Bill Wouldn't Wean U.S. Off Oil Imports, Analysts Say

By Justin Blum
Washington Post Staff Writer
Tuesday, July 26, 2005

Despite repeated calls by President Bush and members of Congress to decrease U.S. dependence on oil imports, a major energy bill that appears headed for passage this week would not significantly reduce the country's need for foreign oil, according to analysts and interest groups.

The United States imports 58 percent of the oil it consumes. Federal officials project that by 2025, the country will have to import 68 percent of its oil to meet demand. At best, analysts say, the energy legislation would slightly slow that rate of growth of dependence.

"We'll be dependent on the global market for more than half our oil for as long as we're using oil, and the energy bill isn't going to change that," said Ben Lieberman, who follows energy issues for the conservative Heritage Foundation in Washington. "There's a few measures to increase domestic production . . . and that would not do much."

Negotiators worked last night and into this morning to iron out differences between the House- and Senate-passed versions of an energy bill that has been high on the president's agenda since shortly after he took office in 2001 and created an energy task force headed by Vice President Cheney. The legislation would create billions of dollars' worth of tax breaks and other federal subsidies to encourage oil and gas production, to reduce pollution at coal-burning power plants, and to encourage energy conservation. The bill also would require the use of billions of gallons of ethanol and other fuels derived from agricultural products.

Lawmakers resolved one of the most contentious issues in the legislation by agreeing not to protect manufacturers of the gasoline additive methyl tertiary-butyl ether (MTBE) from defective product lawsuits. The Senate blocked final passage of an energy bill in 2003 after such legal protections were added.

But the emerging package does not do what some analysts said would have the greatest impact on reducing U.S. oil demand and cutting imports: a requirement to increase fuel-efficiency standards for trucks and cars. Under strong pressure from the automobile industry, the House and Senate rejected higher efficiency standards. Lawmakers argued that doing so would require redesigns that would make vehicles unsafe and result in a loss of manufacturing jobs -- arguments sharply disputed by advocates of fuel efficiency.

"The single biggest step that Congress could take to reduce our oil dependency is to significantly increase the fuel economy standards of the cars and trucks that Americans buy and drive," said Kevin Knobloch, president of the Union of Concerned Scientists, which works on environmental issues.

As oil prices soared during the past year, and remained above $50 a barrel for weeks, lawmakers have raised increasing concerns about being reliant on foreign oil, particularly from the Middle East. High oil prices have pushed the price of gasoline to well over $2 a gallon.

From the start, Bush and GOP lawmakers have sold their energy policies as a means of reducing U.S. dependence on foreign oil. "Our dependence on foreign oil is like a foreign tax on the American dream, and that tax is growing every year," Bush said in May. During the Senate debate on the energy bill last month, Majority Leader Bill Frist (R-Tenn.) said: "We must take steps to reduce our dependence on foreign countries and thereby enhance our energy security at home. When we rely on other nations for more than half our oil supply, we simply put our security at risk."

Some lawmakers say there will be plenty in the legislation to address the problem of dependence on foreign oil. The White House has not analyzed how the legislation would affect reliance on imports, spokeswoman Dana M. Perino said.

"Both bills will improve the nation's energy security by expanding the use of new technologies, increasing the diversity of renewable energy sources and reducing energy consumption through greater conservation and energy efficiency," she said.

The United States consumes more than 20 million barrels of oil a day, an amount forecast to grow steadily. The House-Senate conference committee rejected a measure calling on the president to reduce oil consumption by 1 million barrels a day by 2015. The Bush administration opposed the provision, saying it would require increasing fuel-efficiency standards beyond what technology would allow at an affordable price.

The provision that would have the biggest impact, analysts agreed, is a requirement for the United States to increase the amount of ethanol and other agriculture-derived fuels. That would offset some gasoline use, they said.

The Senate version, which requires more ethanol or agriculture-derived fuels than the House bill, would cut oil imports by 80,000 barrels a day by 2012, according to government estimates. That would mean oil imports would be about 0.8 percent less than they otherwise would have been in 2012.

The energy legislation would provide tax breaks and other subsidies that supporters say would encourage increased domestic oil production to further reduce reliance on foreign oil. Domestic production has been declining for years.

Bush has pushed to open Alaska's Arctic National Wildlife Refuge to oil drilling, to tap what geologists say is one of the few remaining areas of the country that hold promise for major new production. Without that new drilling, net oil imports would be 68 percent in 2025, according to the Energy Department's Energy Information Administration. With drilling in the refuge, net oil imports would account for 64 percent of consumption in 2025, according to the EIA.

A provision to open the refuge -- a highly contentious issue because of the strong opposition from environmentalists and many Democrats -- is unlikely to be included in the final version of the energy bill. But such a measure has been included in budget language, and final votes are expected in Congress in September.

The energy legislation also calls for money to be spent on research into hydrogen, alternative fuels, efficiency and technology, which supporters said could ultimately help reduce oil consumption. The Senate version of the legislation calls for tax breaks for hybrid vehicles, which supporters said would help reduce oil demand.

Environmentalists cited a provision included in the legislation that they said would result in more oil consumption and greater imports: extension of a provision designed to encourage auto manufacturers to produce vehicles that can run on either gasoline or a fuel blend of 85 percent ethanol.

The provision allows automakers to receive fuel economy credit -- and increase production of less-fuel-efficient vehicles -- even if owners use only gasoline, environmentalists said. Few gas stations sell the ethanol blend, and many of the cars end up being fueled by gasoline, they said.

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