Business of Politics

Political energy futures

by Jeremy Alford

Any hope for a federal energy bill appears to be a flop for now, but the ongoing campaign for president offers a look into future policy discussions. For all of the pomp and pageantry that went into the debates over drilling and gas prices this year in Congress, lawmakers were still unable to pass anything that remotely resembles an energy bill. That’s the general consensus from both Republicans and Democrats — one as willing as the other to point fingers — as well as special interests and pundits. With the fall election looming ever closer and a lame duck president in the White House, it’s increasingly unlikely that Congress will be able to pass an energy bill before Christmas.

But there was legislative action this year that serves as a precursor to what Congress might be looking to do in 2009. For instance, the House was able to pass an energy bill in September that would have opened up more federal waters to drilling and invested additional dollars in alternative energy sources. It was the kind of mixed approach both sides of the aisle have been calling for, but the Senate has been unable to pass the bill. Republicans complained that the House Democratic leadership authored the legislation with little input, and its drilling component was meager at best.

A bi-partisan group in the Senate that included Sen. Mary Landrieu, a New Orleans Democrat, likewise pursued legislation to open more drilling in the Outer Continental Shelf of the Gulf of Mexico, but Republicans shuddered at the proposition of taxes on oil production. “[That] will only hinder production in an area that not only provides a significant amount of our nation’s energy but could also supply even more if we could only agree on a path toward responsible energy exploration,” says Sen. David Vitter.

Rep. Charlie Melancon of Napoleonville says key players in both parties were unable to give because it’s an election year. But Melancon, a Democrat who represents lower Acadiana, is hopeful the post-election session of Congress will yield some sort of compromise. “We just need more people in the center,” Melancon says. “Some people in the left wing of my party only want to talk about green energy and ethanol, while people on the far right believe the only answer is fossil fuels and won’t even discuss emissions.”

The most noticeable gridlock this year was over drilling, or rather how much. It’s another indication that future federal energy bills could continue to be diverse. Just last year, Congress passed and President Bush signed an energy bill that seeks to combat oil market manipulation, increase vehicle fuel efficiency to 35 miles per gallon by 2020 and promote the use of more affordable American biofuels. Based on the ongoing races for president and Congress, it’s likely the trend could continue. Republican presidential nominee John McCain has been pushing for new nuclear plants in his campaign speeches, and Democratic nominee Barack Obama has focused his policy pitches on additional wind and solar power.

Still, environmental groups contend oil companies are getting off too easy under all of the proposals floating around. In particular, Frances Beinecke, president of the Natural Resources Defense Council, says oil companies have been able to use the pinch at the pump to their advantage, threatening lawmakers with increased prices should anything negative make its way into an energy bill. “‘Big Oil’ is playing off the fears Americans faced with rising gas prices and is distorting the facts,” Beinecke says. “Unfortunately, the politics of ‘Big Oil’ and its allies have resulted in bad policies that will not provide real solutions.”

To the contrary, Barry Russell, president of the Independent Petroleum Association of America, says this year’s efforts, like the House energy bill, didn’t go far enough and some of the provisions would “hamper” the domestic supply of resources. But on the upside, nearly every proposal had some component to increase production, Russell adds, which was a welcome sign to energy-producing states like Louisiana — it’s just going to take another year before the proverbial rubber to hit the road. “For far too long, America’s offshore development has been unnecessarily prohibited,” Russell says. “Finally, Congress appears to be ready to address this key issue.”

Tale of the Tape

Both John McCain and Barack Obama are touting plans to increase the nation’s supply of alternative energies, but they continue to bump heads over how much of the U.S. should be open for drilling. It’s only a snapshot of the two competing energy proposals in the race for president, but it reveals how the plans can be both agreeable and contradictory. When each candidate’s views are explored, however, it becomes more of the latter.

McCain, the Republican nominee, would suspend the federal gas tax and mandate reductions in greenhouse gasses. As for conservation, his plan largely relies on the free market to make its own decisions. Obama, the Democratic nominee, would tax oil companies to help fund his other policies. Like McCain, Obama wants to restrict greenhouse gasses, but he also wants government to encourage conservation and proposes fining companies that step out of line.

Here’s a quick look at how the presidential contenders breakdown the other issues:

Drilling. McCain would keep Alaska’s Arctic National Wildlife Refuge closed off to drilling but is very receptive to opening up coastal areas, like in Louisiana. He’s also in favor of lifting drilling restrictions and certain tax burdens so companies can drill more cost-effectively. Obama is opposed to a general expansion of domestic drilling. He believes government should play a heavy hand in when and where companies drill for oil and gas.

Taxes. McCain is opposed to any kind of windfall profits tax on oil companies. He also wants to suspend the 18.4 percent federal gas tax from Memorial Day through Labor Day. Obama heavily favors a windfall profits tax on oil companies and would further charge them a fee for every acre they currently lease but don’t drill on. He is opposed to suspending the federal gas tax.

Tapping Reserves. McCain wants to tap the Strategic Petroleum Reserves. Obama does not want to tap the Strategic Petroleum Reserves.

Clean Energy. McCain is pushing for new nuclear plants. Obama is focused more on additional wind and solar power, although he also supports nuclear options.

Renewable Energy Technology. McCain would offer up a $300 million prize for battery technology development. Obama promises to invest $2 billion into clean coal and $15 billion into plug-in hybrids and other renewables.

Fuel-Efficient Cars. McCain wants to create a $5,000 tax credit for people who buy a zero-carbon emission car. Obama wants to create a $7,000 tax credit for people who buy any kind of advanced-technology vehicle.

Alternative Fuel Subsidies. McCain opposes subsidies for corn-based ethanol. Obama supports subsidies for corn-based ethanol.