Energy policy falls flat Too many cooks, not enough heat

April 1, 2002
Many a good idea is lost in the shuffle of politics.

By William Furlow

Many a good idea is lost in the shuffle of politics. Such appears to be the case with US President Bush's National Energy Policy. What started out as a clear and positive idea has been altered and amended beyond recognition.

Early in his presidency, Bush set forth to develop a National Energy Policy. He created the National Energy Policy Development Group to produce the National Energy Policy Report. This was published in May of last year and contains legislative and administrative recommendations designed to secure the country's energy independence. The overriding goal was to make the US less dependent on foreign energy by encouraging more domestic exploration and production.

To Bush's credit this plan preceded the war on terrorism. In fact Congress passed HR4, the Securing America's Future Energy Act, in early August 2001, more than a month before the attacks on the World Trade Center.

The bill, sponsored by Congressman Billy Tauzin, Republican – Louisiana, contained a variety of positive provisions for the oil and gas industry. Among these were deepwater royalty relief for the Central and Western Gulf, incentives for subsalt exploration, a proposal to open the Arctic National Wildlife Refuge to exploration, and R&D support for unconventional and ultra-deepwater production. The bill passed 240-189 and moved on to the Senate. Three Bills were originally introduced in the senate.

At its annual meeting in March, members of the National Ocean Industries Association discussed the similarities and differences of these bills. While there are many elements common to the three bills, the differences are striking. Bingaman's bills contain more tax provisions, according to NOIA, and put an emphasis on conservation. By contrast, the Murkowski bill focuses on production and supports exploration in ANWR. It is this bill that more closely mirrors HB4 and the president's goal of energy independence.

Beyond these three senate bills, an alternate version of Bingaman's bill was brought forward at the end of last year. According to NOIA, Bingaman and Senate Majority Leader Tom Daschle, Democrat – South Dakota, introduced S1766 last December. Called the Energy Policy Act of 2002, this bill focused on renewable energy sources and increased efficiency standards. The bill also provides for numerous studies of the impact of energy on the climate. This bill excluded ANWR and the much sought tax breaks.

S1766 was then replaced by Bingaman and Daschle with an amendment in the form of a substitute, and renumbered S517. Debate began on S517 in March, with 10 amendments offered during the first week. Seven of these were passed, and three more are pending. Bush got involved in the debate by sending a three-page statement of administrative policy to the senate leadership.

The list of approved amendments includes one to expedite approval of a pipeline to transport North Slope gas from Alaska. This amendment includes $10 billion in financial incentives and federal loan guarantees.

The Senate also adopted an amendment to suspend litigation over federal regulation of hydraulic fracturing. Other amendments include the reauthorization of the Price Anderson Act, limiting the liability of the nuclear industry, authorization of the Fusion Energy Science Program, assessment of the dependence of Hawaii on oil, and allowing the federal government to prosecute and impose criminal penalties for damage to a natural gas or hazardous liquid pipeline located within states.

The three pending amendments would provide federal regulatory oversight to the Commodity Futures Trading Commission over derivative transactions of energy commodities and ensure all energy transactions are transparent. The other two would provide for US Mexico border research partnerships and amendments to the Pipeline Safety Act.

Clearly what is coming out of the senate is not what the President had in mind. The irony is that with the fracturing amendment and all the environmental restrictions, the senate may succeed in further frustrating domestic US production. According to NOIA, Bush's office issued a statement of administration policy that supports strong, comprehensive energy legislation and says that S517 does not fit this description.

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