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Lawmakers to add tax package to energy bill

Posted on: Tuesday, 26 July 2005, 16:44 CDT

By Tom Doggett and Chris Baltimore

WASHINGTON (Reuters) - Congressional negotiators on Tuesday were set to finalize $11.5 billion in energy tax credits and incentives, setting the stage for the U.S. Congress to vote on a broad energy bill later this week.

House of Representatives and Senate negotiators worked past midnight on Monday to complete the energy bill that aims to boost traditional oil, natural gas and electricity supplies while also promoting alternative energy sources.

Cost details have yet to be released, but Senate Finance Committee chairman Charles Grassley said tax writers had agreed on most of the $11.5 billion package.

That would be higher than the $6.7 billion recommended by the Bush administration, but there was no threat of a presidential veto because of cost. A White House spokesman on Monday criticized the bill's tax credits for oil companies at a time when crude is well above $50 a barrel.

Oil and gas subsidies in the bill come in at about $1.5 billion, Grassley said, much lower than the House-written bill, which had about $4 billion in such incentives. The final package will have $3.1 billion in incentives to produce electricity from wind, solar and other renewable sources and $1.3 billion for efficiency and conservation.

Democrats and environmentalists still pilloried the bill as a giveaway to Big Oil that will do little to lower gasoline prices or reduce U.S. dependence on foreign oil imports.

"This is the lobbyist backyard barbecue bill, because every energy interest is going home with its pockets stuffed with pork," said Jill Lancelot at Taxpayers for Common Sense.

Rep. Joe Barton of Texas, who headed negotiations, called it a "transformational bill" that will spur new nuclear and cleaner coal plants as well as hybrid-powered cars.

"It's harder and harder to find energy," Barton told reporters. "It's only fair to have some incentives and credits to encourage that."

During a final nine-hour negotiating session that ended shortly before dawn on Tuesday, a joint Senate-House energy bill conference committee agreed to nearly double production of ethanol, a gasoline additive made from corn.

But the panel rejected Senate proposals to cut U.S. oil consumption by 1 million barrels per day and to require American utilities to generate more electricity from renewable energy sources like wind and solar power.

President Bush asked Congress to approve the legislation before this weekend, when lawmakers leave for their month-long summer recess in August. Once the tax package is done, the full House could vote on the bill as early as Wednesday. The Senate may vote Thursday.

OIL DEMAND, MTBE DROPPED FROM BILL

The ethanol compromise, which would raise output of the additive to 7.5 billion gallons a year by 2012, is larger than the 5 billion gallons approved by the House but smaller than the 8 billion gallons sought by the Senate.

Ethanol, scorned by the oil industry, is popular in farm states as a home-grown way to reduce oil imports and boost farmers' incomes.

House negotiators also rejected a Senate plan requiring the president to come up with ways to cut America's oil demand by 1 million barrels a day by 2015. Opponents said the proposal would force Americans into carpools while making automakers boost vehicle fuel standards.

Another Senate proposal that failed would have required use of renewable sources to generate 10 percent of U.S. electricity by 2020.

Also dropped from the bill was a House Republican plan to shield from lawsuits those oil refiners that make a rival fuel additive to ethanol -- methyl tertiary butyl ether, or MTBE.

Rep. Barton wanted to create an $11.4 billion fund to clean up water supplies contaminated by MTBE in return for shielding refiners such as Exxon Mobil Corp. from lawsuits. But the plan was criticized by the oil industry, municipal water officials and key U.S. senators.

House Majority Leader Tom DeLay told Reuters he was "disappointed" the energy bill would not protect MTBE makers. "We're not giving up on it," DeLay said, but did not elaborate on how the plan could be revived.

The final energy bill did not include language to open the Arctic National Wildlife Refuge to oil drilling. However, that proposal has broad support and is expected to be included in separate budget legislation later this year.

Source: REUTERS

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