Bush plan for increase in oil production may fall short

Feb 24, 2002 01:00 AM

President Bush mounted a renewed push for a broad national energy policy that emphasizes production over conservation--one of his top domestic priorities since taking office -- but signs are piling up that the president may fall short of his goal. As the Senate prepares to tackle the issue, Bush called again for opening Alaska's Arctic National Wildlife Refuge to oil drilling, arguing that greater domestic production is vital to national security and economic growth.
"America is already using more energy than our domestic resources can provide, and unless we act to increase our energy independence, our reliance on foreign sources of energy will only increase," Bush said. But with no energy crisis at hand and the congressional air thick with election-year politics and laced with the Enron scandal, whether any bill emerges remains in doubt.
"The pressure's off," said Mark Wolfe, executive director of the National Energy Assistance Directors' Assn., which represents state directors of the low-income home energy assistance program. And opening the Arctic refuge to drilling is a particularly hot issue for many Democrats, whose party controls the Senate.

Bush called Alaska "a place of tremendous natural beauty and important energy resources," and argued that "modern technology allows us to bring oil to the surface cleanly and safely, while protecting our environment and wildlife." "Conservation technology and renewables are important," the president said, pointing toward other elements in his plan. "Yet they alone cannot solve our energy problems. We must also reduce America's dependence on foreign sources of oil by encouraging safe and clean exploration at home."
Last year, Bush seized on high energy prices nationwide and the short supply that triggered California's energy crunch to make the case for more domestic oil and gas exploration. In May, he unveiled a plan that called for expanding nuclear power, spending $ 2 bn for research on "clean coal" technologies and opening more federal lands to oil and gas exploration, including parts of the Arctic refuge. The plan also included environmentally friendly measures such as tax incentives for residential solar power and fuel-efficient hybrid vehicles.

But much has changed since last summer. California rode out its electricity crunch and gasoline prices eased, undercutting the sense of urgency. Although the terrorist attacks on the World Trade Centre and the Pentagon renewed attention on US dependence on foreign energy sources, sales of gas-gulping sport-utility vehicles are as brisk as ever, and polls find Americans still favour conservation over more production.
Bush now is tying his energy initiatives to national security, but the polls find no evidence that his popularity in leading the war against terrorism has led to substantially increased support for his energy policies. Then there's the Enron factor. The now-bankrupt energy company's ties to the White House have become fodder for critics of Bush's energy proposals.
Also, Enron's campaign contributions to members of both parties have made many lawmakers jittery about further energy deregulation. "Enron is likely to make passage of a comprehensive bill less likely," said David M. Nemtzow, president of the Alliance to Save Energy, a Washington-based advocacy group. "Many senators will find their appetite for dealing with energy -- with oil, natural gas and electricity markets considerably calmed down -- even further depressed by both the facts and political risks associated with Enron."

The bill that the Democratic-run Senate expects to begin debating at midweek is far different from the Bush-backed measure approved in August by the GOP-controlled House. The Senate measure tilts more toward conservation than new production, calling for tougher fuel-economy standards for vehicles and eschewing Bush's goal of opening the Arctic refuge to drilling. It also provides $ 14.5 bn in tax credits over the next decade to promote conservation, energy efficiency and production.
The House bill provides for oil exploration in the Arctic refuge and contains $ 33 bn in tax breaks. Sen. Jeff Bingaman, chairman of the Energy and Natural Resources Committee, said he is optimistic an energy bill will pass the Senate. "We'll have some major fights about different provisions that people want to add or delete." But, he added, "there are quite a few areas where we're in general agreement."
Provisions that enjoy bipartisan support include increasing federal energy assistance to low-income households and offering tax breaks to promote energy efficiency and the production of renewable energy sources, such as wind and solar power. Unclear is whether enough lawmakers in the House and Senate can come together to reconcile their differing versions of the legislation to send Bush a bill he will sign.

Bush and his allies plan to step up efforts to rally public support for his energy proposals. For instance, Bush and Vice President Dick Cheney will be joined by officials of the Teamsters union, which helped persuade about a dozen House Democrats who usually side with environmentalists to provide the margin needed to win House approval for the Arctic drilling provision.
But peeling off such Democratic support in the Senate will be no easy task, in part because of the lack of a groundswell of public support for Bush's energy plan. A poll conducted by the Pew Research Centre for the People and the Press in May, during the California energy crisis, found that the public had a slight preference for energy conservation and regulation (49 %) over expanding energy sources (44 %). A new poll has found that the gap has widened: 54 % favour conservation and regulation; 37 % want to expand exploration and build new power plants.

Drilling in the Arctic refuge is, by far, the lightning rod that threatens to kill the bill. Bush has advocated oil and gas exploration on 1.5 mm acres of the 19.6-mm-acre refuge in the northeast corner of Alaska as a way to reduce US dependence on foreign oil.
Currently, more thanhalf of the oil used in the United States is imported -- about a fourth from the politically volatile Middle East. During the 1973 Arab oil embargo, the US imported 36 % of its oil. The US Geological Survey estimates that 6 bn to 16 bn barrels of oil can be recovered from beneath the Alaskan tundra, though opponents argue that only about 3.2 bn barrels can be drawn out economically.
Bush contends that the drilling can be done safely, but foes warn that it could spoil one of the nation's most precious wildernesses and endanger Porcupine River caribou and other species. Sen. John F. Kerry, a potential presidential challenger to Bush in 2004, has vowed to lead a filibuster to keep Arctic drilling out of the bill. Senate Majority Leader Tom Daschle has expressed confidence that he has the votes to sustain a filibuster.

Democrats plan to use the procedural hurdle because they fear that an up-or-down vote on Arctic drilling is likely to pass. A filibuster -- requiring 60 votes to break -- would be difficult to overcome. At virtually every opportunity, Democrats are likely to highlight the ties between the Bush administration and Enron as they argue against more federal support for energy companies.
Amy Myers Jaffe, senior energy advisor at Rice University's James A. Baker III Institute for Public Policy in Houston, expressed hope that debate on a national energy plan would not get derailed by "too much Enronitis." "The Enron disaster is a lesson in corporate governance more than energy policy," she said.
Myron Ebell, an expert on global warming issues at the Competitive Enterprise Institute, a Washington-based conservative think tank, added: "The fact is that Enron was working for both deregulation and re-regulation. Along with lots of other companies, they supported many provisions that they hoped would benefit them and opposed others that they thought would hurt them, but were not on just one side of the argument."
But a comment by Sen. Ron Wyden gave a preview of how the Enron card is likely to beplayed: "I hope we'll be able to keep the Enron philosophy out of the energy bill."

Another contentious issue will be the proposal to require SUVs and other vehicles to average 35 miles per gallon by 2013. Environmentalists view this as the single most important step Congress can take to cut US dependence on foreign oil and reduce emissions of carbon dioxide, a gas linked to global warming.
Any significant increase in the standards faces resistance from Democrats as well as from Republicans who represent vehicle-producing states. The auto industry has contended that tougher standards could make SUVs less safe, put US auto makers at a disadvantage and limit consumer choice.
Passenger cars currently must meet a "corporate average fuel economy," or CAFE, standard of 27.5 mpg. Minivans, SUVs and pickups are permitted to meet an average of 20.7 mpg. Car makers are allowed to average the standard across their fleets, so smaller cars can offset the gas guzzlers.

The Senate bill also would require that an additional 10 % of the nation's electricity come from renewable sources by 2020. And it would provide as much as $ 10 bn in federal loan guarantees for construction of a pipeline to carry Alaskan natural gas to the Lower 48 states, a provision designed to appease labour unions that support Arctic drilling.
Another conservation feature of the Senate measure would restore a Clinton-era efficiency standard for home air-conditioners that was rolled back by the Bush administration. The administration contended that the standards proposed by Clinton set too high a burden on consumers.

Source: Los Angeles Times
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