ENERGY BILL IMPACT
July 29, 2005

Congress Friday passed a sweeping energy bill that provides billions in tax breaks and other incentives to boost domestic production from traditional and alternative sources. After a background report, experts discuss the positives and negatives of the bill.

 

July 29, 2005: Update: President Set To Sign $14.5 Billion Energy Bill June 28, 2005: The Senate passed an energy bill that would double the use of corn-blended ethanol and offer $16 billion in tax breaks. June 14, 2005: The Senate began debate over a broad energy bill the House of Representatives passed in April. Feb. 16, 2005: The Kyoto Treaty, signed in 1997 to combat global warming, went into effect Wednesday. April 21, 2004: A group of scientists studies the effects of climate change on species in Hawaii's diverse ecosystem. More NewsHour coverage of the environment, Congress and science.   News for Students: Top Story: Oil Drilling in Alaska Becomes Focus of Political and Environmental Debate 03.23.05 Top Story: Global Warming Fears Lead to Ratification of Kyoto Protocol 02.14.05     United States Senate Committee on Energy and Natural Resources U.S. Senate Secretary of Energy Advisory Board National Environmental Trust Arctic National Wildlife Refuge	RAY SUAREZ: Now to tell us what won and what lost out in the energy bill we get two views. Dena Wiggins is a lawyer and energy lobbyist for the oil and gas industry; she's also a member of the Secretary of Energy's Advisory Board; and Philip Clap is president of the National Environmental Trust. Its biggest funder is the Pew Charitable Trust, which also contributes to the NewsHour. Well, Dena Wiggins, you were telling me earlier you've been working on this for six years. What is this bill designed to do?
	A diverse fuel portfolio
	DENA WIGGINS: This bill is designed to give the American public a balanced energy portfolio. What this country needs is a balanced energy policy. This bill encourages efficiency; it encourages conservation; it encourages hydropower; it encourages oil and gas production, and, in sum, it is a real win for the American public. RAY SUAREZ: Philip Clapp, will it be able to accomplish any of the things that Dena Wiggins just ticked off? PHILIP CLAPP: On the contrary actually, I think it's an admission of paralysis by both the Republican and the Democratic parties. The Bush administration itself estimated that this bill will not increase oil and gas production in the United States at all over the next 20 years. We're facing a very difficult situation. I mean, we had three big challenges: One, cut our foreign oil dependence; two, move to move our economy away from its dependence on fossils fuels and develop new technologies; and number three to help protect consumers at the pump. And it failed on all three. RAY SUAREZ: Dena Wiggins, is that right, that America would not either produce more or consume less electricity and other forms of energy when this bill takes effect? DENA WIGGINS: I disagree with that. I think that this bill provides incentives for a variety of energy sources. What we have had in this country for a number of years is a policy that has forced companies and forced our economy to try to run off of one fuel. It has forced us into using natural gas. Natural gas, as I'm my colleague, Phil, would agree is clean burning, it's efficient, it's a wonderful fuel. But we can't run this economy on one fuel. What we need is a diverse fuel portfolio. And that is what this bill is designed to give. And also, there are incentives in here for conservation and for energy efficiency. There are efficient -- there are tax incentives for energy efficient clothes washers. There are incentives in here for efficient refrigerators. There are incentives in here for solar water heaters. There are incentives in this bill, tax incentives for people who want to try to improve their home or to build more fuel efficient homes. All of those things go to helping our country have enough energy supplies. What we really need is to make sure that when -- particularly in the heat of the summer like we're facing right now -- is that when somebody flips the switch, they get the kind of air conditioning that they need. Or in the winter when they flip the switch, they get heat to heat our homes. You want lights, you want heat, you want air conditioning. This country runs on fuel. And we need a diverse fuel portfolio. And that's what this bill brings to us.
	No fuel economy standard for cars
	RAY SUAREZ: Speak directly to that issue, that approach of diversifying the portfolio, having a sort of a multi-platform approach to American energy consumption. PHILIP CLAPP: Well, I first went to work on the House Energy Committee 30 years ago. And this bill doesn't change the same policy we've had for 30 years from the Nixon administration, which is a very lopsided subsidization of energy production industries, and it does nothing about demand. It does nothing on energy efficiency. Out of the subsidies in the bill, you only have about 25 percent of them that go to renewable energy and energy efficiency. And most of those are just extensions of just existing tax credits. On the other side, out of an $11.5 billion bill you have about 65 percent of that money that goes in subsidies for oil and gas companies, for the nuclear industry, and for the electric utility industry. And all of the Bush administration's own estimates showed that it would not increase one iota production of oil in the United States. Now we're really heading into a very dangerous period because U.S. oil production is projected to peak in 2009 and decline 25 percent by 2025 over the next 20 years. At the same time our demand is going to go up 40 percent. There is nothing in this legislation -- and the most important thing that could have been done is to set new fuel economy standards for automobiles, which is where we really use oil, and that was completely out of the picture. And what we have is the giant amount of subsidies for more production and even the Bush administration says it's not going to generate any.
	Subsidies for different forms of energy
	RAY SUAREZ: Dena Wiggins, those subsidies have attracted the lion's share of the attention about this bill. Don't they subsidize activity that these companies would have carried on anyway, like oil exploration and research? DENA WIGGINS: What I think we need to do is really put this in perspective. This bill is 1,700 some odd pages long. It's a stack of paper on my desk that is about like this. There are subsidies in there for the oil and gas industry, but as I said earlier, there are subsidies in there for other forms of energy as well. And I think that's the important thing to keep in mind. This is a balanced approach. And Phil was talking earlier about the need to increase domestic oil production. There are things that this bill could have done -- as good as this bill is -- there are things this bill could have done that it didn't do to increase or allow oil and gas companies to help increase oil production in this country. It doesn't open up ANWR or the 1002 Section of ANWR, which is a very small portion of ANWR; it's the size about -- the area around Dulles Airport. There is nothing on there in opening up ANWR, and there is nothing in there on allowing increased exploration and production in the OCS. So if that is -- RAY SUAREZ: And the OCS is what? DENA WIGGINS: The offshore, the offshore area. And if that is where we want to go with increased domestic production of oil, that could have been done. And it's not in there. PHILIP CLAPP: Well, in reality, it's not -- the opening of the Arctic National Wildlife Refuge isn't in the bill because it is another legislation that the administration is pushing through. But even if you opened up the Arctic National Wildlife Refuge, the EIA, Department of Energy projections are that Alaska's oil production, which is about 10 percent of the nation's, will be absolutely flat through 2025 and decline thereafter. So even if you've done it, you haven't answered the question. The real issue is that we have the same lopsided production side nuclear utility and oil and gas industry subsidies and it is designed only to try to hold U.S. production flat, and we are not making any serious investment in new technologies.
	Attention to alternative energy sources
	RAY SUAREZ: Briefly, what should have been in there in your view? You are criticizing this bill for what it includes and doesn't. What should have been in there? PHILIP CLAPP: There are several things that should have been in there. First one is the vast majority of our oil in this country and the imported oil is used for transportation, for cars. And that is why consumers are paying so much at the pump. There should have been a serious attempt to increase fuel efficiency for U.S. auto manufacturers. And I include Japanese companies that manufacture in the United States. We have had an actual decline in fuel efficiency; it's dropped from a high of 22 miles a gallon in 1988 down to 20 miles a gallon today. And that's where a huge amount of the increase in our demand is coming. In addition, they could have required the electric utility industry to generate about 10 percent of its electricity from renewable resources, which would have, indeed, stimulated the market for those technologies and that was dropped. And the Bush administration opposed and pushed out of the bill a provision that would require them to submit to Congress a plan to reduce U.S. oil imports by 10 percent by 2015. And they opposed it and took it out. RAY SUAREZ: Was there enough attention paid to alternative and renewable sources of energy? DENA WIGGINS: I think so. Currently we only get about 1 percent of our energy supply from what I think you would call renewables. Now there is another 3 percent of our supply that come from hydroelectric. And I don't know whether you would consider hydroelectric power renewable or not; I would. But that is still only 4 percent. I don't know that Congress could have done anything that would have taken that 1 or 4 percent and magically transformed it into 50 percent or 60 percent. This country runs on oil and natural gas. I don't think Congress could have changed that in legislation. RAY SUAREZ: What's going to be different? We heard what Phil Clapp thinks should have been in there. But you support this bill. DENA WIGGINS: Yes, I do. RAY SUAREZ: How does the way Americans buy energy look different in five years or 10 years now that this thing looks like it's going to pass? DENA WIGGINS: I think that this bill will end up with lower energy prices across the board. I think that the increase in the fuel diversity is what we have needed, that gives -- will ultimately lead towards lower prices. RAY SUAREZ: Thank you both. DENA WIGGINS: Thank you.