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Energy bill won’t cut gasoline prices-DOE chief

July 27, 2005

WASHINGTON (Reuters) – American motorists should not expect
lower gasoline prices to follow quickly on the heels of this
week’s expected passage of legislation to overhaul U.S. energy
policy, Energy Secretary Sam Bodman said on Wednesday.

The energy bill, submitted to the House of Representatives
for a vote on Thursday, includes $14.5 billion in tax breaks
and incentives over a decade, according to the House Ways and
Means Committee. Of that, nearly $9 billion is earmarked for
oil and gas production, electricity reliability and coal
technology projects.

“There are no magic bullets in this law that will change
energy prices in the next day, week or month,” Bodman told
reporters on Capitol Hill, where the energy bill was formally

“It’s going to take a number of months, if not years, to
deal with energy prices,” Bodman said. He said the legislation
will encourage long-term investment by the private sector in
new nuclear power plants, coal-fired electric generating
facilities and drilling for more oil and natural gas supplies.

The national average gasoline price hit a record high of
$2.33 a gallon two weeks ago, according to the Energy
Department’s survey of retail stations.

The Senate is expected to approve the bill on Friday, so
President Bush can sign it into law next week.

Bush also came to the Capitol on Wednesday and spoke about
energy policy during a private meeting with Republican
lawmakers. People at the meeting said the president listed
terrorism as the biggest threat to U.S. national security, with
energy independence next.

NO CURBS ON OIL DEMAND

Environmental and consumer groups criticized the energy
legislation for doing little to cut U.S. oil consumption, which
averages close to 21 million barrels a day, or to reduce
America’s dependence on foreign oil suppliers.

“This bill funnels billions of taxpayer dollars to
polluting energy industries, and opens up our coastlines and
wildlands to destructive oil and gas activities,” said Carl
Pope, director of the Sierra Club.

“It’s unfortunate that, as Americans head to the beach for
summer vacation, their representatives in Congress are
considering opening up these very coasts to destructive oil and
gas drilling,” Pope added, referring to a provision requiring
an inventory of offshore oil and gas reserves.

Other green groups criticized the bill’s incentives to cut
down trees to use in ethanol and biomass production, and to
allow federal land exchanges for oil shale development.

Democrats were expected to approve it, despite complaints
that the final version dropped some environmentally friendly
measures. Eliminated were proposals that U.S. utilities use
more wind and solar power, a ban on the fuel additive and
suspected carcinogen MTBE, and a requirement that the White
House find savings of 1 million barrels of oil by 2015.

WHITE HOUSE WILL SIGN BILL

Texas Republican Joe Barton, chairman of the House Energy
and Commerce Committee, said there was no way the energy
legislation could have boosted domestic oil production enough
to end crude imports. “We’re going to have imported oil as part
of our economy for a long, long time,” he said.

Bodman said the administration was happy with the overall
bill, although it opposed tax breaks for oil and gas companies.
“The oil and gas companies don’t need incentives with oil and
gas prices where they are today,” Bodman said.

To avoid a Senate filibuster and win approval of the energy
bill, House lawmakers dropped their push to open Alaska’s
Arctic National Wildlife Refuge to oil drilling. However, that
issue will be included this September in budget legislation to
fund the federal government, which can’t be filibustered.

Although the bill’s incentives will cost $14.5 billion,
negotiators inserted about $3 billion in budget “offsets” that
should trim the final cost to about $11.5 billion. Most of the
offsets are expected to come from reinstating a federal fund to
clean up oil spills, which collects a per-barrel fee on oil
imports and domestic production.




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