Energy Bill Lowlights

Today the US House of Representatives passed a comprehensive energy bill.
I would like to report the highlights but there weren't any.
Following are the lowlights:

1) The bill will allow drilling in Alaska's Arctic National Wildlife Refuge (ANWR). Oil-extraction activities will disturb the refuge's most critical and sensitive areas, including calving grounds for the Porcupine caribou herd and denning areas for one of the United States' two polar bear populations. If oil development is allowed, it will most likely displace the caribou cows from the calving area, said Tara Wertz, a biologist who specializes in caribou for the Artic National Wildlife Refuge.

2) The legislation contains roughly $8.1 billion in tax incentives for industry, $1.3 billion more than the White House has budgeted for the bill. House Minority Leader Nancy Pelosi, D-Calif., said $7.5 billion, or 93%, of the incentives in the bill would go to traditional energy sources. If there ever was an industry that did not need handouts it is the traditional oil companies. This Congress continues its pattern of reckless spending by approving even more graft and in more inappropriate places than the President asked for.

3) The bill shields manufacturers of the fuel additive methyl tertiary butyl ether, MTBE, from products effects and groundwater contamination. Companies are free to pollute the environment and US taxpayers will pick up the tab.

4) The bill mandates the production of 5 billion gallons of ethanol by 2010. It does not matter if ethanol is cost effective or not, the bill simply mandates its use. No doubt corn and sugar beet growers are pleased with this provision.

5) An amendment that would have required the administration to reduce oil demand in the U.S. by 1 million barrels a day was defeated on a vote of 166-262.

6) The House rejected an amendment that would have raised fuel economy standards from today's average of 25 miles per gallon to 33 miles per gallon by 2015 on a vote of 177-254. 2015! This administration is worried about social security 50 years down the road but is staring at an energy cricis right here and now and refuses to address it. The apparent solution is to deplete all of our reserves first and worry about it later.

7) An amendment that would have raised fines for companies found to have manipulated electricity and natural gas markets to between $1 million and $5 million from $5,000 was defeated on a vote of 188-243. Enron was guilty of manipulation energy prices in California and that cost the state billions of dollars. This Congress could not even see fit to raise fines to a paltry $1 million but could pass out $7.5 billion in handouts to companies that do not need any handouts at all.

8) The bill does nothing to improve the fuel economy of automobiles, which use 70 percent of the country's oil.

House Democratic leader Nancy Pelosi of California accused Bush of trying to exploit people's anxiety over high gas prices to gain support for a bill that she said "was written by energy lobbyists for the benefit of the energy industry."

According to the US Government Department of Energy US petroleum demand is projected to average 20.9 million barrels per day in 2005, up 1.7 percent from 2004. Jet fuel demand is up by 4.5 percent from 2004; motor gasoline use, accounting for almost half of total petroleum demand, is expected to increase by 1.6 percent this year. In 2006, U.S. petroleum demand is projected to increase by an additional 1.5 percent, as use of motor gasoline and other transportation fuels continues to increase.

Here is the bottom line: This bill does nothing to reduce demand, nothing to encourage conservation, gives handouts where they are not needed, is an affront to environmental common sense, and is totally a disgusting non-energy policy.

Let's compare China's energy policy with ours. China is forging ties with Russia, South America, Iran, Nigeria, Sudan, Australia, and Canada. China is attempting to negotiate pipeline building with multiple countries, mandating higher gasoline mileages on cars, investing heavily in coal gasification, building liquid natural gas terminals, and attempting to secure supplies from oil tar sands in Alberta Canada.

Meanwhile this administration is waging war in Iraq, threatening Iran, threatening Venezuela, doing nothing to encourage conservation, doing next to nothing to encourage development of our oil shale deposits, doing next to nothing about building liquid natural gas terminals, relaxing environmental standards, and giving the biggest handouts to the least deserving companies. What a disaster.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/