The mood on Capitol Hill Wednesday was cautiously upbeat as reports circulated that the feuding tax writers had made some headway on the disputed items in the multi-billion dollar tax package of the broad energy bill, prompting some aides and legislative analysts to venture that a final conference vote on the legislation could occur next week.

“It’s clear the [Bush] administration’s involvement appears to have shaken a few things lose,” said a Senate Democratic aide. A conference vote on the energy measure may take place next week, but he conceded there have been a lot of “false starts” over the past couple of weeks.

“A bill may be coming down [out of conference] before long,” noted an energy industry legislative analyst, adding that a conference vote could be imminent by the middle of next week. The mood is “very positive” on Capitol Hill right now.

There were reports Wednesday the House-Senate tax writers had reached “some sort of agreement” on the ethanol portion of the $16 billion tax package. Details were not known, but it was believed that a compromise favored the Senate position, which called for a change in the tax laws to support increased ethanol content in gasoline while maintaining the revenue flow to the highway trust fund.

The progress on the energy bill came one day after the Bush administration forwarded a proposal to Capitol Hill to resolve the tax standoff. The proposal, which was crafted by the staff of Vice President Dick Cheney, attempted to convince Chairman Bill Thomas (R-CA) of the House Ways and Means Committee to accept the Senate side on ethanol. Senate Democrats, however, warned Wednesday that a favorable ethanol provision was not enough to guarantee passage of an energy bill this year.

The “conventional wisdom” is that the White House tried to push Thomas to go along with the Senate on ethanol, said the Democratic aide.

It was unclear whether the tax writers had made any progress on other outstanding tax items, such as price guarantees for Alaska gas producers to support construction of a proposed $20 billion pipeline from the North Slope to the Lower 48 states. Sen. Pete Domenici (R-NM), chairman of the conference committee on the bill, said the controversial price supports had been dropped, but others weren’t so sure.

There’s “a lot of mixed signals” on the Alaska subsidy issue, the Democratic aide noted.

“It appears to be on its way out. It was not part of the last two to three offers between the House and Senate” tax committees, said Donald Duncan, vice president for federal and international affairs for Alaska producer ConocoPhillips. He noted that Thomas was responsible for the price supports being removed from the energy bill.

Thomas indicated he had a “philosophical problem” with awarding price supports to Alaska producers, said Duncan, but the lawmaker gave incentives to heavy oil producers in Kern County, CA., which is part of his district. The White House, which objected to price guarantees for Alaska producers, “played a key role in killing it” as well, he told NGI.

An Alaska pipeline was first proposed in the 1970s, but it has been held up over the years because of the “huge price fluctuations for natural gas,” Duncan said, adding that lawmakers have failed to realize this. “Wellhead price volatility is driving whether the pipeline will be built.”

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