US Senate Energy chief may be considering crude oil price floor

Washington (Platts)--22Jun2006

US Senate Energy and Natural Resources Committee Chairman Pete Domenici
Thursday said a crude oil price floor of $38 to $40/barrel would increase
investment in alternative energy sources, including coal-to-liquids and
cellulosic ethanol.
While the New Mexico Republican did not specifically endorse such a price
floor, he called it is "a very, very interesting proposition." The senator's
comments came during a hearing a committee hearing on a bill to reduce oil
demand (S. 2747).
He also expressed concern that a dispute the US Office of Management and
Budget and the Department of Energy has frozen loan guarantee programs
authorized by the Energy Policy Act of 2005.
Domenici said he was "embarrassed" the government has failed to implement
the loan guarantee program, which he said was essential to getting investors
to provide funding for advanced energy technologies. The price floor, he
suggested, was another option to coerce investment.
"When we promise new energy policy to get out on the edge of these new
technologies and our government as promised can't deliver, we've got to figure
out why," Domenici said.
EPACT provides federal guarantees for loans for clean coal technologies,
new nuclear plants and development of cellulosic ethanol, among other things.
An administration source said OMB is concerned that projects supported by
DOE loan guarantees have not been successful historically. The possibility of
a default on a loan for risky technologies has OMB worried about approving the
billions of dollars in loans authorized by the Energy Policy Act.
DOE's efforts to expedite the loan program have been hampered by OMB's
concerns. The loan program also is stalled by the need for separate
legislation authorizing the loans.
Domenici has said he would include the needed legislation in the fiscal
2007 energy spending bill. And he vowed that he would force resolution of the
OMB-DOE dispute.
---Dan Whitten, daniel_whitten@platts.com

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