With the U.S. House of Representatives changing hands in January, what will this mean for energy policy? House Speaker Nancy Pelosi (D-California) has stated that the Democrats hope to repeal $33 billion of tax breaks and subsidies that benefit the oil and gas industry, which could mean an end to $4 billion of tax breaks and subsidies from the Energy Policy Act, a repeal of royalty relief, and the closing of tax loopholes for large oil companies, says Standard & Poor's credit analyst Nicholas D. Riccio. "The GOP favors ways to boost fossil fuel production, while the Democrats emphasize conservation and the development of renewable energy resources," he says. "Much of this has been played out in tax incentives included in the Energy Policy Act of 2005." Credit analyst Andrew Watt adds, "Some of these proposals, if enacted, could limit the economic returns on certain deep offshore drilling projects in the Gulf of Mexico, which are often very costly and gain some benefits from favorable tax treatment. Tax credits for renewables, however, will probably be extended, and in some cases increased." Peter D. Hart, whose firm has conducted polls for major newspapers and NBC since 1989, said at the IPAA annual meeting in Grapevine, Texas, this fall, "Pass out the Prozac guys, because this is going to be a tough election." Concerns about energy prices and supplies were showing up in the polls as a key issue, he said. For more on this, see the December issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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