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House passes energy bill; measure to have little effect on gas prices

WASHINGTON—After almost five years of trying, President Bush is about to get an energy bill. It costs more than he wanted, puts off his wish for Arctic oil exploration and does nothing to lower the soaring price of gas at the pump anytime soon.

But the comprehensive bill, which the House of Representatives passed Thursday, 275-156, and which faces easy passage by the Senate, probably Friday, presents Bush with a policy that he's made a priority since his first days in office.

The bill gives the oil and gas industries sizable federal subsidies, tries to kick-start a new age of nuclear power by encouraging new plant construction, and offers generous tax incentives to the coal industry to extract and produce cleaner-burning coal.

Under its provisions, consumers may find it easier to buy energy-efficient appliances. Car gas tanks will have more ethanol, a corn-based cleaner-burning fuel additive. And when it comes to our watches, we'll still spring forward in March, but we'll fall back in November, because daylight savings time will be extended by one month to save electricity.

But lawmakers and analysts conceded that on its major selling point—advancing America's energy independence—the bill's impact will be long term at best. It won't affect the current price of gas at the pump. And though it aims to diversify America's energy sources and ease the extraction of domestic oil and gas, it sets no goals for reducing American dependence on foreign oil.

House Speaker Dennis Hastert, R-Ill., hailed the bill as "the right thing for the American people. They should expect to have an affordable, reliable, efficient and environmentally sound supply of energy, and this bill assures that they will."

House Democratic leader Nancy Pelosi, D-Calif., said the final legislation was an improvement over an earlier House version.

But, she added, "the American people need and deserve an energy policy that will reduce energy prices, reduce our dependence on foreign oil and reduce pollution. Unfortunately this bill is not the answer."

White House press secretary Scott McClellan said Bush was "pleased" with the measure, which he said "will put us on a path to reducing our dependence on foreign sources of energy. This legislation helps address the root causes of high energy prices. It will expand domestic production, it will increase conservation and it will improve reliability of our electricity system as well."

Asked if the bill would do anything to lower gasoline prices, McClellan said: "We didn't get into this overnight, and we're not going to get out of it overnight."

Overall, the bill provides a range of tax breaks totaling $14.5 billion over 10 years. It reduces the cost of those tax cuts with about $3 billion in revenue-producing measures, for a net cost of $11.5 billion. Bush had asked for only $6.7 billion in tax breaks over 10 years. About $1.3 billion of the tax breaks in the final bill would go to conservation and energy-efficiency programs.

House and Senate negotiators dropped a Bush-sought House provision that would have permitted oil drilling in a portion of Alaska's Arctic National Wildlife Refuge—a sticking point in the past. The drilling measure could be considered separately later, however.

Negotiators also dropped language pushed by House Majority Leader Tom DeLay, R-Texas, that would have offered legal protection to the makers of MTBE, a fuel additive that has contaminated water supplies. The provision was widely opposed in the Senate and would have imperiled its passage.

A Senate provision that called for a reduction in oil consumption of 1 million barrels a day from projected 2015 levels was eliminated. The final bill also shifted away from the conservation-tilting provisions of the Senate bill, including a plan to require power plants to increase their use of renewable fuels, such as solar, wind and geothermal power.

Critics complained that the legislation does little to address the problem of global warming and climate change. The bill, however, does authorize some test projects to study whether some technologies can reduce global warming. It also makes it easier for developing countries to try climate change technologies. And its encouragement of nuclear power, which doesn't emit so-called "greenhouse" gases, is cited by proponents as a move against global warming.

The legislation also contains provisions that seem tailored to benefit interests dear to specific lawmakers.

One would set aside hundreds of millions of dollars for research into new oil and gas drilling methods, such as ultra-deepwater drilling. The provision, part of a $1.5 billion allocation toward research and development, calls for the money to be allocated by competitive bid. One eligible consortium, the Research Partnership to Secure Energy for America, is based in DeLay's hometown of Sugar Land, Texas. DeLay has supported the project in the past.

Some Democrats, such as Rep. Henry Waxman, D-Calif., complained that the proposal looked like it was designed with DeLay in mind.

But Bill Wicker, an aide to Sen. Jeff Bingaman of New Mexico, the top Senate Democrat who helped negotiate the bill, said: "We don't see this as a sweetheart deal for anyone. ... While Mr. DeLay may have a constituent that thinks it will be successful in winning such a competition, there is nothing in the provision that would steer the procurement in its direction."


Key provisions of the big energy bill approved Thursday by the House and expected to win Senate approval Friday include:

_$14.5 billion tax incentives over 10 years. Among them:

_$1 billion for oil and gas producers and refiners by shortening depreciation periods for gas distribution lines to 15 years from 20 years.

_$1.24 billion to electric companies for reducing the depreciation period on transmission and distribution lines.

_$1.3 billion to help nuclear power plants decommission old plants.

_$1.6 billion in tax credits for investments in "clean coal" electric power plants.

_$2.75 billion in tax credits for use of various renewable energy sources in the production of electricity. Sources include solar, wind, landfill gas and trash combustion.

_$1.3 billion to promote energy efficiency and conservation, including expanded breaks for hybrid-fuel cars.

_Encourages energy efficiency by setting higher standards for appliances such as refrigerators and air conditioners.

_Gives homeowners a 10 percent personal tax credit for energy-efficiency improvements.

_Mandates expanded use of ethanol in gasoline to 7.5 billion gallons a year by 2012.

_Expands the current tax credit for buyers of gas-electric hybrid and diesel-powered cars. The tax credit is based on the fuel economy of the car and the lifetime fuel savings.

_Repeals the Public Utility Holding Company Act, a Depression-era law that limits utility mergers.

Sources: House-Senate Conference report, Congressional Quarterly.


(c) 2005, Knight Ridder/Tribune Information Services.

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