Methane Tax Another Case of the Elitist Empire Striking Back

Methane Tax

NGLJim Willis on NGL Pipelines
Editor & Publisher, Marcellus Drilling News (MDN)

 

[Editor’s Note: Biden is the face of an elitist empire. His methane tax is just part of s strike back campaign to destroy oil and gas and bring the middle class under control.]

How much more of Joe Biden’s completely failed policies are you willing to tolerate? His so-called “Build Back Better” budget bill, which will cost Americans (YOU) $1.75 trillion (no, it’s NOT paid for by “someone else”), retains a new tax on methane that will jack up the rates everyone pays for natural gas by an estimated 12-34%. The price of gasoline is up 53% year over year for October ($3.291 in Oct 2021 vs. $2.158 in Oct 2020). Similarly, the price of #2 heating oil is up 59% year over year for October ($3.397 in Oct 2021 vs. $2.142 in Oct 2020). The price of natural gas has also jumped–even more!

methane tax

The NYMEX price upon which many other retail prices are based is up 131% year over year in October, averaging $5.51 in Oct 2021 vs. $2.39 in Oct 2020. Biden’s budget bill would tack an extra 12-34% on top of that!

We have two articles to share on this subject. The first appears in the Delaware Valley Journal, approaching the methane tax issue from the perspective of how much residents in southeastern Pennsylvania will be impacted by this new tax, should it go forward:

Environmental activists call it a “methane fee.” The energy industry calls it a “natural gas tax.” Either way, Pennsylvania consumers are likely to feel the effects in their pocketbooks.

The U.S. House of Representatives is expected to vote this week on its version of the budget reconciliation bill — also known as the “Build Back Better” bill — which includes increased fees on methane emissions. Methane is a byproduct of oil and natural gas production, and as a result, the fee would be an increase in the cost of production.

Environmentalists say reducing methane is essential to the fight against climate change. At the COP26 meeting in Scotland last week, the United States announced it will participate in the Global Methane Pledge to cut methane emissions 30 percent by 2030.

“Methane has more than 80 times the warming power of carbon dioxide over the first 20 years after it reaches the atmosphere,” says Environmental Defense Fund (EDF) on its website. “Even though CO2 has a longer-lasting effect, methane sets the pace for warming in the near term.”

As National Geographic reports, “Whereas carbon dioxide persists for centuries, most methane converts to carbon dioxide or gets cycled out of the atmosphere within about a decade.”

Meanwhile, two of the world’s biggest methane emitters — China nor Russia — refused to sign the Global Methane Pledge.

And energy producers point to America’s surging costs to heat their homes this winter and the wider inflation problem as evidence this is the wrong time to add costs to consumers’ utility bills.

“This is nothing more than a tax on natural gas at a time when policymakers should be focused on solutions that support affordable, reliable energy while reducing emissions,” says API Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola.

“We must continue to drive down methane emissions without adding new burdens on American families and businesses,” added said Karen Harbert, President and CEO of the American Gas Association. “Our analysis indicates that the proposed tax could increase natural gas bills from 12 percent to 34 percent, depending on the variation of the proposal assessed.”

Sen. Joe Manchin, a Democrat representing natural-gas producing West Virginia, has been reluctant to support legislation with a tax or fee on methane. As a result, House Democrats have been trying to find ways to change the terminology and get Manchin’s blessing once the bill is approved in the House and sent to the Senate. Democrats’ have a razor-thin majority in both chambers and need the support of every Democrat in the Senate.

Winning over Manchin has not been, and will not be, easy.

“Major oil and gas companies are actively investing in, developing, and using new technologies to detect and repair leaks, which are known to be a public health risk and contribute to climate change,” Manchin said in August 2020.

Delaware Valley U.S. Reps. Madeleine Dean (D), Mary Gay Scanlon (D), and Brian Fitzpatrick (R) declined to respond to requests for comment about the upcoming Build Back Better bill vote.

Meanwhile, API’s Frank Macchiarola says methane is already being regulated.

“The direct regulation of methane by the EPA is the most impactful way to build on the downward trend of methane emission rates in key producing regions rather than a duplicative and punitive natural gas tax that would only hurt American consumers and undermine the economic recovery,” says Macchiarola.

Gordon Tomb, senior adviser to CO2 Coalition, does not see a need for the regulations.

“Methane makes up a minuscule portion of the atmosphere — less than two parts per million — and together with carbon dioxide contributes an estimated 0.012 degrees C a year — an amount too small to even measure,” says Tomb. “Regulating emissions of either gas has no basis in science and imposes an unnecessary burden on businesses and the people who buy their products.”

And, Tomb added, “When politicians are talking about regulating methane, they are usually talking about taxing methane that gets leaked to the environment during production operations, treating that methane as a pollutant,” says Tomb. “Of course, methane is put into the atmosphere from all kinds of sources, and in the scheme of things the amount in the atmosphere is quite small irrespective of where it is coming from.”

The Marcellus Shale Coalition has also warned that taxes or fees would be bad for everyone.

“Layering more taxes on strongly regulated domestic energy production increases costs for those who produce and rely on these essential resources, with low-and fixed-income families shouldering the disproportionate share of the tax hike,” the group wrote in a September letter that included the Gas & Oil Association of West Virginia and the Ohio Oil & Gas Association.

And while organizations including the Sierra Club say fossil fuel organizations do not care about the environment, Marcellus Shale Coalition begs to differ.

“Our members are fully committed to improving air quality and further reducing all emission sources, particularly methane since it is the very product we sell, through leveraging best available technologies and practices.”

The second article appears in the Wall Street Journal and covers the methane tax issue from a national perspective:

Concerns about rising home heating costs are clouding prospects for a proposed tax on methane leaks in the $2 trillion social and climate spending bill backed by President Biden and congressional Democrats.

The tax would charge oil-and-gas producers for leaks of methane from wellheads, pipelines, storage tanks and other facilities. The Congressional Budget Office hasn’t weighed in the financial impact, but independent analysts have said it would cost producers between $1 billion and $10 billion annually.

Methane is a potent greenhouse gas that contributes to global warming. Proponents say the tax would provide incentives for the oil-and-gas industry to plug leaks and capture excess gas that would otherwise be wasted.

Industry groups including the powerful American Petroleum Institute are opposing it, saying the tax is unnecessary given that the Environmental Protection Agency recently proposed new rules to curb methane leaks.

Residential natural-gas prices for August, the most recent available, were up nearly 15% from the same month of 2020, according to the Energy Information Administration. It has forecast that the average U.S. household that relies on natural gas for heating will pay 30% more for the fuel this year.

“The White House’s plan is a recipe for disaster,” said Sen. John Barrasso (R., Wyo.) in a statement. “It will result in skyrocketing power bills, less reliable energy, and fewer jobs for the American people.”

Some gas industry trade groups initially said the levy could raise natural-gas bills by 17%, but they haven’t updated that estimate since lawmakers agreed in September to lower the tax. The nonprofit research group Resources for the Future said the tax would result in a 1% increase in household bills.

Kevin Book, an analyst for ClearView Energy Partners LLC, said there is no reliable way to estimate the costs for consumers because of the number of variables involved.

“It’s certainly a sign of political tone deafness,” Mr. Book said. “And whether or not it’s economically risky, any increase is going to be perceived as a strike against voters, and that would be a weird thing to do politically before closely contested midterms.”

Republicans are solidly opposed to the tax, which Mr. Book estimated would cost the industry roughly $10 billion annually once the fee is fully phased in, and they are finding allies among some Democrats from oil-patch states.

“This tax will hurt U.S. competitiveness and increase the wholesale cost of natural gas and encourage industries to shift to high-polluting sources to save money,” wrote Reps. Vicente Gonzalez, Henry Cuellar and Filemon Vela, all Democrats from Texas, in a recent letter to House Speaker Nancy Pelosi.

The House and Senate are scheduled to take up the $2 trillion social and climate spending bill when they return to D.C. this week.

Sen. Joe Manchin (D., W.Va.), whose vote will be essential to Democrats in a 50-50 Senate given unanimous Republican opposition, hasn’t said that he would support the package if the methane provision is included.

But when new government figures showed the inflation rate hit a three-decade high last week, Mr. Manchin posted on Twitter that “the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse.” He said that “DC can no longer ignore the economic pain Americans feel every day.”

Rising energy prices have doomed prior attempts to cut greenhouse gases. In 2008, as gasoline prices hovered around $4 a gallon, a record at the time, several Senate Democrats joined Republicans to block climate legislation. Mr. Biden, who was a senator but would soon be picked as a vice-presidential nominee, didn’t cast a vote.

Sen. Tina Smith (D., Minn.) called the methane tax an “inexpensive and very effective way to address emissions” in an emailed statement.

“It’s important to remember at this moment that temporary swings in fuel prices shouldn’t distract us from the long-term transition to clean energy,” said Ms. Smith, who sent a letter with 10 Democratic colleagues to Mr. Biden last week asking him to take steps to ease energy prices.

Robbie Orvis, a senior director of energy policy design at San Francisco-based research group Energy Innovation, estimated that the methane fee would account for roughly 8% of Mr. Biden’s goal of slashing U.S. greenhouse-gas emissions in half by the end of the decade.

To help win Mr. Manchin’s support, Democrats included $775 million of grants and other subsidies for the oil-and-gas industry to track and reduce methane emissions starting in 2022.

They also agreed to lower the tax to start at $900 a ton in 2023, rising to $1,500 a ton in 2025. Originally the tax would have started at $1,500 a ton.

“We have a good compromise,” said Senate Environment and Public Works Committee Chairman Tom Carper (D., Del.), who developed the subsidies with input from Mr. Manchin. “Those oil and gas folks who are emitting methane, it incentivizes them to end that practice, and to say we’re not just going to penalize you.”

Mr. Manchin declined to say that he would support the compromise and has complained about the cost of Democrats’ proposals.

Activists from the Sunrise Movement, which focuses on environmental issues, surrounded Mr. Manchin earlier this month as he left his houseboat in Washington, D.C., chanting “we want to live” as they pressured him not to derail the climate and social policy bill.

The oil-and-gas industry is the source of about one-third of the U.S.’s industrial methane emissions, which escape from wells, drilling equipment and thousands of miles of pipelines that transport it to major customers such as chemical plants.

U.S. officials would calculate the annual tax owed by oil-and-gas companies based on the methane emissions they report each year by law. It is designed to exclude smaller emitters, only applying to companies whose emissions exceed thresholds set at different levels for producers, processors, pipeline operators and storage facilities.

If you think Biden’s methane tax will not raise the price of natural gas you pay, we have a real deal for ya on a bridge…in Brooklyn, NY. Contact us.

The bottom line here is that the only thing standing between us and oblivion is West Virginia Senator Joe Manchin. We pray daily that he remains steadfast and refuses to vote in favor of the budget reconciliation bill.

Editor’s Note: Joe Biden is just a face stuck in front of a camera who can barely read his teleprompter. He made a deal with an elitist empire eager to reverse what happened under Trump when the lowest earners made the biggest gains at the their expense. They want the cheap labor of illegal immigrants. They want the ability to off-shore as much manufacturing as possible to Communist China. They want the opportunity to grab trillions in green government rent at the expense of ratepayers and taxpayers. They want to use the Wu-Flu to force commoners into a social credit system similar to China’s to squelch any possible opposition in action, word or thought to their plans. The methane tax is simply another element of the totalitarian template captured under the grand themes of Build Back Better and the Great Reset. It’s just the elitist empire striking back. 

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The post Methane Tax Another Case of the Elitist Empire Striking Back appeared first on Natural Gas Now.

Methane Tax Another Case of the Elitist Empire Striking Back