by Denise A. Bode & Anne C. Canfield
On November 2, House Republicans released their tax reform bill titled, “Tax Cuts and Jobs Act.” Michael Best Strategies’ (MBS) tax policy experts, Denise Bode and Anne Canfield continue to provide constant updates to their tax analysis charts in this tax reform update. This past week, on November 16, the House of Representatives passed “Tax Cuts and Jobs Act” (H.R. 1) as approved by Ways and Means Committee by a vote of 227 to 205. On November 16, the Senate Finance Committee passed their version of the “Tax Cut And New Jobs” act by a vote of 14-12.
Next week, the Senate Budget Committee will review the Senate Finance Committee passed bill to ensure that it complies with the requirements set forth in the FY2018 Budget Resolution. The week of November 27, the full Senate will consider the Senate Finance Committee passed bill on the Senate floor.
There are two possible pathways once the bill is on the Senate Floor: (1) The Senate passes a bill, with any amendments that may be added by the full Senate. The conferees are appointed for a House-Senate Conference Committee to resolve any differences between the two bills. Once the Conference Report is put together by the House-Senate Conference Committee, the Conference Report will then go back to the full Senate and U.S. House of Representatives for an up-down vote on the Conference Report, which is not amendable. (2) The second and, potentially, more likely pathway is that the House and Senate pre-conference the bill. Any changes that the House wants to make to the bill would be included by the full Senate during its consideration of the Senate Finance Committee-passed bill. The final tax reform bill would then be passed by the full Senate and then passed by the U.S. House of Representatives, thus avoiding a second vote in the Senate, which might be critical to the ultimate success of getting a final tax reform bill enacted.
TAX REFORM NEWS
- California Looks at Republican Tax Measures and Sees Payback
- Tax breaks for oil, wind, electric cars survive in Senate bill
- GOP nears initial victory on tax reform
- What to Know in Washington: Tax Clash Coming in House and Senate
- Haste on Tax Measures May Leave a Trail of Loopholes
- Senate Finance Committee Digs Into Tax Plan
- Portman Wants Senate to Cut Executive Pay Changes From Tax Plan
- Senators stack energy amendments in tax bill
ENERGY TRANSPORTATION NEWS
- U.S. Justice Dept commits to prosecute activists that damage pipelines
- U.S. Justice pledges to prosecute activists who damage pipelines
- Lawsuit Seeks to Stop Work on Appalachian Gas Pipeline
- Keystone is shut down after S.D. oil leak
- $300 Billion War Beneath the Street: Fighting to Replace America’s Water Pipes
- 61 EPA Staff Have Left Chicago Office in 2017, And They’re Missed
- Trump admin proposes WOTUS delay until 2020
STATE ENERGY NEWS
ENERGY REGULATORY NEWS
ENERGY POLICY NEWS
ENERGY MARKET NEWS
- Trump appointee floats overhaul to key climate strategy
- The U.S. Will Be the Next Saudi Arabia, IEA Says
GLOBAL ENERGY NEWS
- Lighthizer vows to pursue Trump’s ‘America First’ trade agenda
- Trans-Pacific Trade Partners Are Moving On, Without the U.S.
- As oil prices Rise, majors eye Mexico’s deep waters
- Countries enter round 5 with hardened stance
- Trade officials from NAFTA countries will not take part in fifth round
- Mexico Shows Willingness to Compromise With U.S. on Nafta Review
- Russia Offers Venezuela Debt Relief
- Chatterjee ready to hand off chairmanship to McIntyre
- Senate confirms Lyft manager for No. 3 post at the Transportation Dept.
- Bill Wehrum is sworn in as air chief
- Rep. Green to retire
- Dunn to run EPA’s Region 1
RENEWABLE ENERGY NEWS
- Russia Offers Venezuela Debt Relief
- Germany’s Siemens to Slash 6,900 Jobs Amid Shift to Renewable Energy
FROM THE CHART ROOM
Transportation Constraints Impacting Crude Pricing
In its November Short-Term Energy Outlook (STEO), EIA forecasts the price difference between West Texas Intermediate (WTI) crude oil priced at Cushing, Oklahoma, and Brent, the global crude oil price benchmark, to remain at $6 per barrel (b) through the first quarter of 2018.The wider forecast spread reflects continuing price developments that have emerged over the past two months that likely resulted from transportation constraints in moving domestically produced crude oil from Cushing, Oklahoma, and from the Permian basin in Texas to the U.S. Gulf Coast. Although many other factors can affect WTI, Brent, or both crude oil prices at any given time, near-term changes in the Brent-WTI price spread will generally be derived from either changes in pipeline capacity or U.S. crude oil production.
As U.S. crude oil production has increased, particularly in regions such as the Permian basin, so has the need for more transportation infrastructure to accommodate it. However, the rate of production growth and the scale and timing of when additional pipeline capacity is brought online are not always aligned. EIA estimates that, without pipeline constraints, moving crude oil from Cushing to the U.S. Gulf Coast typically costs $3.50/b, but it has become more expensive as transportation constraints have developed. Total commercial U.S. crude oil inventories declined by 25 million barrels from the last week of July to the week ending November 3, but inventories in Cushing increased by 8.8 million barrels. The inventory builds at Cushing have pushed its inventories 51% higher than the five-year average, while inventories for the United States as a whole and in the Gulf Coast region are only 15% and 10% higher than their respective five-year averages.
Another factor affecting the Brent-WTI spread is the transportation of light sweet crude oil from the U.S. Gulf Coast to Asia. With the removal of restrictions on exporting domestically produced crude oil in December 2015, additional supplies of light sweet crude oil that cannot be economically processed at U.S. refineries or transported domestically can now be exported. Once exported, WTI competes with Brent directly in the global market. U.S. crude oil export data suggest that WTI’s and Brent’s marginal competitive market is Asia. So far in 2017, China is the second-largest destination for U.S. crude oil exports at 173,000 barrels per day.To compete with Brent in Asia, WTI prices must reflect the additional transportation costs U.S. crude oil exports incur on their way to Asia. Although more infrastructure to export crude oil has been built recently, U.S. exporters must still use smaller, less-economic vessels or complex shipping arrangements, which add to costs. EIA estimates that it costs approximately $0.50/b more to transport WTI from the United States to Asia than it costs to ship Brent from the North Sea to Asia. LINK TO EIA
Michael Best Strategies’ Energy Team
- Denise Bode
- Greg Brophy
- Beth Cubriel
- Andrew Cook
- Chip Englander
- Sarah Helton
- Ross Romero
- Thomas Schreibel
- Kevin Swanson
- Jeffrey Sherman (Michael Best)
About Michael Best Strategies
Michael Best Strategies focuses on achieving clients’ objectives through unparalleled strategy development and deployment for implementation, pragmatic guidance on public policy development, and government relations. The Strategies team specializes in a full range of services, including government relations, public policy consulting, grassroots advocacy, public affairs, conference planning, and strategic political relationships. For more information, visit michaelbeststrategies.com.