OGJ Editorial: Energy bill founders

Oct. 28, 2002
Chances are fading that the 107th Congress will pass a comprehensive energy bill. So who needs a comprehensive energy bill? The package approach has become a problem.

Chances are fading that the 107th Congress will pass a comprehensive energy bill. So who needs a comprehensive energy bill? The package approach has become a problem.

Divergent energy bills from the House and Senate have been under study by a conference committee since September. With Congress in recess for midterm elections, little time remains. Reconvening in mid-November, lawmakers might still act on a full energy bill. Or they might attach pieces of the package to other legislation awaiting action. Or they might delay action on most or all of the energy package for work by the 108th Congress.

Delay best

At this point, delay would be best. Election-year politics turned an energy package that began reasonably into a monstrosity. The legislation's political center of gravity, in fact, has to do less with energy than with agriculture. The only major issue able to garner bipartisan support and sustain movement toward reconciliation of the House and Senate bills was an obscenely generous market mandate for fuel ethanol.

As opponents to the move from outside the Midwest recognize, ethanol's an energy bust. It's bad for energy consumers, bad for taxpayers, neutral at best for the environment, and good only for agricultural interests already fat with subsidies. Yet it hijacked energy legislation. How did this happen?

The answer lies in a profound disagreement over basic aims of energy policy. One side, generally Republican, thinks energy policy should stimulate domestic production of fuels and generate wealth through development of natural resources. The other side, generally Democrat, thinks energy policy should promote alternative energy, discourage consumption, and limit resource development for environmental reasons.

So the Republican-controlled House passed a bill approving oil and gas leasing of the Arctic National Wildlife Refuge coastal plain, improving producer access to other federal land, and adjusting tax laws to stimulate oil and gas production. The Democrat-controlled Senate declared ANWR leasing anathema, proposed toughening of vehicle fuel-economy standards, and passed a bill favoring ethanol and renewable fuels, requiring reporting of greenhouse gas emissions, and using price supports to boost construction of a pipeline for North Slope natural gas partly through Alaska rather than solely through Canada.

The Senate bill wasn't all bad. It didn't reject tax changes beneficial to producers, although it was less generous than the House version in this area. And it raised useful questions about new regulation of hydraulic fracturing. On balance, however, the Senate bill favored consumption cuts and alternative energy supply over resource development and domestic production of oil and gas.

Differences between the House and Senate bills thus embody an ideological standoff that impedes broad action on energy. A lame-duck Congress pressed for time won't close the gaps. It can only aggressively compromise in hopes of producing an energy bill for the simple sake of producing one.

That's the wrong reason for lawmakers to act. Here's the worst case: Unable to reach any other compromise, Congress passes a bill with the word "energy" in its title that contains little more than the ethanol mandate. Americans think their representatives have acted on energy, yet all they see for it are rising prices of gasoline, stagnation of highway construction, and grain distillers growing rich.

This might seem far-fetched. But it's much more likely to happen than congressional approval of ANWR leasing.

Decomposition of energy legislation this year highlights two areas of oil and gas political advocacy that need work.

One area is the supposition that energy legislation must take the form of a comprehensive package. Why? Packaging energy legislation just packages opposition, enabling strategic conflicts to swamp tactical issues. Controversy over ANWR leasing thus might keep lawmakers from making overdue repairs to producer taxation. The two measures shouldn't be part of the same bill.

Ideological disadvantage

The other area that needs work is the ideological disadvantage the industry drags into every political fight. To most of the US, oil and gas companies are alien and suspicious. Most Americans see no connection between affordable, secure supplies of energy and the activities of oil and gas companies.

That must change. And the change requires money, people, and persistence. Until it happens, comprehensive energy legislation reasonably free of ethanol mandates, global-warming placebos, and other expensive distractions will remain an elusive goal.