washingtonpost.com
Bush Signs Energy Bill, Cheers Steps Toward Self-Sufficiency
Measure Includes Billions in Tax Breaks for Industry

By Jim VandeHei and Justin Blum
Washington Post Staff Writers
Tuesday, August 9, 2005

ALBUQUERQUE, Aug. 8 -- President Bush signed the first national energy legislation in more than a decade on Monday, hailing the measure as a smart way to make Americans more secure and less dependent on foreign oil.

At a bill-signing ceremony at the Energy Department's Sandia National Laboratories, Bush said the new energy policy will go a long way toward weaning Americans off imported oil by encouraging the domestic production of oil and natural gas and greater use of cleaner-burning, domestic energy sources such as nuclear power, ethanol and liquefied natural gas.

"I'm confident that one day Americans will look back on this bill as a vital step toward a more secure and more prosperous nation that is less dependent on foreign sources of energy," Bush said.

But independent energy analysts cautioned that with crude oil prices hitting new highs, consumers should not expect the new law to push down gas prices or reduce U.S. reliance on Middle East oil soon, if ever. Bush acknowledged that it will "take years of focused effort to alleviate those problems."

The new 1,724-page energy law, four years in the making, will provide $14.5 billion in tax breaks. The recipients will include producers of oil, natural gas, coal and nuclear power, as well as smaller incentives for consumers who use cleaner-burning fuels produced in this country. Analysts say it is unlikely most Americans will see a noticeable improvement in their energy costs in the short term. But supporters said the new law is designed to provide a long-term lift to the fuels of the future, including cleaner-burning coal and a new generation of gasoline-electric hybrid vehicles.

"It's not a bill for today or necessarily tomorrow -- it's for the future," said Senate Energy and Natural Resources Committee Chairman Pete V. Domenici (R-N.M.). He was a chief sponsor of the bill and took part in the signing ceremony.

The price of crude oil hit a new high of more than $63 a barrel Monday. The national average price of a gallon of gas was $2.339 yesterday, according to the AAA auto club. The nation imports a net 58 percent of its oil, some of it from Saudi Arabia and other nations where anti-U.S. sentiments run high. By 2025, the United States will be importing 68 percent of its oil, according to the U.S. Energy Information Administration.

The energy bill provides tax breaks and other incentives to encourage new nuclear plants, cleaner-burning coal facilities, and production of more oil and natural gas. It also offers incentives to produce energy from wind and other renewable sources and to make homes and office buildings more efficient.

"It's Christmas in August for big energy, and consumers get lumps of coal," said Anna Aurilio, legislative director for U.S. PIRG, an advocacy group that works on environmental and consumer issues.

The bill exempts oil and gas industries from some clean-water laws, streamlines permits for oil wells and power lines on public lands, and helps the hydropower industry appeal environmental restrictions. One provision would repeal a Depression-era law that has prevented consolidation of public utilities, potentially transforming the nation's electricity market.

The law also seeks to increase another kind of imported energy: liquefied natural gas. The legislation gives the federal government ultimate authority to approve new liquefied natural gas terminals, which supporters said would lead to more being approved.

The final bill dropped many of the controversial amendments that blocked passage of earlier versions, including authorizing oil drilling in the Arctic National Wildlife Refuge and giving the petroleum industry protection against product-defect lawsuits for the gasoline additive known as MBTE.

The government forecasts that ANWR oil would slightly diminish U.S. dependence on foreign oil by 2025. Separate budget legislation, which is to be considered later this year, would open the refuge to oil and natural gas drilling.

Analysts said the biggest step lawmakers could have taken to reduce foreign oil dependence would have been to increase vehicle mileage standards. But Congress rejected that approach, saying doing so would result in the loss of U.S. auto jobs and the production of vehicles that are unsafe -- arguments disputed by environmentalists and some analysts. Instead, lawmakers focused on fixes backed by powerful lobbies and influential constituencies. Ethanol, for instance, is a big winner under the new law because it is often produced from corn, a popular and plentiful crop in the Midwest, where many states are considered up for grabs in next year's election.

Blum reported from Washington.

© 2005 The Washington Post Company