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U.S. House approves $14.5 bln energy bill

July 28, 2005

By Tom Doggett and Chris Baltimore

WASHINGTON (Reuters) – The U.S. House of Representatives on
Thursday easily approved an energy bill packed with $14.5
billion in tax breaks and incentives and hailed by Republicans
as a major change in U.S. energy policy.

Environmental and consumer groups criticized the
legislation as a giveaway to an industry enjoying record
profits with crude oil prices near $60 a barrel, while spending
little on ways to curb demand or encourage renewable energy.

The bill passed by a vote of 275 to 156.

The Senate is expected to approve it on Friday, just before
Congress recesses for its summer vacation. President Bush is
expected next week to sign the energy bill, which he called one
of his top priorities in 2005.

“This legislation will help us reduce our dependence on
foreign sources of energy. It will help address the root causes
that have led to high energy prices,” said White House
spokesman Scott McClellan.

Industry officials praised the bill.

“For the first time, our energy policy is coming together,”
said William Kovacs at the U.S. Chamber of Commerce.

Other Republicans acknowledged it could not cut oil imports
in the near term. The United States now imports 60 percent of
its oil supply.

“As long as we’re consuming 21 million barrels (a day) and
we’re only producing 8 million, we’re going to be importing
oil,” said Texas Republican Joe Barton, author of much of the
bill.

BILLIONS TO INDUSTRY

Of the bill’s $14.5 billion in tax breaks and incentives
over 10 years, nearly $9 billion is earmarked for oil and gas,
electricity and coal companies. Less than $5 billion will be
spent on energy efficiency and renewable energy programs.

Republicans say it will revive the nuclear power industry
by encouraging companies to build the first new plants since
the Three Mile Island accident in 1979. Coal is another big
winner in the bill, which offers incentives to cut pollution
from coal-fired electricity plants.

Oil and gas companies will get royalty relief for
production from deep water in the Gulf of Mexico, an inventory
of energy deposits off Florida and other states, and tax breaks
for enlarging existing oil refineries.

American farmers will benefit from the bill’s requirement
to nearly double U.S. ethanol use to 7.5 billion gallons (34
billion liters) by 2012. Ethanol, refined from corn, is added
to gasoline to make it burn more cleanly.

Consumer groups complained that the legislation would hand
over billions in taxpayer dollars to the energy industry.

The U.S. Public Interest Research Group said it calculated
all the tax breaks, guaranteed loans and direct spending were
worth $25 billion to energy firms. “This bill keeps the oil,
coal and nuclear industry firmly in the driver’s seat,” said
Anna Aurilio, a PIRG spokeswoman.

Democrat Henry Waxman of California criticized last-minute
items added to the bill after House and Senate negotiators
halted debate. Among them was a $1.5 billion fund for drilling
research that would benefit an energy consortium based in House
Majority Leader Tom DeLay’s Texas district, Waxman said.

A spokesman for DeLay defended the fund, saying it was in
the energy bill approved by the House in April. The measure was
not in the Senate’s version of an energy bill.

Other Democrats said energy companies have ample profits to
fund new projects and don’t need more subsidies. On Thursday,
Exxon Mobil Corp. reported a 32 percent jump in its quarterly
profits to $7.64 billion.

“Right now Adam Smith is spinning in his grave so fast that
he would qualify for a subsidy in this bill as an energy
source,” said Democrat Edward Markey of Massachusetts. “This
bill is a political and moral and technological failure.”

The final version of the bill dropped some environmentally
friendly measures, such as the Senate’s requirement that the
federal government find ways to cut U.S. oil demand and improve
fuel mileage for gas guzzlers.




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