Energy games

Many times-in fact, most times-that legislation is introduced in the US Congress, it's not with the expectation that the bill could pass.

Many times-in fact, most times-that legislation is introduced in the US Congress, it's not with the expectation that the bill could pass. But there are ways you can tell when a bill was dropped in the hopper just to make a political point.

The omnibus energy bill that Senate Republicans filed last week is a good example.

After gasoline prices shot up this spring, Sen. Majority Leader Trent Lott (R-Miss.) named a task force to draft an omnibus energy bill that would decrease US dependence on oil imports from 56% now to 50% by 2010. Lott explained, "The Congress should stop waiting on the administration to do something, to do anything, about our dependence on foreign oil."

Lott surely knows, but didn't say, that Congress isn't going to do anything with his legislation, either.

Giveaways

The Republican bill fails all but one test of realistic legislation.

First of all, it's a Republican bill. No oil-state Democrats are on board. That's because they recognized the bill was election-year posturing.

Second, the legislation is being filed very late in the session. There's barely enough time for the usual Senate committee and floor action. At this point in the legislative calendar, a single senator could kill the bill with the mere threat of a filibuster. There's no time for the House of Representatives to pass a bill and a conference committee to merge the two versions.

Third, the legislation is weighted with items guaranteed to sink it like a rock. It would allow leasing on the Arctic National Wildlife Refuge Coastal Plain in northeastern Alaska. That's unacceptable to the House and veto-bait, as well.

The bill would allow states to assume the regulation of oil and gas leases on federal lands, a nonstarter in previous congresses. And the bill is an unrealistically broad grab-bag of 23 provisions with an equally unrealistic goal of reducing oil imports.

All the legislation has going for it is the support of a couple of key legislators, Lott and Frank Murkowski (R-Alas.), the energy committee chairman. But parts of the bill also would go to the finance and environment committees, which will be unenthusiastic.

Elements

Still, the bill has some worthy provisions. In addition to creating a home heating oil reserve in the northeastern US, the bill would create a state-led program to encourage consumers to stockpile heating oil in the summer. It would allow distributors to expense the costs of building additional storage.

The bill permits a tax credit of up to $3/bbl and 50¢/Mcf for marginal production when prices dip to levels that might cause wells to be shut in. Producers could expense their geological and geophysical costs for wells and expense delay rental payments when they defer drilling. Independents could qualify for a 5-year net operating loss carry-back and a temporary suspension of the percentage depletion limitation. And the legislation would provide royalty relief for exploratory wells in remote Outer Continental Shelf areas.

To the US oil industry, this bill may sound too good to be true. Unfortunately, it is.

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