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Senate Passes Comprehensive, $16 Billion Energy Bill

June 28, 2005 at 12:00 AM EDT
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RAY SUAREZ: A recent surge in gas prices, oil prices to more than $60 a barrel has made energy policy a hot topic this summer. Today, the Senate overwhelmingly passed its version of a wide-ranging energy bill. The House passed its version this spring. Both bills share a number of similar goals, including increasing oil and gas production, expanding tax incentives and boosting the use of corn-based ethanol in fuel refineries.

But there are still some key differences to be resolved. The Senate bill is more expensive and seeks to expand the use of renewable energy sources, like wind and solar power, and offers no liability protection to companies that use a fuel additive called MTBE.

To walk us through the major issues on the table, I’m joined by Mary O’Driscoll of Environment and Energy Daily. And welcome back.

MARY O’DRISCOLL: Thank you.

RAY SUAREZ: Would you describe the two sides, now that they’re going to go to conference and start reconciliation as far apart?

MARY O’DRISCOLL: Well, it depends how you look at it. They really — they have the same goals as you said, that they both really want — the need is to increase production of oil and gas domestically, and to be able to expand import of natural gas from overseas, because natural gas prices are high or even higher than the gasoline prices that we’re finding at the pump.

But where they really differ is on some very specific things that, as you said, that the ethanol requirements — that the Senate has a higher ethanol market requirement than the House, and so they have to reconcile that. That can be pretty well thought-out.

They also differ on what the Senate is calling for an inventory of the offshore regions of the country, the oil and gas reserves that are in the offshore regions in the outer continental shelf, which is — that kind of an issue does not fly very far in the House, which is a very interesting point.

But then there’s also the difference of the MTBE, as you said, that is not in there. And there’s also no ANWR in the Senate bill, no call for exploring for oil and gas in the Arctic National Wildlife Refuge.

So they are very close in some of the real basic points of it, but there is some divergence, and some of these things can really explode into all-out war between the two Houses.

RAY SUAREZ: Well, does the combination of the public attention on $60-plus a barrel oil, and the fact that they couldn’t get it done the last couple of times this came down the pike, create more pressure to reconcile and pass a bill?

MARY O’DRISCOLL: It certainly does. It’s very interesting. You think: Do they need a catastrophe to happen in order to pass an energy bill? Well, two years ago we had a big blackout in the Northeast and the Midwest, and that didn’t force them over the finish line to get the energy bill done.

But this time, this is the third time the Senate has passed an energy bill in the past four years, and they’re very eager to get this done. The Congress, in general, is very eager to get this bill done. And everyone is kind of sick of energy at this point.

The White House would like to get it done. The White House first called for an energy policy in May of 2001. So President Bush has been very active in trying to get Congress to pass an energy bill this year.

They would like very much to have a bill signing at the Rose Garden at the White House, and Congress would like to be able to go home in August or any time later this year and say we did something; we did the energy bill for you.

RAY SUAREZ: The Senate specifically mentions alternative and renewable forms of energy. Does the House not mention it at all, or are they far apart in emphasis?

MARY O’DRISCOLL: No. The House mentions it, too, and they’re not that far apart. But, as I said, there are forms of the renewable fuel, such as ethanol and biodiesel, that the Senate calls for a higher level of a market; it’s an eight billion gallon market, as opposed to the what the House says should be a six billion gallon market.

And so that’s a distinction that is important when it comes to energy circles; it doesn’t really sound like very much when you’re just talking about it, but it’s very important because it’s a requirement that in the Senate legislation, it would bring ethanol up to about 5 percent of our transportation fuels.

RAY SUAREZ: Does that ethanol subsidy explain a lot of why the Senate bill is so much more expensive than the House bill cumulative?

MARY O’DRISCOLL: Well, that and the fact that the Senate bill also — when you look at the extension of programs, the Congressional Budget Office has scored the Senate energy bill at about $35 billion, a little north of $35 billion when it first came to the floor. And that’s just for authorizations, and authorizations don’t always get approved. They have to be appropriated through the congressional process. And that doesn’t always happen right away. Sometimes it takes a few years to get that done. And so $35 billion is just kind of what they’re generally calling for. It’s nothing that’s definite.

The Senate bill also has a tax portion, a tax incentives provision that is $12.6 billion over five years, and $18.4 billion over ten years, as opposed to the House tax provision, which is $8 billion. But I want to caution that Bill Thomas, the chairman of the House Ways and Means Committee, stressed on the House floor when they voted on this last April, that this is just — this $8 billion is to just get us to conference, we will work it out in conference. The goal of the Senate is to keep it right around $11 billion.

RAY SUAREZ: Well, recently, the Senate was very — it was involved in very tough debate over an emissions reduction aspect of their version of the bill.

MARY O’DRISCOLL: Right; right.

RAY SUAREZ: A very weak, by all accounts, version of emission reduction past.

MARY O’DRISCOLL: Right.

RAY SUAREZ: Does that mean the Senate version has a better shot at being reconciled with the House because it’s not weighted down by a Kyoto-style requirement?

MARY O’DRISCOLL: Well, yes, it does, and it’s very interesting that the Senate did have a very intense debate over climate change, over what kind of — what the nation needs to do.

It’s very interesting that some members of the Senate who never really had expressed views on this before and now starting to recognize that climate change is a problem and we need to do something about it.

And so what they did was they had a series of votes, and what they did accept was what they call a sense of the Senate resolution, that calls for action, some future action, that needs to be done to take care of the climate change issue and to reduce emissions.

Now, that is just a sense of the Senate; that does not bind to the House into anything and so that will not be a factor when it comes to the discussions on the energy bill between the Senate and House. However, the Senate is poised to start some hearings. Senator Domenici, the chairman of the Energy and Natural Resources Committee, is going to have some hearings later this summer on this issue.

RAY SUAREZ: The House version of the bill includes liability protection for producers who included this additive, MTBE, in their gasoline.

MARY O’DRISCOLL: Right.

RAY SUAREZ: There are members of the United States Senate that are adamantly against that. They say they won’t vote for a version of the bill — Republicans won’t vote for a version of the bill that includes that liability protection. Is this big enough to be a deal breaker?

MARY O’DRISCOLL: Well, it certainly was two years ago; this was the deal breaker in 2003. It kept the Senate from taking a final vote on the energy bill, and it’s coming back again because House leadership is determined to keep that liability provision in there, that liability waiver. But the Senate doesn’t want it. What they’re trying to do now, House members are now trying to come up with some sort of a compromise, that they would provide funds for cleanups of the MTBE spill sites.

And it’s a problem all over the country, but lawmakers, the Republicans in the Northeast and lawmakers from the West are very adamant about that in particular, that this — you do not need the liability waiver for the MTBE producers.

But it was a deal breaker two years ago. It could be this time. However, they’re trying to work out a compromise. But when you talk to any of the leaders in the House, they always say that, you know, our bottom line for the compromise is that we have to have liability protection, which really doesn’t fly in the Senate. So it will be interesting to see if they can actually work it out this time.

RAY SUAREZ: Did either or both chambers urge a new look at nuclear energy as a way of reducing dependence on imported oil?

MARY O’DRISCOLL: Oh, certainly. There’s a lot of nuclear power in both bills, but more so, probably, in the Senate — essentially, because Senator Domenici, who was leading the charge for the energy bill in the Senate, is a very big supporter of nuclear. And when you’re talking about climate change, when you’re talking about trying to reduce emissions and having emissions-free sources of electricity, nuclear power is the logical choice for many people because it doesn’t produce any emissions. It does produce a lot of nuclear waste, and that’s another issue for a later debate, but it has no emissions that can — that cause air quality problems. And so that that is what they’re looking at, that if you want to have emissions-free power generation, you’ve got to look at nuclear.

RAY SUAREZ: And quickly, before we go, if a version of either of these two bills passes, will the end users, people filling up their tanks, people paying an electric bill or a natural gas bill, notice much difference in the way they acquire any of these commodities?

MARY O’DRISCOLL: No, not right away. But, President Bush, as soon as he signs it, if he signs it — he could sign it tomorrow — it’s not going to have any effect on prices. But what they’re saying is that this is a long-term process; it’s going to take five years, 10 years, 15 years to be able to see the fruits of what happens with this bill. They’re very well aware of that, except, you know, they do tend to use the high prices of $60 a barrel oil that we have, the high natural gas prices, the high electricity prices, the loss of jobs because of the high cost of energy as a reason to pass this bill, but it’s really not going to do anything in the immediate future.

RAY SUAREZ: Mary O’Driscoll, thanks for being with us.

MARY O’DRISCOLL: Thank you.