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U.S. House approves $14.5 bln energy bill

Posted on: Thursday, 28 July 2005, 12:27 CDT

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.

Source: REUTERS

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