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Senate GOP unveils supply-side solutions for soaring gas prices

Friday, May 2, 2008

(E&E Daily)

Josh Voorhees and Alex Kaplun, E&E Daily reporters

This story appeared in yesterday's E&ENews PM.

Republican Senate leaders yesterday floated a supply-heavy energy bill aimed at curbing soaring gas prices by increasing domestic production.

The bill from Energy and Natural Resources Committee ranking member Pete Domenici (R-N.M.) and other top Republicans combines a number of past GOP energy solutions -- such as drilling for oil in the Arctic National Wildlife Refuge and developing oil shale in the Rockies -- but also represents a break with the White House over the nation's Strategic Petroleum Reserve (SPR).

The proposal includes a 180-day suspension of filling the SPR, a move that will likely set up a showdown with the Bush administration. Earlier this week, President Bush indicated that he has no intention of backing away from his opposition to such a suspension, arguing that a halt to shipments would do little to bring down the prices at the pump.

"If I thought it would affect the price of oil positively, I'd seriously consider it," Bush said Tuesday at his Rose Garden press conference. "But when you're talking about one-tenth of 1 percent of global demand ... I don't think you get any benefits from making the decision. I do think it costs you oil in the case of a national security risk" (Greenwire, April 29).

All 51 members of the Senate Democratic Caucus have endorsed suspending SPR purchases, and Sen. Byron Dorgan (D-N.D.) has said he would consider adding SPR language to the FAA reauthorization bill currently on the Senate floor.

"It is a healthy reserve, now is the time to acknowledge that we have a problem in this country, people are paying too much at the pump, and Congress is going to do something about it," said Sen. Kay Bailey Hutchison (R-Texas).

Paul Bledsoe, communications and strategy director at the National Commission on Energy Policy, said that the consensus might not force Bush to change his stance, "but clearly momentum is building behind the suspension of oil acquisition for the SPR."

Despite apparent bipartisan support on SPR, the Republicans' other energy provisions are likely to draw strong opposition from Democrats.

Most notably, the Republicans call for oil drilling in ANWR and the outer continental shelf, something Democrats and environmentalists have long opposed. Republicans argue that those two areas have a combined 24 billion barrels of untapped oil.

Senate Majority Leader Harry Reid (D-Nev.) told reporters that Democrats are open to ideas to increase domestic production of fossil fuels, but he remained steadfast that he would not support drilling in ANWR or in other environmentally sensitive areas. "I don't think that we have to make a decision on drilling in currently closed areas," Reid said.

Republican leaders suggested that their ideas -- many of which have failed to make it through the Senate before -- would have new life simply because of the record-high prices of oil. "None of those failed when oil was $112 or $115," Domenici told reporters. "Some of these issues have to be voted on again while the people are looking in on us."

Virtually all of the proposals would deal only with long-term solutions and would do little to bring down prices at the pump short-term, though Republicans argued that taking such action would send a strong signal to the markets and foreign governments and spur a reduction in the price.

"This would show a tremendous change in the willingness of ... American leadership to do something for themselves with American oil," Domenici said. "It would send a shockwave to those that send us so much oil."

GOP leaders said they designed their legislation to focus specifically on production and the Senate should look at several other energy items over the next few weeks, including market speculation and the impact of the increased ethanol mandate.

Bledsoe, who had not seen the details of the legislation but was familiar with the overall effort, said the Republican focus on increasing domestic supply would not have a large effect on the overall global oil supply. "If you are concerned about oil prices, what matters is the global supply because prices are set on the global market," he said. "So increasing domestic supply could affect the global supply, but [the majority of] the spare capacity in global production lies outside of the U.S."

Coal-to-liquid fuels

The Republican legislation also would clear the way for federal agencies to purchase coal-to-liquid fuels by repealing a measure in last year's energy law.

At issue is Section 526 of last year's energy bill, which says federal agencies cannot buy alternative fuels if they have higher greenhouse gas emissions than conventional petroleum fuels. Some analysts have said that coal-to-liquid fuels are estimated to produce almost double the greenhouse gas emissions of the comparable conventional fuel.

The provision did not attract attention when the House debated broad energy legislation in August, or in December, when a House-Senate deal was struck that President Bush signed. But in recent weeks, GOP lawmakers have taken aim at the section (E&E Daily, April 16).

Senate Dems set to release gas price plans

Senate Democratic leaders plan to unveil their own energy package in the near future. Reid hinted that the legislation will probably include a combination of items that have failed to make it through Congress in the past as well as some new ideas.

Reid said he has been meeting with lawmakers to hash out plans for the package, though he refused to disclose the details of the legislation. "I think you'll see some new stuff," Reid said.

One of the ideas that Senate lawmakers have discussed is a temporary suspension of the 18.4-cents-per-gallon federal gasoline tax -- which has been called for by both Sens. John McCain (R-Ariz.) and Hillary Rodham Clinton (D-N.Y.) -- but Democratic leaders said there is not yet any agreement on the issue. "That's something we're discussing in our caucus ,and there's no agreement at this time," said Sen. Chuck Schumer (D-N.Y.).

Meanwhile, House Speaker Nancy Pelosi (D-Calif.) said she would not support any effort to repeal the gas tax, arguing that it would do little to bring down prices. "There's no reason to believe that any moratorium on the gas tax would be passed on to consumers," Pelosi said.

Reid said no decision has been made on when he will bring the energy package to the floor, though Democratic leaders promised a vigorous debate on energy issues over the next couple weeks. "We have a sane, balanced policy aimed at consumers, they have a one-sided policy aimed at the oil companies, and the differences are really going to start showing themselves in the next few weeks," Schumer said.

Additionally, Democrats said it is possible that energy items could be added to the supplemental spending bill that Congress is currently working on, though those items would be separate from the gas price legislation that the party will try to move over the next few weeks.

Senior reporter Ben Geman contributed to this story.