Analysis: Palin could complicate energy debate

If Democrats hoped to portray John McCain as captive to the oil industry, their task became more complicated with his selection of Alaska Gov. Sarah Palin as a running mate.

She is an ardent advocate for more drilling — off Alaska, off the Atlantic and Pacific coasts and in the off-limits Arctic National Wildlife Refuge. Yet she also not shied from confronting Exxon Mobil, BP and ConocoPhillips.

As the presidential campaign moves into high gear, McCain and Democratic nominee Barack Obama will duel over two overriding energy issues: whether to expand offshore oil drilling into areas long off-limits and whether to impose new taxes on oil companies enjoying tens of billions of dollars in windfall profits.

Palin is a popular governor in a state that for decades has been closely tied to oil. She may be a political novice, but she is hardly a newcomer when it comes to these two issues. Her emergence as McCain's No. 2 and possibly the next vice president could shift the campaign's energy debate.

When it comes to the oil industry is Palin friend or foe?

The answer may not be black or white but shades of gray.

"No one is closer to the oil industry than Governor Palin," said Carl Pope, executive director of the Sierra Club in comments reflecting the views of a cross section of environmental activists. They cite her eagerness to embrace expanded offshore oil development, her lawsuit against further protection of polar bears so as not to hinder oil drilling in Alaska's ice-filled waters and her ardent support to allow oil companies into the Alaska wildlife refuge.

Drilling in the refuge's sliver of coastal tundra in northeastern Alaska — an area viewed by environmentalists as a treasured wild place that also harbors 11 billion barrels of oil — was believed to have been a dead issue. McCain opposes drilling there, as does Obama.
But that too might be changing.

The selection of Palin places the refuge's "energy production front and center in the policy debate once again," maintains Brian Kennedy, senior vice president of the Institute for Energy Research. The group has pushed for increased domestic oil production and has some oil companies among its sponsors.

While McCain has said he hasn't changed his mind about drilling there, he also has said that he is willing to re-examine the issue.

When it comes to taxing oil companies, Palin's selection might well be a doubled-edged knife for the McCain campaign.

Shortly after becoming governor in 2006, she pushed new oil taxes through the Alaska Legislature, saying the taxes proposed by her predecessor, Frank Murkowski, were too favorable to the oil companies. She was bucking Exxon Mobil, BP PLC and ConocoPhillips, which strongly opposed the legislation.

The new tax brought in an estimated $6 billion in the last budget year, bulging Alaska's treasury with an expected surplus of as much as $9 billion. Thst enabled Palin to push a second initiative — giving each Alaskan $1,200 to help them cope with high energy costs.
Sound familiar?

Obama has proposed taxing the windfall profits of the five biggest oil companies and giving people $1,000 to pay for high energy costs. Palin called such financial help "a tool that must be on the table" although she differs with Obama on where the money's source.

Like McCain, Palin says a national windfall profits tax on oil companies will hinder domestic energy production. Democrats are expected to be quick to ask: If it's good for Alaska, why isn't it good for the country?

But Palin has bucked oil companies in other ways. She pushed for more competition for the construction of a $26 billion pipeline to bring natural gas from the North Slope to the lower 48 states by favoring the TransCanada pipeline project, backed by independent companies over one proposed by BP and ConocoPhillips. She has tangled with Exxon Mobil and other oil companies over their reluctance to develop gas fields on state land.

Republicans hope that will neutralize claims that the McCain ticket is too cozy with the oil industry and shift more of the energy debate away from oil taxes to the need for expanded offshore drilling and generally more domestic energy production — issues on which Palin has been outspoken.

Don't expect the Obama campaign, not to mention many of the environmentalists activists, to cooperate.

"Big Oil extended its reach into the campaign of John McCain," said Margie Alt, executive director of Environment America, a federation of state-based environmental groups, after Palin's selection became known.

Mark Hellenthal, a GOP pollster in Alaska sees it differently. In the state "she's viewed ... as almost anti-oil. She's probably pro-oil from a national perspective, but she's not in the pocket of Big Oil. She's fought them at every step."

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On the Net:
Governor's office: http://us.rd.yahoo.com/dailynews/ap/ap_on_el_pr/storytext/cvn_campaign_energy/28866506/SIG=10pfilome/*http://gov.state.ak.us/ ___
EDITOR'S NOTE — H. Josef Hebert has covered energy and environmental issues for The Associated Press since 1990. AP writer Steve Quinn in Juneau contributed to this report.