”

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