It’s still possible to say that the US Congress would do more good by enacting energy legislation in its present shape than by not passing anything. The potential benefit, however, is limited. And it might not survive the remaining political churn.
Foolishness in the Senate puts the oil and gas industry in a quandary. Senators have trampled labor and economic interests, subverted environmentalist credibility, and ravaged consumers. So does the industry muffle its objections in hope that production incentives passed by the House last August survive reconciliation of the two, now very different bills? It might as well. A politically divided Congress offers little hope for effective energy policy.
Just before the Senate rejected oil and gas leasing of a small piece of the Arctic National Wildlife Refuge, Senate Majority Leader Tom Daschle (D-SD) proclaimed, "We are just not going to allow Republicans to destroy the environment." How is a political body supposed to deliberate the complexities of energy when one of its leaders can utter such nonsense and not be laughed into submission?
Environmental deceptions
Destroy the environment? No way. Leasing and drilling can occur on ANWR’s bleak coastal plain without destroying anything except environmentalist prejudice against resource development. Daschle’s hyperbole perpetuates ANWR deceptions that undermine credibility of the environmental agenda and infect debate over leasing elsewhere.
Yet deception prevails. By refusing to approve leasing of coastal-plain acreage, the Senate declares that there can be no ANWR discovery, no development of a promising natural resource, no creation of wealth. There can be no new jobs, incomes, or tax revenues. There can be no ANWR oil production.
Having thus sacrificed national interest to environmentalist exaggeration, Daschle and his Senate allies next squeezed energy policy for farm-state indulgence in the form of a mandate for ethanol in gasoline. It’s not as though ethanol didn’t already find its way into vehicle fuel. Last year, 1.7 billion gal of the heavily subsidized substance entered the market. Senate energy legislation, however, would phase out the favored oxygenate, methyl tertiary butyl ether, and require that the volume of ethanol in gasoline grow in steps to 5 billion gal by 2012.
Ethanol supporters take as much liberty with environmental facts as ANWR leasing opponents do. While one group overstates the environmental threat to ANWR, the other group overstates the environmental benefits of ethanol. In fact, ethanol doesn’t offer any environmental advantages not offset by low energy content and unfavorable evaporative characteristics. Enough refiners use ethanol voluntarily to assure that a market exists as long as the tax credit stays in place. So expanding the market by fiat is just an environmentally unwarranted sop to agricultural interests, especially grain distillers.
It’s also a slap at refiners and their customers. Ethanol is difficult and costly to transport and store. It creates supply bottlenecks. Logically fearing elevated gasoline prices, eastern state senators oppose the measure. Charles E. Schumer (D-NY) told the New York Times an ethanol mandate would "hurt consumers dramatically in my state of New York and throughout the country."
But Daschle wouldn’t hear it. His state grows a lot of grain. So does Illinois, represented by Republican House Speaker J. Dennis Hastert, who will assure passage of the ethanol mandate by the conference committee that reconciles the House and Senate bills.
So in the course of energy policy-making, the Senate forecloses the chance for increased oil production and economic activity in Alaska and raises the costs of gasoline manufacture, which will inevitably lift fuel prices for consumers, for no reason except farm-state politics. The temptation is strong to judge the nation better off without an energy policy so rife with contradiction.
Some advantages
Still, the big controversies over ANWR and ethanol might let advantages to producers in the House bill become law. They include incentives for marginal production and tax changes producers have sought for years. The measures should be enacted. They should have been enacted long ago. They’re good for producers-especially independents-and good for US production, which is good for the country.
They’re small consolation, though. Thanks to the Senate, ANWR probably will remain unleasable. Ethanol interests will get richer at consumers’ expense. And the US will remain smitten with self-destructive misconceptions about resource development. Some energy policy.
