Minor tweaks won’t fix the Energy Policy Act of 2005 (EPACT). But no one believes HR 2337 is really about fixing flawed energy law.
The bill, approved last week by the House Natural Resources Committee, would repeal a few of EPACT’s minor triumphs. The oil and gas measures deal with processing fees for drilling permits, categorical exclusions from environmental statutes, royalty-in-kind payments to the federal government, federal offshore audits, split-estate issues on federal leases, various fees, regulation of produced water, and leasing of oil shale and tar sands acreage. They all would bruise oil and gas companies.
That the law would contradict US interests in the development of domestic energy supply is inexcusable. Worse, HR 2337 and the politics behind it perpetuate a baffling American refusal to face facts on energy. But the big battles over the biggest US energy issues already were lost.
Chipping away
The US had energy problems even before Congress lurched into action on the subject. The country leads the world in consumption, which grows steadily. It imports oil and gas at increasing rates while refusing to allow exploration of promising federal acreage. Its refining capacity doesn’t expand in step with oil demand, operates at stressful rates, and grapples with increasingly complex product specifications. And while air quality has improved greatly, public concern about greenhouse gases is intense.
EPACT, developed as “comprehensive energy legislation,” at best chipped away at those problems. It mostly doled out favors to producers of a variety of energy forms, most of them uneconomic without subsidies and unlikely ever to add greatly to supply. Overall, it reinstituted fuel choice by the state and shoved agriculture to the center of energy policy. It took no major step toward expanding oil and gas leasing of federal land, choosing only the half-step of opening a small part of the Eastern Gulf of Mexico. And it undermined its own efforts to encourage refinery construction by injecting, with its enthusiasm for ethanol and other such folly, deadly new uncertainty into decisions about refining investments.
The best and wholly improbable fix for EPACT is repeal. Sure, that would overturn minor gains the oil and gas scored in the monstrous bill. But those advances are in jeopardy in a hostile Congress. Against real US energy needs, a bill that mandates ethanol in gasoline and doesn’t meaningfully broaden oil and gas leasing of federal land cannot be called comprehensive or constructive.
EPACT repeal won’t happen, of course. Congress would never confess to a mistake so colossal. With HR 2337, the House has simply set about to fix what Democrats newly in control depict as the EPACT mistakes of their Republican predecessors, meaning measures that in any way benefit oil and gas companies.
Energy politics in the US has degenerated into this kind of mindless grope for revenge against popular demons: oil companies and the Organization of Petroleum Exporting Countries. So fixing EPACT comes to mean not rationalizing the venal ethanol mandate or expanding oil and gas leasing but punishing the oil industry. Such demagoguery plays well to the angry and unthinking crowd. But it limits oil and gas supply and in other ways costs people money.
Uninformed spite
The Senate seems determined to make comparable mistakes for like reasons. It began discussion last week of a legislative package unveiled in May that would, among other things, make “price-gouging” a crime. The debate included a glittering illustration of the uninformed spite propelling these bills. A proposal to encourage refinery construction, said Sen. Barbara Boxer (D-Calif.), would be “a total taxpayer give-away to the oil industry.” She then complained that, in the less than 2 years since EPACT accelerated capital recovery for projects that add refining capacity, no new refinery has opened in the US.
Americans need a large supply of cheap energy. They won’t get that from the biofuels, wind, or solar industries. They won’t get it from an oil and gas industry hamstrung by vindictive policy. And they won’t get it from politicians who exploit popular misunderstanding to the detriment of national interests.
