Energy Bill Wins Senate Committee Approval

Published July 1, 2005

Comprehensive federal energy legislation gained significant momentum on May 26 as the Senate Energy and Natural Resources Committee overwhelmingly approved, by a vote of 21-1, a proposed energy bill.

The bill’s ultimate fate remains uncertain, however, as compromises and changes made to satisfy committee members may generate opposition in the full Senate. Moreover, the bill would also require contentious reconciliation with a competing bill already approved by the House of Representatives.

The Senate bill contains a patchwork of provisions designed to encourage efficient energy production and assist in energy conservation. With provisions ranging from new subsidies and tax breaks for renewable energy companies to mandatory increases in the production and sale of ethanol, tax breaks for consumer energy efficiency, and the removal of obstacles for fossil fuel development, the bill has generated mixed emotions among most Senators. Nevertheless, bipartisan momentum for the bill appeared to gaining as this story went to press.

Bill Wins Bipartisan Support

Louisiana Democrat Mary Landrieu, who supports the bill, won approval for a provision authorizing the federal government to inventory the oil and gas deposits believed to exist in the Outer Continental Shelf, where natural resource recovery is currently prohibited.

“The American people deserve to know how rich they are, and politicians in Washington who want to keep that information from the public are wrong,” Landrieu said.

Alaska Republican Lisa Murkowski, who also supports the bill, cautioned the measure may not have an immediate impact on energy prices, but said it should have a positive, long-term effect on the nation’s energy production and usage.

“People need to have realistic expectations as to what an energy bill is going to mean to them,” Murkowski told the Anchorage Daily News on June 2. “It doesn’t mean the price they’re paying for natural gas to put on the air conditioning is going to go down just because of something in the bill. What they need to understand is in the long-term, it will make a difference.”

Patchwork Causing Opposition

The patchwork nature of the bill, however, has created uncertainty about the bill’s fate. California Democrat Dianne Feinstein supports many of the bill’s provisions but is adamantly opposed to a requirement that refiners must double the amount of ethanol and other renewable fuels in gasoline.

“It’s bad public policy,” said Feinstein, as reported by ABC News.

“You’re forcing something on us that is not necessary,” added Feinstein, as reported May 25 by CNN.

In support of her criticism, Feinstein referenced an Energy Information Administration report predicting the Senate bill’s 8 billion gallon ethanol use requirement would raise gasoline prices by 2.4 cents per gallon. Analysts such as The Heritage Foundation’s Ben Lieberman report the price may actually rise by as much as 3.6 cents per gallon.

“This is about fuel in our farm fields, not under the sands of the Saudis or Kuwaitis,” countered Feinstein’s fellow Democrat, Senator Byron Dorgan of North Dakota.

Many free-market economists also found fault with provisions of the bill.

“The current version is frighteningly like the California deregulation bill of 1996, in that there’s something for everyone, but the pieces cannot fit with each other,” noted Tom Tanton, senior fellow with the Institute for Energy Research. “It is as if all of the stakeholders came to the table with one piece of their favorite jigsaw puzzle.”

“The House-passed ‘energy’ bill, the bill reported out by Senate Energy, and the ‘energy tax’ provisions–including a lot of special interest tax credits–are bad news for the national and public interest,” energy market consultant Glenn Schleede said.

“As nearly as I can tell,” noted Schleede, “these ‘energy bills’ continue to be a collection of special interest provisions cobbled together from offerings by Washington-based trade associations, lobbyists, and so-called ‘environmental’ nonprofit groups funded by DOE, EPA, and their contractors. There may be a few provisions that are truly in the national and public interest, but these are overshadowed by special interest provisions.

“The best thing to hope for is that these bills will end up so loaded down with bad ideas that they will fail someplace on the way toward passage,” Schleede asserted.

Others Give Support

Despite the hostility toward some specific provisions of the bill, the bill’s prospects were buoyed by support from such diverse groups as the American Council for an Energy-Efficient Economy (ACEEE) and the National Association of Manufacturers (NAM).

“We commend the Energy Committee for adding many useful energy efficiency sections to this bill,” commented ACEEE Executive Director Steven Nadel in a May 26 media statement.

As this story went to press, the NAM was preparing to release a study showing nearly 2 million jobs could be lost if the Senate does not pass the energy bill. The report promises state-by-state statistics regarding energy prices, job creation, and economic growth dependent on the bill.

James Hoare ([email protected]) is managing attorney at the Syracuse, New York office of McGivney, Kluger & Gannon.