Having tried and failed to overhaul the nation’s immigration laws last week, Congress begins what some say is an even more divisive project this week: taming America’s thirst for oil.
With gasoline prices hovering near all-time highs, the Senate on Monday began debating a sprawling energy bill that has already kicked off an epic lobbying war by huge industries, some of them in conflict with one another: car companies, oil companies, electric utilities, coal producers and corn farmers, to name a few.
Industry groups have raced to sign up influential lawmakers and are nervously calculating how much regulation they might have to accept from the Democratic majority in Congress.
“This is going to be harder than immigration,” said John B. Breaux, a former Democratic senator from Louisiana who is representing Cerberus Capital Management, the private equity firm that recently took control of the Chrysler Corporation. “This is going to be the mother of all bills. By that I mean, any one portion of it is important enough to affect completion of the whole bill.”
Detroit’s automakers are lobbying hard against tough fuel economy standards, but they support increased production of ethanol and other alternative fuels.
But Charles W. Stenholm, a former Democratic representative from Texas, is lobbying on behalf of oil producers and cattle farmers against big subsidies for corn-based ethanol.
The Senate bill, as well as a similar measure in the House, would force automakers to increase the fuel economy of their cars and light trucks. It would require a huge expansion of alternative fuels for cars and trucks as well as electric power plants. And it is expected to offer as much as $25 billion in tax breaks over 10 years to promote those fuels.
“Bold steps and big ideas,” Senator Harry Reid of Nevada, the majority leader, said in a speech on Monday. “The Democratic plan is all about harnessing power: the clear, renewable power that exists literally all around us.”
Senate leaders have allotted up to two weeks for debate, but that may not be enough. It took the Republican-controlled Congress four years to pass the last major energy bill, in 2005, and even that measure almost died because of fights over a peripheral issue involving a fuel additive.
This time, Democrats are emphasizing renewable fuels, as opposed to the Republican focus on increased oil production.
But lawmakers from both parties are drafting scores of proposed amendments, many of which would tilt the competitive advantage of one industry over another, and some would cost taxpayers billions of dollars.
Some debates are over basic questions that seem obvious but are not. Does “clean” and “renewable” energy include nuclear power? Should the government subsidize only “renewable” fuels, like wind or ethanol, or should it subsidize “alternative” fuels, including coal-based liquids, that might substitute for oil and reduce dependence on foreign oil?
The clash between rival industry agendas was apparent on Monday. Fifteen trade associations and companies from the food industry warned senators in a letter that heavy government subsidies for ethanol would push up prices for corn and other feed, and thus the cost of food.
“It is essential to carefully weigh the impacts of these policy actions,” warned the group, which includes trade associations for beef, pork, turkey and chicken producers as well as big food companies like the H. J. Heinz Company, the Kellogg Company and NestlÃ©.
Food producers use corn as a feedstock for cattle and poultry as well as an ingredient in things like baked goods and soft drinks. “We are in favor of developing all the alternative energy that we can, but we need to be as market-oriented as possible,” said Mr. Stenholm, the former member of Congress from Texas who now lobbies for oil and farming industries. “You can’t produce food and feed without oil and gas, and you can’t produce oil and gas without food and feed and fiber.”
As groups jockey for position, the underlying agendas are often less than obvious.
The Energy Security Leadership Council, which includes the chief executives of big energy-consuming companies like FedEx and Southwest Airlines, began broadcasting television advertisements Monday night on CNN, Fox and other cable news outlets.
The advertisements warn that “America’s enemies understand that oil is the lifeblood of our economy,” and strongly support higher fuel-economy standards for cars and an expansion of “alternative fuels.”
But the group also supports nuclear fuel as an alternative to coal. Coincidentally or not, a co-founder of the group is John Rowe, chief executive of the Exelon Corporation, an electric utility company that is also the nation’s biggest operator of nuclear power plants.
Amid all the complexity of the energy bills, the biggest fights are likely to center on a handful of issues.
One fight will be over whether to increase the government’s mandate for production of renewable fuels for cars and trucks to 36 billion gallons a year in 2022 from about 8.6 billion gallons a year in 2008.
President Bush proposed a similar goal in January, but Mr. Bush’s mandate could be satisfied in part with coal-based liquid fuels. The coal industry, which has political support in both parties, is pushing for the government to guarantee billions of dollars in loans for coal-to-liquid plants as well as price subsidies and long-term government purchases.
Senator Jeff Bingaman, Democrat of New Mexico, the chairman of the Energy Committee and the Senate bill’s main author, has opposed big government support for coal-to-liquid fuels. But House Democrats have already included coal measures in early drafts of their energy bill.
A second fight will be over increased fuel-economy requirements for cars and light trucks. The Senate bill would require that cars, pickup trucks and sport utility vehicles have a combined average mileage of 35 miles per gallon by 2020. The current requirement is 27.5 miles per gallon for cars and 24 miles per gallon for light trucks.
Car manufacturers are fiercely fighting the measure, though they have agreed to the general call for higher fuel-economy requirements. The manufacturers are insisting that light trucks and sport utility vehicles be allowed to meet a lower mileage standard.
House Democrats are bogged down in a major intraparty battle over a related issue. A bill drafted by two Democrats, Representative Rick Boucher of Virginia and Representative John D. Dingell of Michigan, the chairman of the Energy and Commerce Committee, would reverse a Supreme Court ruling that directed the Environmental Protection Agency to regulate carbon dioxide as a pollutant.
The draft bill has set off a furor among lawmakers, governors and attorneys general from California and 11 other states that want to impose tough new restrictions on emissions of carbon dioxide.
A third big fight is likely over a section in Mr. Bingaman’s bill that would create a “renewable energy standard” for electric utilities by requiring them to produce 15 percent of their power from renewable sources of energy by 2020.
Electric utilities and coal producers are opposed. Senator Pete V. Domenici of New Mexico, the ranking Republican on the Energy Committee, is expected to offer a substitute “clean energy” standard that would allow utilities to use nuclear and “clean coal” technologies to meet their requirements.
By Edmund L. Andrews
12 June 2007
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