Saturday, January 19, 2019
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big dogs of the oil patch tangle over gas subsidies

the oil-patch titans are brawling over a congressional bill that would provide tax breaks to trucking companies for 18-wheelers that run on natural gas instead of oil.

mr. pickens, a limelight-loving, veteran energy investor who owns part of a company that installs natural-gas fueling stations, has spent tens of millions of dollars promoting an energy plan he says would help shift the u.s. off imported oil. mr. koch, an intensely private but prominent donor to conservative causes, opposes the bill. his family conglomerate, koch industries inc., refines oil into motor fuel, including diesel for trucks, and uses natural gas to make chemicals. he says the bill would unfairly enrich the gas industry.

the pickens-koch spat is playing out in washington policy circles, but it is a clash between two outsized business personalities, said rep. john sullivan, the oklahoma republican who is a main sponsor of the subsidy bill. "they're two bulls in a field," mr. sullivan said of the men, both of whom he knows.

a koch industries spokesman said mr. koch wouldn't comment for this article. but, in an interview tuesday, richard fink, a koch industries executive vice president, said: "we just think it's a fundamental mistake for the government to be picking winners and losers in this way. while we respect boone, we disagree with him on a very fundamental level."

a spokesman for dallas-based mr. pickens said mr. koch and his company have a financial interest in opposing the natural-gas bill. "they have to bet against the plan," said the spokesman, jay rosser. "they import and refine $2 billion of opec oil every year" at koch industries' refinery in corpus christi, tex., he said, a figure he attributed to government figures compiled by mr. pickens' staff.

"frankly, it's good to know who the opposition is," said mr. rosser, who himself worked for koch industries before working for mr. pickens. "what we're seeing is the same old special interests step forward who have blocked our efforts to get off opec oil for 40 years."

mr. fink, the koch executive, said he didn't know the dollar value of opec oil the corpus christi refinery processes. "even if we weren't in the business, we would be opposing subsidies," he said. "they both know that," he added, referring to messrs. pickens and rosser.

with the nation awash in domestic natural gas following recent huge discoveries, the political row between messrs. pickens and koch reflects a broader fight between the natural-gas industry and gas consumers over how best to use the fuel.

the natural-gas industry sees trucks as a potentially big new market—and the subsidies as a way to jump-start that market.

that is because trucking companies say an 18-wheeler tractor configured to burn natural gas can cost about $200,000, roughly twice as much as a diesel version. and the trucks need special natural-gas fueling stations. the bill at the center of the tussle would provide tax breaks of up to $64,000 per natural-gas truck to transport companies and up to $100,000 per fueling station for owners of the stations. the tax breaks would end after five years.

as of tuesday, 185 house lawmakers, including 104 democrats and 81 republicans, were sponsoring the bill. a bill that would have provided tax breaks over a longer period—and cost more money—died without a vote in congress last year. even backers of the bill say that, with government coffers strained, approving such breaks face an uphill slog.

large industrial users of natural gas, particularly chemical makers, don't like the bill. they fear it will boost demand for natural gas, raising the prices they have to pay for the fuel. those companies say that, with oil prices high and natural-gas prices low, natural-gas vehicles should compete without the need for tax breaks.

in the current fight, messrs. pickens and koch both present themselves as defenders of u.s. fiscal restraint. they cut very different profiles.

mr. pickens an oklahoma native living in dallas, says he has spent some $80 million the past few years touting policies to curb u.s. dependence on imported oil. he spends much of his time flying around the country delivering speeches touting the bill, a main plank in a broader energy platform he calls the pickens plan. on his website, he offers frequent updates, dubbed the daily pickens, to his supporters, whom he calls the pickens army."i think we're stupid doing what we're doing," he said in an april interview, referring to vehicles burning imported oil instead of domestic natural gas.

mr. koch, chief executive of privately held koch industries, based in wichita, kan., seldom speaks in public. he has long been a major contributor to free-market think tanks. the center for responsive politics, a nonpartisan research group, said koch industries was the oil-and-gas industry's top giver to federal candidates, parties and so-called outside groups, spending $1.9 million in 2009 and 2010. lately, however, he has amped up his voice, penning several op-ed pieces. in an opinion piece last thursday in the wichita eagle, he wrote that energy subsidies like those in the natural-gas bill distort free markets. without naming mr. pickens directly, he criticized the "misguided suggestion that the natural-gas industry should receive enormous new subsidies," adding that the subsidies "are promoted, in large part, by those seeking to profit politically, rather than by competing in a market where consumers vote with their wallets."

on monday, several conservative groups, some of which have received donations from mr. koch, issued a letter warning members of congress that sponsoring the bill would be "a sign that you have not heard the message and are not serious about eliminating expensive, counter-productive energy subsidies." tax breaks like those in the bill "give advantages to the politically well connected," it said.

messrs. koch and pickens have known each other for years. in 2007, mr. pickens spoke in palm springs, calif., to a meeting of business leaders run by mr. koch. the subject: philanthropy.

mr. pickens and his family own 41% of clean energy fuels corp., a company that installs natural-gas fueling stations for cars and trucks. he said he supports the bill not because of that investment but because he wants the u.s. to "get off of oil from the enemy."

as the war of words has heated up, critics of mr. koch have pointed out that koch industries receives federal energy subsidies—for blending ethanol into gasoline in its refineries. mr. koch, in a march op-ed piece in the wall street journal, addressed that criticism. his company opposes ethanol subsidies as a matter of policy, he said, but it accepts the taxpayer money because it's "essentially obligated" by federal policy to use the alternative fuel.


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