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House set to approve $14.5 bln energy bill

Posted on: Thursday, 28 July 2005, 04:29 CDT

By Julie Vorman

WASHINGTON (Reuters) - The U.S. House of Representatives was set on Thursday to approve 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 will pass "overwhelmingly" in the House, predicted Rep. Joe Barton, a Texas Republican and author of much of the 1,700-page legislation.

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

"The enactment of this bill is needed to put us on a path to greater energy and economic security," said Treasury Secretary John Snow. "It will help American workers, families and businesses by increasing energy efficiency and conservation and reducing our dependence on foreign sources of energy."

Other Republicans acknowledged the bill could not cut oil imports in the near term. The United States imports 60 percent of the 21 million barrels of oil consumed daily.

"We're going to have imported oil as part of our economy for a long, long time," Barton said.

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 encourage companies to revive the nuclear power industry by building 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 increasing the capacity of 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 criticized the bill, saying it 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 "would provide more than $25 billion to polluting energy interests."

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.

"If Congress has an extra $1.5 billion to give away, the money should be used to help families struggling to pay for soaring gasoline prices -- not to further enrich oil and gas companies that are rolling in profits," 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.

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

Source: REUTERS

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