Energy Bill Passes House

Lynne Kiesling

See this Business Week summary of the energy bill version that passed the House yesterday. The Washington Post opined that the bill is “new and unimproved”:

More to the point, it will fail to give this country the truly revolutionary energy policy it desperately needs. Instead of pointing the way toward an eventual transition from fossil fuels to other energy sources — a transition that would have environmental as well as national security benefits — the bill will simply make Americans even more dependent on oil and gas than they are now.

As before, the bill contains sizable subsidies for the oil and gas industries (and all kinds of other groups as well) although Mr. Bush himself has pointed out that in a time of high prices, this is hardly the economic sector that needs the most help.

Indeed. Then there’s the Orwellian protection of MTBE producers from liability for groundwater contamination, a distortion in response to the mandatory, federal oxygenate requirement that was implemented over a decade ago.

Although the Post editorial then goes steeply wrong by advocating more stringent CAFE standards on vehicles. This energy bill proposal is almost unchanged from last year’s, and it has all of last year’s warts. If you support a forward-looking, dynamic, creative, innovative approach to energy, this is not the legislation for you. If you are a fan of corporate subsidies to oil companies, and you are happy with the reality that “what gets subsidized gets done” (that is, increased oil production and consumption), then belly up to the bar.


10 thoughts on “Energy Bill Passes House

  1. The “federal follies” with regard to energy have been neither strategic nor serious. Nuclear is too dangerous, coal is too dirty, oil is dirty too, natural gas is the future of electric generation (until it runs out), forty percent of potential domestic oil and gas resources are off limits to E&P activity, wind turbines are ugly and kill birds, hydro dams are bad for fish, “etcetera, etcetera, etcetera.” The states have hardly distinguished themselves either.

    Against this background, population and energy consumption and demand continue to rise. The rise in energy consumption is largely driven by the population growth, which is largely a function of immigration (legal and illegal) and births to first and second generation immigrants.

    The market might well deal with these issues, were it not a “managed market”. However, the US energy market is managed at both the state and federal levels; and, the “managers” cannot agree among themselves how the market should be managed.

    Government must either lead (which it seems incapable of doing), follow (which is historically unwilling to do), or get the hell out of the way (which borders on the impossible).

    The US typically waits until an issue develops into a crisis (fiasco?) before addressing the issue. So far we have been reasonably successful in doing so. One can only hope we are as successful this time, since “wait for the crisis” appears to be the extent of strategic planning to date. Living in caves would likely be more difficult now than it was for our cave-dwelling ancestors, since open fires emit criteria pollutants and CO2.

  2. Looks like it’s too late to get anything worthwhile into this bill.  Are the House and Senate versions different enough to need a conference?

  3. I don’t see why you call the MTBE libaility exemption “Orwellian” – it’s one of the few good things in the energy bill. The refiners added MTBE under duress – without federal and state rules requiring MTBE, the refiners would not have added it.

    Yes, the rules allowed ethanol instead. Ethanol is significantly more expensive, and takes more energy to produce than it delivers, while MTBE is relatively easy to extract or produce during oil refining. So requiring an oxygenate without subsidising ethanol was essentially requiring MTBE. The feds should shield people from paying the consequences of actions they took only becuase the feds required it.

  4. Anthony:

    MTBE isn’t extracted from crude, or produced along with gasoline – it required entirely new process units. You’re right that MTBE was a better solution than ethanol, both technically and economically. The oxygenate requirement was added to the Clean Air Act Amendments of 1990 by corn-belt politicians, who assumed ethanol would be the oxygenate of choice. Imagine their surprise to discover the gasoline industry choosing a better substitute.

    To the best of my knowledge they aren’t taking the same chances this time around: if this bill is anything like the last one, it contains explicit ethanol use requirements.

    If anybody should be held liable for groundwater contamination, the owners of underground tanks should. They’re the ones directly responsible.

    Furthermore, I always thought to claim damages one had to show that they had been “damaged”, and there is no evidence whatsoever that MTBE in the aquifers ever caused anybody actual harm.

    Anyway, it’s unlikely that this bill get through conference before Congess convenes for this session, so it will die on he table like the last couple of energy bills.

  5. Anthony:

    MTBE isn’t extracted from crude, or produced along with gasoline – it required entirely new process units. You’re right that MTBE was a better solution than ethanol, both technically and economically. The oxygenate requirement was added to the Clean Air Act Amendments of 1990 by corn-belt politicians, who assumed ethanol would be the oxygenate of choice. Imagine their surprise to discover the gasoline industry choosing a better substitute.

    To the best of my knowledge they aren’t taking the same chances this time around: if this bill is anything like the last one, it contains explicit ethanol use requirements.

    If anybody should be held liable for groundwater contamination, the owners of underground tanks should. They’re the ones directly responsible.

    Furthermore, I always thought to claim damages one had to show that they had been “damaged”, and there is no evidence whatsoever that MTBE in the aquifers ever caused anybody actual harm.

    Anyway, it’s unlikely that this bill get through conference before Congess convenes for this session, so it will die on he table like the last couple of energy bills.

  6. Anthony,

    I don’t call the MTBE thing Orwellian in isolation; it’s the federal fuel oxygenate requirement plus the use of MTBE to meet it plus the use of a government subsidy to limit their liability that, in total, I call Orwellian. In the extreme. Sadly, though, it’s not the only example of such layering and heaping of distortion upon distortion, when the first distortion does not produce the intended results.

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