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Jack Gerard, the force majeure behind Big Oil

By Steven Mufson,April 06, 2012

(Page 3 of 4)

The week before Obama rejected the proposed Keystone XL pipeline, the API blitzed TV viewers with $600,000 in ads urging people to “tell our president we need it now,” according to Kantar Media.

In March, after Obama proposed, as he had in the past, that Congress end about $4 billion a year in tax incentives for the oil industry, Gerard accused him of “efforts to punish the oil and natural gas industry through tax policy.” He then launched a new ad equating higher taxes with higher gasoline prices. “In speech after speech, President Obama is calling for higher taxes on energy producers to pay for more spending,” the ad said.

Obama, who in the 2008 campaign said “we must end the age of oil,” has drawn his own stark line. On March 29, with Congress set to vote on industry tax breaks, he said: “Today, members of Congress have a simple choice to make: They can stand with big oil companies, or they can stand with the American people.” The vote failed in the Senate.

For a brief moment in March 2010, it looked as though Obama’s effort to find a middle ground on energy policy might succeed. He unveiled a five-year lease plan that included expanded offshore drilling. Gerard called it a “positive development.” Three weeks later, when a BP exploration well exploded, killing 11 workers and uncorking a massive oil spill in the Gulf of Mexico, the administration backed away and declared a six-month drilling moratorium. Gerard went back on the offensive.

Interior Secretary Ken Salazar has been a special target because he oversees leases and drilling on federal lands, both onshore in the Rocky Mountain states and offshore on the Outer Continental Shelf. After the oil spill, Salazar angered oil execs by saying he wanted to “keep our boot on their neck” until BP cleaned up.

Gerard lambasted the drilling slowdown as the administration struggled to address the environmental disaster and overhaul of the discredited regulatory agency before ramping up drilling again. The Interior Department fired back: “API’s Gerard Makes Inaccurate Statements on Federal Oil and Gas Development,” it said in a “reality check” noting high levels of drilling and production on federal lands. Even after deep-water drilling returned to pre-spill levels, Gerard kept hammering Obama on the issue.

Is confrontation the best strategy? Not every trade association thinks so.

“Our association tries to avoid combat and hope the logic of our positions prevail,” said Thomas F. Farrell, chief of Dominion Power and chairman of the utility industry’s Edison Electric Institute.

A former API board member said “for my taste the whole organization is far too aggressive.”

“A trade organization should not adopt party loyalty,” said Fadel Gheit, an oil analyst with Oppenheimer & Co. “It should be much more constructive instead of just blaming the president.” According to Open Secrets, 70 percent of campaign contributions from API’s political action committee (started by Gerard and funded by employees) go to Republicans. Roughly 90 percent of oil company PAC contributions go to Republicans.

API has given relatively small grants to a litany of Republican causes. It gave $25,500 to Americans for Prosperity, the political action group run by the conservative Koch brothers; $25,000 to the Sixty Plus Association, devoted to ending the estate tax; $50,000 to Americans for Tax Reform, the Grover Norquist-led group that urges lawmakers to take a pledge not to raise taxes. API also gave $50,000 to the Congressional Coalition on Adoption Institute as well as the New Orleans-based America’s Wetland Foundation.

API’s shift toward Republicans predates Gerard’s arrival. According to a person present at a board meeting in 2008, some members wanted to spend money to defeat industry loyalist Sen. Mary Landrieu (D-La.) in order to prevent Democrats from gaining a filibuster-proof 60-vote majority in the Senate. Other board members blocked the idea.

Gerard says “energy is not about Republicans, not about Democrats. It is not a partisan issue. It’s an issue that affects Americans at large.” API has tried to woo Democrats by giving money to the Congressional Hispanic and Black caucuses, funding fellowships and supplying data about oil industry jobs in their districts.

At the White House, much of Gerard’s rhetoric has been dismissed as political noise. Bill Daley, who as Obama’s chief of staff was supposed to help bridge the gap between business and the president, says that he didn’t have any contact with API during his stint. “They are pretty much viewed as a Republican operation,” he said. “They’ve been beating up the president now for three years. It’s not a group most Democrats think of as an unbiased, nonpartisan organization.”

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