May 6, 2010 / 2:32 PM / 7 years ago

Oil lobby money unlikely to quell storm over BP

<p>The United States Capitol building is seen in Washington March 19, 2010 file photo.Jim Bourg</p>

WASHINGTON (Reuters) - Big Oil's ability to spend huge sums of money lobbying Congress may not deflect the election-year spotlight on oil interests on Capitol Hill after BP Plc's catastrophic spill in the Gulf of Mexico.

Before the Deep Horizon rig exploded and sank off the Louisiana coast, oil companies were already paying lobbyists millions to protect their interests in climate-change talks and backing that up with campaign donations to key members of the Senate and House of Representatives, disclosure filings show.

With a giant oil spill now threatening the U.S. Gulf Coast and possibly endangering the faraway shores of the Atlantic, some analysts say the industry's hopes of new U.S. offshore drilling leases could be set back five years.

"It is a perfect storm," said Ken Green of the conservative American Enterprise Institute think tank. "Lobbying won't do much good because no politician is going to stand up and say: 'This is O.K.' It's a huge black eye for oil companies."

At least three committees in Congress plan to investigate the disaster. BP could be in for billions of dollars in clean-up costs and analysts say the industry may face new government demands for costly safety standard upgrades and tax and royalty concessions.

Yet the industry has plenty of financial firepower and political sway to meet the challenge.

"There's no understating how powerful the oil and gas lobby is," said Dave Levinthal of the nonpartisan watchdog Center for Responsive Politics, which says the industry spent a record $169 million on lobbying in 2009 -- far outstripping the $22 million spent by environmental interests.


This year, oil lobby spending could set another record as the industry seeks to minimize political damage from the BP spill and revive its policy prospects as quickly as possible.

About 780 lobbyists worked for oil and gas interests last year, including lobbyists from the American Petroleum Institute, an industry group whose $7.3 million expenditure was eclipsed by only half a dozen companies -- including BP.

BP has massively ramped up lobby spending under Chief Executive Tony Hayward, reaching $16 million last year versus only $3.6 million in 2006 -- the year before Hayward took over. BP spent $3.5 million in the first quarter of this year alone.

"You can have all the money in the world behind you. But if public perception cuts against you, it's an awful major hurdle to overcome," Levinthal said.

In the two weeks since the Gulf disaster erupted, most oil lobbyists have kept a low profile on Capitol Hill, while BP gives lawmakers multiple daily updates on the spill and technical guidance on efforts to stem the underwater leaks.

"They're making what appears to be a good-faith effort to keep people informed," said one Senate aide.

Tyson Slocum of consumer group Public Citizen called it damage control, saying: "They're making themselves available to Congress in an effort to sooth anger. But if there's a finding of negligence, I don't see how this will be effective."

The scale of the challenge awaiting oil interests depends on how damaging the spill becomes. But analysts say there is still a chance that control efforts will keep much of the giant slick away from the coast.

Meanwhile, lobbyists say the energy market's fundamentals of growing world demand and the U.S. economy's need to keep oil costs down will ultimately serve industry interests.


"Whatever view we have now is not likely be the same in the coming weeks and months," remarked API economist Sara Banaszak, saying it could be several months before authorities know enough about the spill's cause to chart a coherent response.

"And a lot of the factors that shape energy policy, the energy debate and even American public opinion haven't changed," she added.

The spill forced President Barack Obama to suspend plans to expand offshore oil drilling, unveiled last month partly to woo Republican support for climate legislation.

With hundreds of members of Congress facing re-election in November, oil industry political action committees (PACs) are also pouring money into the campaign coffers of House and Senate candidates -- particularly Republicans.

Candidates collected $168,000 from the PACs of BP, ConocoPhillips, Exxon Mobil Corp. and Chevron Corp.. About 84 percent of the money went to Republicans, many on the congressional panels that oversee energy, natural resources and tax issues.

Employees and individuals associated with BP contributed $500,000 to political campaigns in 2008, with Obama the biggest beneficiary at $71,000, according to the Center for Responsive Politics.

Editing by Philip Barbara

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