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House Cap-and-Trade Bill Passage a Setback for C-store, Petroleum Industry

WASHINGTON – A triumph for President Barack Obama and the Democratic-controlled House of Representatives could result in increased energy costs for consumers and onerous new regulations on the convenience and petroleum industry.

NACS—the Association for Convenience and Petroleum Retailing called upon its members to contact legislators and express opposition to the bill, part of which mandates allocations of emissions allowances to various industries. The association believes these allocations would place the petroleum industry at a significant disadvantage by providing the oil and gas industry with far fewer allowances than necessary to reach the new compliance levels. Meanwhile, other industries, such as coal, received significant allowances in exchange for their political support of certain Congressmen, NACS charged.

To see how each representative voted, click here.

Despite months of infighting, negotiations and arm-twisting by both President Obama and House Speaker Nancy Pelosi, the majority of Democrats came together with a few Republicans to pass the bill Friday.

Republicans were overwhelmingly against the measure, arguing it would kill jobs in the midst of a recession while burdening consumers with higher energy costs. This bill "amounts to the largest tax increase in American history under the guise of climate change," said Rep. Mike Pence, a republican from Indiana.

In its opposition to the bill, NACS last week sent a letter to Congress urging it to abandon the legislation, and on Friday, it directly lobbied dozens of representatives whose position on the bill was not considered finalized yet. Pointing out the distress caused last summer by $4 a gallon gasoline prices, NACS warned representatives about the impact the higher cost of gasoline and diesel fuel would have on their constituents. The association reports its efforts were mixed, with a slight majority of those contacted voting against the bill.

NACS’ concern centers around the impact of a new regulatory scheme on the petroleum industry that will increase the cost of refining and force refiners to reduce production to comply with requirements—thus increasing the cost of fuel to convenience stores and customers. The association also believes Congress will then pursue further price control regulation to ease public anxiety over rising energy costs.

Typical of the Democrats’ reaction, Rep. Ed Markey of Massachusetts hailed the bill as "the most important energy and environmental legislation in the history of the country."

But House Republican leader, Rep. John Boehner, spoke for an hour before the final vote and called the bill a "bureaucratic nightmare" that would cost jobs, depress real estate prices and put the government into parts of the economy where it now has no role.

The bill requires the nation to reduce carbon dioxide and other greenhouse gas emissions by 17 percent from 2005 levels by 2020, and by about 80 percent by midcentury. That was slightly more aggressive than Obama’s original plan, which was to reduce emissions by 14 percent by 2020 and 80 percent by midcentury.

Under the bill, the government would issue allowances for polluters. Most of the allowances would be given away, but about 15 percent would be auctioned by bid and the proceeds used to defray higher energy costs for lower-income individuals and families, according to The Associated Press.

The final bill also contains concessions pushed by farm-state lawmakers, ethanol producers, hydroelectric advocates, the nuclear industry and others.

Supporters and opponents agreed the result would be higher energy costs, but disagreed on the extent of the impact on consumers. Democrats pointed to two reports —one from the nonpartisan Congressional Budget Office and the other from the Environmental Protection Agency—that suggested average increases would be limited after tax credits and rebates were taken into account. The CBO estimated the bill would cost an average household $175 a year, the EPA $80 to $110 a year.

Republicans questioned the validity of the CBO study and noted even analysis showed actual energy production costs increasing $770 per household. Industry groups cited other studies showing much higher costs to the economy and individuals.

Passage of the bill was marked by the usual Congressional wheeling and dealing for favors. According to one report, Rep. Alan Grayson, a first-term Democrat, won a pledge of support that $50 million from the proceeds of pollution permit sales in the bill would go to a proposed new hurricane research facility in his district in Orlando.

The bill now goes to the Senate, where lawmakers aren’t expected to vote on it until this fall. NACS vowed to continue to express its concerns to senators.

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