Energy Booster
Consumers, Republicans and the Environment Will See Little Benefit From the Energy Bill in the Short Term

By Terry M. Neal
washingtonpost.com Staff Writer
Tuesday, August 16, 2005 12:01 AM

As was the case with the Bush administration's passage of the sweeping overhaul of bankruptcy laws a few months ago, the newly signed energy bill will serve as a multibillion-dollar boon to some of the GOP's staunchest corporate contributors.

That doesn't mean it won't eventually end up helping consumers. It may or may not encourage domestic oil exploration and promote alternative energy sources as it's intended to do.

But the bill will do little to ameliorate the pain Americans are feeling at the pump. In signing the measure, Bush acknowledged as much. "This bill is not going to solve our energy challenges overnight," Bush said. "It's going to take years of focused efforts to alleviate those problems."

White House spokesman Scott McClellan expanded on that sentiment in an interview on Wednesday, portraying the bill as a bold step toward a comprehensive energy strategy that will reduce America's dependence on foreign sources of energy.

"The credits for oil and gas exploration came in at around $1.1 billion," he said. "The tax credits for conservation and renewables and energy efficiency came in at over $4 billion. So more than four times are going to renewables and energy efficiency. And in addition there are tax credits for hybrid fuel cars that the president has touted, there's tax credits for clean coal technology."

You'd almost think Bush's next campaign was going to be for the presidency of the Sierra Club.

White House Accounting Incomplete

At a time when oil industry revenues are soaring, and oil is topping out above $65 a barrel, some are wondering why the industry needs so much government largess.

"The newest numbers from the second quarter of this year show Exxon Mobil with a 32 percent increase in earnings over this time last year -- that's more than $7.6 billion," ABCNews.com reported on Thursday. "BP saw a profit increase of 38 percent, totaling $6.7 billion, while Conoco Phillips -- the third largest oil company in the country -- recorded a 56 percent increase in profit, more than $3 billion."

Even Bush originally preferred an energy bill with a far larger percentage of money going to renewables and energy efficiency. "I will tell you with $55 oil we don't need incentives to oil and gas companies to explore," Bush said in a speech to newspaper editors in Washington in April. "There are plenty of incentives. What we need is to put a strategy in place that will help this country over time become less dependent." Yet Bush signed the legislation and hailed it as a victory.

"I think there's no doubt that this bill reflects the worst of Washington politics," said Anna Aurilio, legislative director for the nonpartisan, left-leaning U.S. Public Interest Research Group. "It's Christmas in August for the big energy companies, and the consumers get lumps of coal. There's really nothing to cheer about by anyone who gets a utility bill or has to fill up a gas tank. The energy lobbyists are the big winners, and the rest of us are left in the dust choking."

Aurilio, who sat through the House and Senate committees' markups on the bill, says McClellan is playing funny with the numbers. According to PIRG's reading of information provided by the Joint Committee on Taxation, the tax break for the oil and gas industry comes out closer to $1.7 billion, but even that only hints at the total value of savings to that sector. If you include all of the subsidies and incentives such as the waiving of royalty payments for drilling in the Gulf of Mexico, the total figure is close to $4 billion.

Nor did McClellan mention the more than $10 billion in credits and breaks to the coal, nuclear and utility industries.

"If you look at the whole package," Aurilio said, the subsidies are "2-1, dirty to clean [energy sources]."

Read here for PIRG's full report on the energy bill subsidies.

Energy Contributes Big to Republicans

The energy sector is one of the most powerful in Washington. It has contributed about $183 million to presidential and congressional campaigns since 1990, with three-quarters of those dollars going to Republicans, according to the Center for Responsive Politics.

The top 10 contributors among energy companies -- a list that includes Exxon Mobil, Marathon Oil and the American Gas Association -- contributed an average of 83 percent of their dollars to Republicans.

And Bush received $2.6 million from the industry in the 2004 election cycle compared to John Kerry, who received $300,000.

In the Senate, 25 Democrats joined 49 Republicans in supporting the new energy bill. And in the House, 75 Democrats joined 200 Republicans.

Aurilio said some members of both parties demanded what amounted essentially to pork as a condition for supporting the legislation, and the net result was much like the highway bill that passed this week, a piece loaded down with swine.

Steven Weiss, a spokesman for the Center for Responsive Politics, said it's difficult to make a direct correlation between money and votes. And no politician would ever acknowledge that campaign money affects his or her vote.

"Energy companies have a history of long-standing influence in Washington. Just as with any influential industry or group, the public ought to keep careful watch on legislation that the group cares a lot about. The public ought to decide for itself whether this is a bill that will serve America's long-term energy needs and to what extent it gives beneficial treatment to big campaign donors."

The Pocketbook Effect

The GOP has been able to accomplish some of its top economic priorities this year, passing new laws overhauling bankruptcy laws and promoting domestic energy exploration and conservation.

But none of its measures seem to be resonating with the public. The president's overall approval rating remains low, and Congress's rating is the lowest since 1994 when Democrats last controlled both chambers.

New polls out this week suggest majorities of the public continue to disapprove of the president's handling of the economy. Some Republicans are complaining that the media is not reporting the good news of economic expansion and job creation.

But Frank Newport, editor in chief of the Gallup Poll, says there is an explanation for this phenomenon.

"The question is, why do we still have a majority of Americans who say the economy is getting worse, not better when we're getting better official news from the economy and stock market," Newport said. "The answer is that the official statistics focus on job creation and the stock market, and they don't necessarily reflect what's important to Americans."

In a poll taken from July 25-28, Gallup asked, in an open-ended question, what people believed to be the biggest challenge facing their families.

"Health care cost ranked first followed by energy costs," Newport said. "That was followed by 'not enough money to pay debts' and then unemployment was fourth. Then retirement savings and lack of money and college expenses."

In other words, most Americans -- the majority of whom are working -- are not as concerned about job creation as they are about where and how far their money is going. People have jobs, but their salaries aren't going as far, especially when they're paying nearly $3 a gallon for gas or have medication co-payments that have jumped from $10 to $40 in recent years, as some do.

As far as energy costs are concerned, McClellan suggests help is on the way -- albeit no time soon.

"This is a comprehensive energy strategy, something that the president had advocated from the very beginning when he came into office, and it was four years in coming but we finally got it done," McClellan said. "It's been over a decade since we've actually had a comprehensive national energy strategy. What this would do is put us on a path to reducing our dependence on foreign sources of energy. We didn't get into this overnight, we're not going to get out of this overnight."

Staff writer Mary Specht contributed to this article.

Comments can be sent to Terry Neal at commentsforneal@washingtonpost.com.