Every year since 2001, the Bush Administration has requested a comprehensive
energy bill from Congress, with hopes to avoid a potential energy crisis. Congress
has failed to approve a comprehensive bill on two previous attempts. This year,
the House passed an energy bill in April, and the Senate is still working on
their version. With less than half of Congress’ work completed on this
year’s legislation and a long hot summer ahead, the president and others
have raised serious concerns about whether the legislation is comprehensive
enough to ease our energy needs.
The president would like a national energy policy that helps the private sector
promote dependable, affordable and environmentally sound production and distribution
of energy, as the country faces increasing energy demands. Reliance on fossil
fuels for electricity generation and transportation is up and is expected to
continue to increase for at least the next 25 years. The country’s dependence
on foreign sources of oil and gas are increasing, while the price of oil and
gas has rapidly risen. The price of a barrel of oil has increased since 2001,
and last April reached a peak of $57 a barrel. Prices have skyrocketed because
of fears over demand outpacing supply, and the capacity to process petroleum
to meet future growing demands is uncertain — a single critical failure
in world supply could create a crisis.
The United States consumes about 25 percent of the total fossil fuels produced
for a population that is less than 5 percent of the global total. In the meantime,
China and India, with much larger populations, have burgeoning energy needs.
The global demand for cheap and reliable fossil fuels is growing at an alarming
rate, and the concentration of 64 percent of the world’s known petroleum
resources in the volatile Middle East exacerbates geopolitical concerns over
the stability of the supply. The world’s dependence on fossil fuels also
has environmental consequences because of pollutants emitted into water and
air, including greenhouse gas emissions that cause atmospheric warming.
Unfortunately, the House bill falls short of achieving a comprehensive national
energy policy and will do little to prevent a potential global energy crisis.
The bill focuses on significant incentives and tax credits for large oil and
gas producers, while providing far fewer incentives for alternative energy producers.
Democrats claim the incentives and tax credits are corporate paybacks by Republicans
who received campaign donations from large energy companies.
The bill includes provisions for companies to streamline leasing and permitting,
reimburse costs of environmental reviews, and for the government to repurchase
leases where exploration and development are not allowed. The tax breaks in
the bill total $8 billion with only 6 percent going to alternative energy sources
and efficiency measures, whereas Bush’s plan requested $6.7 billion in
tax breaks, with 72 percent for alternative energy sources and efficiency. In
particular, Bush’s request called for $3.6 billion in tax incentives through
2010 for hybrid and fuel-cell vehicles and residential solar heating, as well
as energy from landfill gases, wind, biomass, and combined heat and power sources.
Bush warned against significant oil and gas producer incentives, just days before
the bill was passed, saying, “with oil at more than $50 a barrel …
energy companies do not need taxpayer-funded incentives to explore for oil and
gas.” Some lawmakers have advocated for far greater incentives for more
efficient vehicles and far greater promotion of alternative energy resources
than are contained in the House bill.
Still, research and development spending in the bill will help promote cleaner
fossil-fuel technologies and cheaper renewable energy resources. The bill includes
$4.9 billion for “clean coal” technology development; $1.3 billion
for a nuclear hydrogen power plant; and $4 billion for hydrogen fuel-cell research.
The question is whether this research will lead to better technology that is
also cheaper to implement than conventional technologies. If the innovative
and cleaner technologies are not cost-effective, then the United States and
other countries will not develop them.
The bill also includes an additional $2 billion for research into ultra-deep
oil and natural gas drilling in the Gulf of Mexico. Some critics say that the
major oil and gas producers, which are making recordbreaking profits from current
high prices, should support such research instead of the government.
The House energy bill also contains two controversial provisions that stalled
the 2003 energy bill: drilling in the Arctic National Wildlife Refuge (ANWR)
and legal protections for producers of the gasoline additive methyl tertiary
butyl ether (MTBE), a groundwater contaminant. There may not be enough votes
in the Senate to retain either of these provisions. Congress will be forced
to approve drilling in ANWR in some legislation this year, however, because
the expected revenues estimated from ANWR oil reserves are built into the final
budget agreement and cannot be filibustered.
The House energy bill is not comprehensive enough to reduce the nation’s
energy or environmental concerns. More research and development and more incentives
for a greater variety of renewable energy resources, as well as greater incentives
for conservation and efficiency, are missing from the legislation. A national
energy policy needs to drive the market — both corporate and individual
consumers — to conserve more fossil fuels, demand more alternative energy
resources and create more innovative advances. An efficient and distributed
energy market will drive industry and the government to support cleaner, sustainable
and more diversified energy consumption while mitigating the potential global
energy crisis.
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