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What’s in the Energy Bill?
National Public Radio (NPR)
The controversial energy bill now on the Senate floor takes a different approach than the bill pushed through by a Republican Senate in 2005. That measure sought to increase domestic oil production through subsidies and other incentives. With Democrats now in charge, the new bill focuses on decreasing consumption of oil and gasoline. Here’s a look at the bill’s major provisions:
Fuel Economy: The bill would, for the first time in decades, raise average fuel-economy standards for cars and SUVs or light trucks (up to 10,000 pounds) – from 25 mpg to 35 mpg by 2020 (a roughly 40 percent increase). This provision is the most controversial, especially with the auto industry, which argues that it could push up the production costs of each vehicle by thousands of dollars. That has led some Democrats to propose federal financial relief for automakers.
Renewable Fuels: The bill mandates the use of 15 billion gallons of biofuels annually by 2015 and 36 billion gallons by 2022 (up from 8.5 billion gallons in 2008). In the beginning, most of the biofuel would be corn ethanol. Beginning in 2016, the bill mandates annual increases of 3 billion gallons in the use of advanced biofuels – such as “cellulosic” ethanol, which can be made from switch grass, wood chips or agricultural waste. Oil refineries and food manufacturers – who warn that diverting corn to ethanol production could hike up food costs – oppose this provision.
Energy Efficiency: The bill sets energy-efficiency standards for home appliances, heating and cooling systems, lights and residential boilers. It requires federal agencies to get at least 15 percent of their electricity from renewable sources by 2015 and to reduce oil consumption by 20 percent. It also requires regular government review of efficiency standards.
Carbon Capture and Storage: The bill promotes research into methods of capturing carbon dioxide emissions from power plants and storing them underground.
Public Buildings: The bill requires energy efficiency in federal buildings, mandating a 20 percent reduction in operating expenses over five years through the use of more-efficient lights, heating and cooling. It also authorizes three demonstration projects that put “green-building” techniques into practice.
Energy Security: The bill asks the secretary of state to establish “strategic energy partnerships” with the governments of major energy producers and consumers to increase international energy security.
Price Gouging: The bill makes oil industry “price gouging” a federal crime during times when the president has declared a temporary “national energy emergency” – much like the emergencies that states declared after Hurricane Katrina. The Federal Trade Commission would also be given greater authority to investigate possible manipulation of the oil market – including refinery shutdowns. Oil companies and the Bush administration strongly oppose this provision, which has prompted a veto threat from President Bush.
(14 June 2007)
800-pound Gorilla in the Senate Energy Bill
Editorial, Washington Post
GIVEN THE alternative of doing nothing about global warming — which President Bush and the Republican-led Congress excelled at for the past six years — the flurry of activity on climate change in Washington is welcome. President Bush at least agreed at the recent Group of Eight summit in Germany to international talks on the topic, and the Democratic-led Senate is debating an energy bill designed in part to limit greenhouse gas emissions. But here’s the problem with the latter: Nowhere in its 277 pages does the legislation even entertain the notion of incentives to curb greenhouse gas emissions, through a carbon tax or a cap-and-trade system or both.
There are useful provisions in the Senate bill, as well as some areas of concern. The drive for greater efficiency, with the federal government taking the lead, is good.
(14 June 2007)
Congress Turns to Energy, and Lobbyists Arrive
Edmund L. Andrews, NY Times
Having tried and failed to overhaul the nation’s immigration laws last week, Congress begins what some say is an even more divisive project this week: taming America’s thirst for oil.
With gasoline prices hovering near all-time highs, the Senate on Monday began debating a sprawling energy bill that has already kicked off an epic lobbying war by huge industries, some of them in conflict with one another: car companies, oil companies, electric utilities, coal producers and corn farmers, to name a few.
Industry groups have raced to sign up influential lawmakers and are nervously calculating how much regulation they might have to accept from the Democratic majority in Congress.
…Detroit’s automakers are lobbying hard against tough fuel economy standards, but they support increased production of ethanol and other alternative fuels.
But Charles W. Stenholm, a former Democratic representative from Texas, is lobbying on behalf of oil producers and cattle farmers against big subsidies for corn-based ethanol.
The Senate bill, as well as a similar measure in the House, would force automakers to increase the fuel economy of their cars and light trucks. It would require a huge expansion of alternative fuels for cars and trucks as well as electric power plants. And it is expected to offer as much as $25 billion in tax breaks over 10 years to promote those fuels.
“Bold steps and big ideas,” Senator Harry Reid of Nevada, the majority leader, said in a speech on Monday. “The Democratic plan is all about harnessing power: the clear, renewable power that exists literally all around us.”
(12 June 2007)
Writes David Robert at Gristmill:
This piece in the NYT is pretty depressing. It’s about the main battles around the upcoming energy legislation. Here are the points of contention:
- Ethanol subsidies
- Coal and nuclear subsidies
- CAFE standards
On pretty much all these issues, it’s Big Money lobby vs. Big Money lobby, and every one of them is a distraction — no help at best, a hindrance at worst. Where’s the Big Efficiency lobby when you need it?
It’s Still All About Oil
Michael Johns, Intellectual Conservative
…Yet, despite the obvious long-term need to adopt these “alternative” approaches to our nation’s energy needs, it’s troubling that Washington feels the necessity to trump market forces by making their production a federal mandate. If ethanol is all that its advocates represent, such a mandate would prove unnecessary because market resources would naturally flow to its development.
…Our long-term energy policy, when it does emerge, will not likely be rooted in oil, as President Bush has astutely acknowledged. But the short-term bridge to this long-term policy is very much rooted in oil, and it’s a short-term bridge that requires the use of our own oil resources that can be easily extracted now. Such a step would ease the supply cycle that is burdening this nation with unnecessarily escalated oil and gasoline prices and enhancing our dependency on unreliable Persian Gulf, Nigerian and other oil resources.
Ditto the case with nuclear power, which, since Three Mile Island, modern technology has made an impressively efficient and environmentally-friendly mechanism for the delivery of energy. Even in the environmentally conscious European Union nations, this is a fact long ago recognized. But it’s been 30 years since bureaucrats at the Nuclear Regulatory Commission have authorized the construction of a nuclear power facility in this nation. The first one since then is now under development in New Mexico, but it’s been a long time coming.
A final point: It surely is not a pleasant thought for most Americans, especially given the prolonged nature and excessive loss of life in the Iraq conflict, but the likelihood of a potential conflict with Iran is not insignificant. High school geography taught us that the Straight [sic] of Hormuz, which divides Iran and the United Arab Emirates, is roughly 21 miles wide and twenty percent of the world’s oil flows through it. In the not so improbable case that Iran ultimately attempts to close this Straight (as it has periodically threatened to do), either in provocation, in retaliation, or as part of a larger geopolitical conflict, it will be important that our currently untapped U.S.-based oil reserves are available.
Michael Johns formerly served as a White House Speechwriter to President George H. W. Bush, a public affairs aide to the U.S. Secretary of Commerce, and a senior aide to former New Jersey Governor and 9/11 Commission Chairman Tom Kean and U.S. Senator Olympia Snowe.
(12 June 2007)
Fairly predictable conservative opinion on energy – more corporate conservative than libertarian I would say. On the plus side, Johns is skeptical about subsidies for ethanol and he recognizes that the oil age will come to an end. In a remarkable leap of double-think, however, he concludes that the best way to prepare for a non-oil economy is to run through the U.S. reserves as quickly as possible. Party on!
-BA
We’re doing it to ourselves on oil, says Pickens
Glenn Hunter, Houston Business Journal via MSNBC
…In this interview, the Oklahoma native talks about the energy markets, comparisons between the leveraged-buyout and private-equity eras in U.S. finance, and the secrets of his spectacular business success.
Q: Energy seems to be on everyone’s mind these days, and you’re an acknowledged expert. What do you see happening with oil and gasoline prices?
BOONE PICKENS: I think you’ll see $80 oil before the end of the year. There’s no question in my mind that oil has peaked. If you’ve already peaked, you’ll start to decline. Can you replace it? Probably not. What happens then? The supply goes down, demand goes up, and price goes up. It will be a case of, how much does the consumer want to pay to get gasoline?
I don’t know whether $4 chokes them. Three dollars didn’t. But, you know, Europe has seen $5, $6 for gasoline. So I have the feeling that you’re going to see the price go up in the U.S. I think cars will get smaller over time.
We have a tremendous demand in the United States. The United States uses 25 percent of the 85 million barrels used daily, and we have less than 5 percent of the population. So when you start to look around at who’s doing it, we’re doing it to ourselves. We are the ones that are using it, and we’re the ones that are driving up the price.
Q: How do you recommend we move away from oil and gasoline to something else?
PICKENS: I say let the markets handle it. I don’t think the government should try to manage it. If you can’t stand the price, you’re going to drive less; that’s the way it starts. Also, I think that all the alternatives now are being given a chance, and that’s good. Ethanol, for example, is not the solution, but it could be part of the solution. Biodiesel will also work, there’s no question. But, we use so much oil and gasoline in the United States, there’s not anything you’re going to be able to pluck out of the air and say, “This is it, let’s do it and we’ll no longer be dependent on foreign oil.”
Q: You don’t think the government should tax gasoline to suppress demand, do you?
PICKENS: Oil is really a global commodity, so you can compare prices all over the world. But you can’t do that with gasoline. Gasoline is taxed differently in different places. In Europe it’s taxed much more than it is in the United States. But I have said, just go ahead and move up to where it’s a global price or nearly a global price, as happens with oil, and then just tax gasoline up to that (global price point).
If you did tax gasoline, you could give the people that are most affected by it some trade-off. I’m not for taxing the poor, but go ahead and tax me with a big car.
(10 June 2007)
Related:
Pickens wants to build world’s largest wind farm
