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Energy Dollars Go to Clean Coal, New Nuclear Plants, Renewables, SPR

While infusing new funds for filling the Strategic Petroleum Reserve (SPR) and advancing nuclear, clean coal and renewable fuels, the Bush Administration made no apologies for cutting all oil and natural gas research and development dollars out of its fiscal 2008 energy budget request. "This president has never been in favor of subsidies for the oil and gas industry," Energy Secretary Samuel Bodman told a budget briefing Monday.

Bodman noted that with $60 for a barrel of oil and $7-$8/Mcf for gas there was no need for research and development (R&D) dollars for the industry. Tax provisions of the new budget also struck at oil and gas with a proposal to extend the amortization period for new geological and geophysical costs from two years to five years.

Favored in the new budget proposal are a boost in SPR in the name of energy security from a billion to 1.5 billion barrels of oil at a cost of $168 million, and increased dollars going to clean coal, nuclear and renewables programs.

Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, D-NM, saw the budget slant as something less than comprehensive and said he was "concerned that some of the President's budget choices appear to short-change my home state of New Mexico." Bodman will have a chance to explain that when he testifies on the budget before the committee on Wednesday.

A breakdown of the Department of Energy total of $24.3 billion proposed for FY 2008, which because of inflation is about the same as the previous year, shows $9.4 billion going to the nuclear weapons segment of the department, another $9.4 billion for environmental cleanup and radioactive waste management, $4.4 billion for basic science, and $3.1 billion to energy supply and energy efficiency programs.

Bingaman noted that coal is the only fossil fuel targeted for continued research. "The Administration's proposal zeroes out all R&D relating to oil and gas, and proposes to repeal $50 million in guaranteed funding outside the regular budget for onshore natural gas exploration.

"Even though the price of oil and gas are near record highs, we won't be able tap new domestic oil and gas resources without additional R&D. The key players for natural gas onshore in the United States are independent producers, they don't have R&D departments, and they are too small to be able to afford to start ones, regardless of the price of oil and gas. If the government abandons the field of oil and gas research, where is the new technology going to come from to keep domestic natural gas flowing in an economic and environmentally responsible manner? This is a wrongheaded decision that I hope the Congress reverses." Bingaman said.

Some of the administration's goals evidenced in the FY 2008 budget are to make solar energy prices competitive by 2015, advance hydrogen fueled vehicles, and see the first new nuclear power plants under construction by 2010 for the first time in 30 years. Also, it aims for cost competitive ethanol in five years.

Bingaman questioned the increased fill for SPR. "I am a strong supporter of the Strategic Petroleum Reserve, but the Administration has never given us a clear idea of what, short of a total calamity like Hurricane Katrina, it would take to put it to use." Bodman said DOE would be looking at setting up new storage caverns, possibly on the East or West Coasts.

Bingaman expressed disappointment that solid state lighting R&D was funded at the same level as last year's request -- $19 million -- when lighting accounts for some 20% of electricity used in the United States and advanced lighting is seen worldwide as a key technology for the future. "If we don't get the U.S program for solid-state lighting jump-started, we will forfeit a potential $12 billion annual market to our economic competitors."

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