Sunday, November 19, 2006

After six years of the Bush administration pushing for more oil production and new nuclear power, Democrats want to provide new incentives for energy efficiency and renewable energy while limiting those for nuclear power.

Congress could raise gas-mileage standards and add incentives for ethanol producers.

Democrats also may take aim at reducing or eliminating tax incentives for oil-drilling and refinery investments. Likely targets include two items from the Energy Policy Act of 2005: a tax incentive for capital expenditures at refineries, designed to encourage expansion of capacity, and permission for oil and gas producers to deduct expenses for geological surveys. Democrats might also try to extract more royalties from drilling on federal leases in the Gulf of Mexico.

The American Petroleum Institute, whose members include most of the nation's biggest oil and gas companies, worries that Congress might try to force gasoline retailers to offer E85 gasoline, fuel that is 85 percent ethanol. That would require major expenditures, and the oil industry argues that E85 could damage cars on the road, only 3 million or so of which have engines designed to handle such fuel.

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