President Bush last week took steps to try to bring about a quick resolution of the tax-related conflict that has halted progress on comprehensive energy legislation for weeks, pressing House and Senate lawmakers to get a “common sense, reasonable” measure to his desk before they leave for the year.
“We need to use the energy resources we’ve got at hand in an environmentally friendly way. And we need to advance new kinds of energy. But we’ve got to get after it. And that’s my message to the United States Congress — resolve your differences,” he said in a speech delivered last Thursday in Columbus, OH. “Understand that if you’re interested in people finding a job, we need an energy policy…Get the bill done.”
The energy bill, a high priority of the Bush administration, has been hung up for weeks due to a bitter feud between the House and Senate tax writers over several items in the $16 billion tax package, most notably a proposal to revise ethanol tax credits. Bush dispatched Vice President Dick Cheney to Capitol Hill last week to mediate the dispute. Energy Secretary Spencer Abraham visited the Hill as well, meeting with top Republican energy negotiators.
The president referred to ethanol only once in his speech, saying “we ought to make sure that we use ethanol from corn” to reduce the nation’s reliance on foreign energy sources. But he steered clear of taking sides on the tax credit issue.
Bush chose as the setting for his energy message an aluminum plant in Ohio, which he said spent 30% more on natural gas this year than in 2002. “When gas prices go up, the manufacturing sector hurts here in Ohio and around the country,” he said.
The president urged Congress to pass a broad bill that promotes both domestic production and conservation. “We need to produce in our own country and we need to encourage exploration in our own hemisphere…Our nation and our hemisphere have got natural gas, the energy used right here in this plant. But this resource has been hampered by restrictions on exploration.” An energy bill should allow for “reasonable” and “responsible” exploration to bring more gas to the market.
Bush said an improved energy infrastructure was a priority as well. “We need pipelines, gas terminals and power lines so that the flow of energy is reliable.”
The August blackout, which paralyzed the Northeast and Midwest, “ought to be a signal that we need to modernize the electricity grid…The current grid is old and it’s inefficient in places. Incredibly enough, federal law discourages new investment in the infrastructure. You got old laws on the books that need to be changed,” Bush told the crowd.
“By keeping investors from entering the electricity and the natural gas business, it stifles the capacity to provide more electricity and more natural gas” and keeps prices artificially high.
In addition to more investment in the power grid, “we need mandatory, not voluntary, reliability standards for our power companies,” and must give federal energy regulators back-stop authority to site new power lines, the president said.
He also called for more research and investment in nuclear generation, clean coal technology, increased conservation and for lawmakers to take steps to promote new sources of energy. “We ought to expand tax credits for renewable energy sources like wind and solar power. We ought to see if we can’t use technology to diversify our energy supply in a smart way. Congress should fund research in a new hydrogen fuel technology that I called for in my State of the Union.”
In a related development on Capitol Hill, a bloc of Midwest Republican lawmakers last week asked House Speaker Dennis Hastert (R-IL) to “forcefully interject and resolve” the feud between the House-Senate tax writers that has brought the broad energy bill to a virtual standstill.
“We’re calling on the speaker to get this bill to the floor, so we can vote on it and get it to the president for his signature. Letting this bill sit on the shelf isn’t going to do anybody any good,” said Reps. Lee Terry (R-NE) and Tom Latham (R-IA), who on Wednesday sent the letter that was co-signed by 26 lawmakers from ethanol-producing states.
Terry and Latham met with Hastert last Thursday to discuss “possible solutions” to the stalemate over proposed tax changes for ethanol. “My hope is that the leadership recognizes the importance of renewable energy to Midwestern members of Congress and will step in and bring a resolution to this conflict,” the two said in a statement.
The legislation has been stuck in neutral for several weeks as Bill Thomas (R-CA), chairman of the House Ways and Means Committee, and Charles Grassley (R-IA), chairman of the Finance Committee, have been at war over several items in the tax portion of the bill. The issue involving ethanol tax changes has been the most contentious.
Still, Republican conferee Rep. Joe Barton (R-TX) remains optimistic that an energy bill is imminent. He said last week he expected the impasse over energy-related tax issues to end soon, clearing the way for national energy legislation to be passed by Congress and signed into law within the next month.
The feuding tax writers are “close to resolution” of items in the tax package that have stalled the bill, and top Senate and House negotiators have agreed to settle the outstanding policy issues “very quickly” once the tax items are cleared away, Barton said at a conference sponsored by Charles Schwab Capital Markets in Washington, DC, last Tuesday.
In addition to ethanol, another controversial tax item involves price supports for Alaska gas. While the energy bill will authorize the construction of an Alaska natural gas pipeline, Barton said he doubted it would offer price guarantees for gas produced in Alaska and transported over the proposed line.
“The largest privately capitalized corporations in the world are saying that with market prices of $5 per Mcf…it’s too risky [to build an Alaska line] unless we give them a price guarantee. I don’t buy that,” said Barton, chairman of the House Energy and Commerce subcommittee on energy and air quality.
“I don’t think we’re going to have some price guarantees on the Alaska pipeline,” he said, although he noted there was “still some debate” occurring on the issue. The Senate backs price supports, but House conferees and the Bush administration are dead-set against them.
Barton indicated that awarding price guarantees to Alaska producers would be at odds with a key underlying proposition in the energy bill that “markets are better than mandates.”
The legislation will authorize other financial incentives — tax credits and loan guarantee — for the proposed 3,600-mile pipeline that would transport gas from Alaska’s North Slope to the Lower 48 states, he said. While Alaska producers welcome the other incentives, they point out that the price supports are the key.
Alaska producers ConocoPhillips and BP have lobbied hard for the price guarantees. Without them, ConocoPhillips has said publicly that it will withdraw its support for the construction of the $20 billion line.
In yet other action, the Interstate Natural Gas Association of America (INGAA) last week called on House-Senate negotiators to jettison the irreconcilable issues that threaten passage of a broad energy bill this year.
“In the interest of enacting the energy bill this year…the conference should narrow its focus to those issues that obtain the necessary majorities of both chambers,” wrote INGAA President Donald F. Santa Jr. in a letter last Monday to the conference chairman, Sen. Pete Domenici (R-NM), and Rep. W.J. “Billy” Tauzin (R-LA).
“To borrow [an] old adage, the perfect should not become the enemy of the good. Issues that seriously diminish the likelihood of passing the [energy] conference report should be held over for future debate,” he said.
“Great progress” has been made in getting the House and Senate energy bills to “this advanced stage of the legislative process,” Santa noted. Delaying the completion of the energy conference report until next year, an election year, “greatly jeopardizes” the enactment of a broad energy bill during the 108th session of Congress. “With the finish line so close, now is not the time to stop.”
Interest in seeing an energy bill passed this year isn’t just limited to Washington, DC, according to the Alliance for Energy and Economic Growth (AEEG), a broad coalition of energy consumers, producers, and business and labor groups. An AEEG-commissioned survey of 1,000 Americans earlier this month found that 87% placed a high priority on Congress voting out a national energy bill this year.
This is the highest level of support yet recorded for energy legislation, the group noted. “People understand that there is a link between energy and our economic and national security,” said AEEG spokesman Bruce Josten in a statement last week.
“This energy bill is past due. Congress needs to finish the job and pass an energy bill…and this survey demonstrates that they have a mandate from their constituents back home to do so,” he noted.
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