Energy Bill Fuels Skeptics

Energy Bill Fuels Skeptics

Jun 25 - Chicago Tribune

A haunting question hangs over the new energy bill passed by the Democratic-controlled Senate just before midnight Thursday: Would it work if it became law?

The real answer lies far in the future, but skepticism was rampant Friday. One prominent presidential candidate, New Mexico's Democratic Gov. Bill Richardson, called it a "Band-Aid approach," a sentiment expressed by other critics. Some called price-gouging provisions in the bill virtually meaningless, and President Bush has threatened to veto any bill containing such provisions.

Democratic leaders held out great promise for the legislation, saying it would reduce the nation's reliance on foreign oil and help keep gasoline prices in check. "A giant leap forward," Senate Majority Leader Harry Reid (D-Nev.) declared.

The measure, approved 65-27, now goes to the House. Final passage could still be weeks -- or perhaps months -- away. One problem is that opposition from Senate Republicans caused defeat of $32 billion in oil company tax increases to finance new incentives for renewable fuels. Supporters hope the House will restore these tax boosts, which could be considered by a House-Senate conference committee and put into a final bill.

In counterpoint to high Democratic praise in the Senate, Richardson, who served as energy secretary in the Clinton administration, said in a statement the bill did not go far enough and would not break U.S. dependence on foreign oil.

"It's another Band-Aid approach, not the comprehensive medical treatment our nation's energy policy needs," he said. He called for a 50 m.p.g. fuel economy standard for cars instead of the 35 miles per gallon in the bill, which would have to be attained by 2020.

Ron Minsk, a former economic assistant in the Clinton White House, said in an interview, "This bill is a very small first step toward solving our problem. It is akin to the first step in a marathon." Minsk said he doubted that increasing the supply of ethanol would bring relief from high gasoline prices.

The measure would require the production of 36 billion gallons of ethanol a year by 2022, roughly seven times last year's output. The bill calls for 15 percent of that production to come from corn and the remainder from "cellulosic" sources such as wood chips and switch grass.

Andrew Weissman, an energy expert at FTI Consulting in Washington, said cellulosic ethanol "is not yet a commercial viability. Instead, it remains a purely speculative alternative, requiring major scientific breakthroughs before it can be deployed."

Robin West, chairman of PFC Energy and a former Interior Department official in the Reagan administration, agreed. "Hope is not a policy," he said. "It would be a tragedy if money is wasted, but more of a tragedy if time is wasted.

"We should certainly try to find alternatives," West added, "but no serious commentator can tell you how we are going to do it. Demand is growing in Asia and the U.S. We need all the energy we can get, both conventional and renewable."

Analysts said that higher fuel economy standards for vehicles had the best chance of influencing the price of gasoline by potentially reducing demand. But Minsk said the proposed higher standards likely would have only a marginal effect on prices.

Sen. Dick Durbin (D-Ill.) told the Senate on Friday that he was optimistic that U.S. automobile manufacturers "can rise to the challenge" and produce highly efficient, high-quality vehicles.

The Senate approved the higher fuel economy standards as a result of a compromise. A provision in the original bill to require an annual 4 percent increase in fuel economy standards after 2020 was dropped in order to garner votes from senators who represent auto-producing states.

Cars, SUVs, vans and small trucks would be covered by the same regulation for increasing fuel economy standards. Each vehicle group would be required to make a 10 m.p.g. increase in fuel economy by 2020, but a manufacturer's fleet of vehicles would have to achieve a 35 m.p.g. level by 2022. Cars now are subject to a 27.5 m.p.g. standard, while light trucks, SUVs and vans are subject to a 22.2 m.p.g. standard.

But Public Citizen, a consumer advocate group, complained that the new standards would allow manufacturers too much leeway. Tyson Slocum, director of the group's energy program, said the U.S. government could trim the 35 m.p.g. standard by producing a cost-benefit analysis justifying a lower goal.

Minsk called the price-gouging section of the bill unworkable. It defines price-gouging as charging "unconscionably" excessive prices for fuel, he said, a definition he said was too vague to pass muster in the courts.

But Reid defended it. "We put the common good over corporate greed by protecting consumers from price-gouging and supply disruption," he said.

WHAT'S IN ENERGY BILL: The Senate energy legislation would:

--Raise automobile fuel economy requirements to a fleetwide average of 35 miles per gallon by 2020, up from 27.5 m.p.g. for cars and 22.2 m.p.g. for SUVs and small trucks

--Require that half of the new cars made by 2015 be capable of running on 85 percent ethanol or biodiesel fuels

--Mandate the production of 36 billion gallons a year of ethanol by 2022, a sevenfold increase over 2006 production

--Make it unlawful to charge an "unconscionably excessive" price for oil products and give the federal government new authority to investigate oil industry market manipulation

--Impose new appliance and lighting efficiency standards and require the federal government to accelerate use of more efficient lighting in public buildings

--Support large-scale demonstrations that capture carbon dioxide from coal-burning power plants and inject it into the ground

SOURCE: Associated Press

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