House to Vote Today on Energy Bill

The House is scheduled to vote today on their latest incarnation of an energy bill:

Energy bill vote pushed to today amid opposition

WASHINGTON -- Congressional Democratic leaders pushed back a vote on an energy bill with a historic increase in fuel economy standards until today, in the face of growing opposition from Senate Republicans, President George W. Bush and even some Democrats.

As outlined by House Speaker Nancy Pelosi, the bill would include new requirements for renewable fuels, the elimination of $21 billion tax breaks to oil companies and other sources of revenue, and require electric utilities to generate 15% of their energy from renewable sources by 2020.

The key points, per the AP:

Car Mileage: Requires automakers to increase the fuel economy of cars and small trucks, including SUVs, by 40 percent to an industry average of 35 miles per gallon by 2020.

Renewable motor fuels: Requires a sevenfold increase in the use of ethanol as a motor fuel to 36 billion gallons a year by 2022, with two-thirds to be cellulosic ethanol from such feedstock as prairie grass and wood chips. Has tax incentives for renewable fuels plants.

Taxes: Includes a $21 billion tax package, including a rollback of $13.5 billion in tax breaks for the five largest oil companies. The revenue is to be used for tax incentives to promote renewable fuels and energy efficiency.

Electricity: Requires electric utilities to produce 15 percent of their power from renewable energy such as wind, solar or biomass. Some of the mandate could be satisfied by utilities promoting efficiency or buying renewable energy credits.

Energy efficiency: Requires increased energy efficient appliances and improvements in energy efficiency of federal and commercial buildings. Also requires faster approval of federal energy efficiency standards.

Hybrid cars: Creates tax incentives to develop plug-in hybrid electric cars and establishes tax credits for buying the vehicles.

There are pieces I like, and pieces I don't. I like the hybrid incentive, but I think the renewable fuels mandate is a joke. That may be because in general I like incentives, but I hate mandates. With an incentive, you say "Here's $X million, try to make this work." With a mandate, you say "Consequences be damned, just go and do it." I don't like that.

And if you are wondering exactly what the rollback of tax breaks involves, here is the interpretation according to one site:

(i) Denies the oil industry a $10 billion tax break over the next decade. This subsidy came as a result of 2004 legislation that created a sweeping new deduction for domestic manufacturing. As a result, for the first time, oil and natural gas production was classified as a manufactured good, treating it the same as domestically produced cars or other items made in a factory. This legislation would repeal the deduction for all large, integrated oil companies, while still retaining the 6 percent deduction for smaller ones.

(ii) Extends from five to seven years the period of time over which oil companies can claim a tax deduction for geological and geophysical expenses. Deducting the expenses more slowly will save Americans $100 million over the next decade. This alters the tax break granted to Big Oil in the 2005 energy bill.

(iii) Limits the ability of oil companies drilling in foreign countries to manipulate their drilling income in ways to reduce U.S. tax liability. Closing this loophole will save Americans $3.2 billion over the next 10 years.

(iv) Extends from 15 to 20 years the period of time over which owners of natural gas distribution lines can deduct the depreciation of their pipelines. Deducting the expenses more slowly will save Americans $500 million over the next decade.

The problem, as I have said before, is that we have no consistent, long-term energy policy. If we are going to get a new energy bill every other year - in which tax breaks are granted and then repealed - it makes it difficult to execute long-term projects. Imagine that two years ago you started in on a five-year project, you based the project economics on the rules in place at that time, and then half way through the project the rules are changed on you. This creates a climate that discourages investment in the U.S., because the rules are apt to change at any time.

Some of the mandate could be satisfied by utilities promoting efficiency or buying renewable energy credits.

= you are hereby invited to find novel ways to lie and manipulate.

1) efficiency
Sure we increased our coal emissions 10% but it would have been 20% if we hadn't told off the customers.
2) RE credits
Sure our company burns coal but we paid something to a mini-hydro in Bolivia so that makes it OK.

There could be a clue here why emissions keep rising.

Um....little late, isn't it?

One thousand and fifty-five!

That's how many pages long this legislative sausage is.

This is the wrong way to sort out how to deal with our "Energy Independence and Security". To make any decent sense and hope for real progress all the various aspects of this issue should be dealt with as separate legislative acts that Congress (and the public) can actually try to read up on to understand and vote on individually!

Roscoe Bartlett's no vote on the basis of the ethanol provisions would perhaps then have meant and counted for more then it does now.

As is this Congressional bred stuffed turkey & lip-sticked pig way of doing such critical business is disgusting!

Senate rejects House-backed energy bill

The US government will not seriously act to mitigate peak oil until the country is in a crises. And then they will legislate in a state of panic.

The CAFE changes should be interesting. Here's an interesting take on that part of the bill.

It would take about three months to retool our factories for making cars averaging 35 MPG. We just have GM and Ford import the tooling for the European cars they already make now. Ditto the Japanese, Koreans, Germans, etc, for the cars they make at home.

And suspend the 5 star crash rating system, not to mention the EPA's Clean Air Act.(aka "things European cars don't have")
No problem!

Sure, we'd just use the same air standards as the French and British. After all, they are already fitted with computer controlled fuel injection.

The problem comes down to some of the other provisions in the "new" CAFE rules. There is a significant concern that the laws would push more consumers into buying SUVs and also push the size of the SUVs and other light trucks to be bigger than ever.

What it doesn't have is anything to make up for the subsidy that foreign auto makers receive in the form of government health benefits for workers and especially retirees. About $1,250 per import would be in the ball park. Maybe that could be $500 per Prius and 3,000 per tundra and highlander.

"Denies the oil industry a $10 billion tax break over the next decade."

Therefore the price of fuel & lubricants will go up by about $1 Billion a year.

"Deducting the expenses more slowly will save Americans $100 million over the next decade."

See above.

"Closing this loophole will save Americans $3.2 billion over the next 10 years."

See #1

"Deducting the expenses more slowly will save Americans $500 million over the next decade."

Actually all of the above will increase the price of petroleum products, will make less likely for companies to build more pipelines. Basically folks you learn in Economics 100 the more you tax something the less you get of it and/or the more expensive it will be.

"Denies the oil industry a $10 billion tax break over the next decade."

Therefore the price of fuel & lubricants will go up by about $1 Billion a year.

And the recent price increase of ~200 billion/year due to crude price hikes is insignificant?

Do you see any mention of a $200 billion price hike in my post? Or any comment about it? My point is very simple. All the above “savings” will not make gasoline or any petroleum product in the US cheaper. It will have just the opposite effect: The taxpayers, you, me, and Dupree will all pay more to offset the increase cost of doing business, especially in the USA.

macquechoux, I think the entire point of revamping our energy policy at this time is to finally start encouraging domestic and sustainable energy solutions, ones that make sense for the long term...not just making petroluem fuels cheaper! That was 20th Century thinking, and it got us into the horribly dependent mess that we're in now. At some point in a given fuel's maturation, it has to be able to stand on its own two feet. The petroleum industry has had about 100 years to find its rightful place in the energy mix, and has enjoyed many trillions of dollars worth of direct (royalty and tax relief) and indirect (military costs, externalized environmental and health costs) subsidies over that time. If we can't get along without subsidized petroleum at this point, then we don't want it, and don't need it. So I can't get too excited about higher petroleum costs...especially if it means lower costs for domestic and renewable energy in the long run.

You mean, increase the cost of doing oil-dependent business.

I think that's a good thing.  I think petroleum should be taxed up to at least $5/gallon (perhaps more, and augmented by license, lane and speed restrictions on vehicles from H2 Hummers down to full-size pickups).  We should make it both expensive and inconvenient to be a wastrel.

Oil is going away.  The last thing I want is to encourage anyone, starting with the oil companies, to think that this isn't the beginning of the end of the oil age.  If a repeal of a tax break helps, it's doing at least some good.


And BTW, in a pay as you go mode teh House is in, funding for renewables must come from somewhere. Consider this an after cost for the ultra-cheap gasoline of the 1990's and early 2000's.

I just heard the report about this bill on NPR ("Never Piss off Republicans").

I can't express to you the feeling of nausea and despair that overcame me.

Especially the part where the Democratic representative began to crow in self-congratulation about "sending a message to OPEC" and "energy independence."

"God" help us.

Imagine that two years ago you started in on a five-year project, you based the project economics on the rules in place at that time, and then half way through the project the rules are changed on you.

Which is exactly what the renewable energy industry has faced for most of its existence. Had we had a stable energy policy in place for the last 30 years, with long-lived incentives, and not one based on ad-hoc global diplomacy, I have no doubt that we'd have deployed far more RE by now than we have.

The RE industry should be so lucky as to enjoy the same sort of constancy in tax relief and federal incentives as the oil and gas industry has had for many decades.

But I think we're about to see that happen...hurrah.


Yes. And the man at the top of the government heap, the man solely responsible for the Iraq debacle ($400B plus and counting) says he'll veto any bill that uses the tax code to favor or punish specific industries.

Jeez, here's the Senators who can override a veto you all need to call and ask where is your outrage? (okay, cursing probably is a bad idea)

Arizona - John McCain & Jon Kyl
Colorado - Wayne Allard
Florida - Mel Martinez
Idaho - Larry Craig & Mike Crapo
Indiana - Dick Lugar
Maine - Susan Collins & Olympia Snowe
Mississippi - Thad Cochran
Nevada - John Ensign
New Hampshire - John Sununu & Judd Gregg
Oregon - Gordon Smith Pennsylvania - Arlen Specter
South Dakota - John Thune
Tennessee - Lamar Alexander & Bob Corker
Utah - Orrin Hatch & Bob Bennett
Virginia - John Warner

Hi John,

Collins and Snowe voted to proceed. Here are the no and not voting senators:
NAYs ---42
Alexander (R-TN)
Allard (R-CO)
Barrasso (R-WY)
Bayh (D-IN)
Bennett (R-UT)
Bond (R-MO)
Brownback (R-KS)
Bunning (R-KY)
Burr (R-NC)
Byrd (D-WV)
Chambliss (R-GA)
Coburn (R-OK)
Cochran (R-MS)
Corker (R-TN)
Cornyn (R-TX)
Craig (R-ID)
Crapo (R-ID)
DeMint (R-SC)
Dole (R-NC)
Domenici (R-NM)
Enzi (R-WY)
Graham (R-SC)
Grassley (R-IA)
Gregg (R-NH)
Hagel (R-NE)
Hatch (R-UT)
Inhofe (R-OK)
Isakson (R-GA)
Landrieu (D-LA)
Lott (R-MS)
Lugar (R-IN)
McConnell (R-KY)
Murkowski (R-AK)
Roberts (R-KS)
Sessions (R-AL)
Shelby (R-AL)
Specter (R-PA)
Stevens (R-AK)
Sununu (R-NH)
Vitter (R-LA)
Voinovich (R-OH)
Warner (R-VA)
Not Voting - 5
Ensign (R-NV)
Hutchison (R-TX)
Kyl (R-AZ)
Martinez (R-FL)
McCain (R-AZ)


If we make the big switch to E85 and E85 only delivers approx. 60-70% of the mileage gasoline delivers, shouldn't the mileage estimate difference be acknowledged on the sticker?
I read somewhere that most peoples first awareness of a vehicles mileage rating comes from reading the sticker.

There seems to an almost absolute hysteria about the 35 mile per gallon CAFE requirement due to take effect in 13 years. This is amusing coming on a board that has said we would be back at horse and buggies by then!

The CAFE is a combined fleet average. Thus, not every vehicle sold will have to get 35 mile per gallon. Some have pointed out that Toyota Prius's and Honda Insights cannot be used as measuring stick, since these are "niche" cars, and that is correct. Now everyone wants a Prius sized car.

But the hybrid technology that powers the Prius is already making it's way into the midsize class, and even into SUV's. The average fuel economy of thse vehicles is climbing, the the Hybrid Ford Escape and Mercury sister SUV being now over 30 miles per gallon, and that is with current batteries, not advanced lithium ion.

The real concern seems to be concerning heavier towing vehicles, used to tow boats or RV's. These will be more difficult to get to 35 miles per gallon, but it is by no means impossible. It does not, as some hysterics claim, require "defying the laws of physics".

Below is a link to one path forward:

Hydraulic hybrid SUV's and lithium ion hybrid SUV's are well within the realm of possibility.

We have not even discussed advances that should easily be available in 13 years, including improved aerodynamics, lower weight componets due to substitution of carbon fiber and lighter materials, more efficient engines, perhaps Diesel and natural gas, and the big advance in electric hybrids, plug hybrid grid based vehicles.

What does all the above lead to? First, the vehicles will be more expensive, pick ups and SUV's in particular. Second, people may take a different path forward, and substitute renting such vehicles on an as needed basis rather than buying them, so that they will be in more efficient vehicles on a daily driving basis. This makes sense now for people who only take a few trips per year in an SUV requiring a vehicle of that size, or for people who need a pick up truck on only an occasional basis.

We must face the facts: If we cannot develop a fleet of new vehicles that can get 35 miles per gallon on average (again, not every vehicle has to do it, many will get much, much more, and some will get less) then we are simply not going to make it as a modern world power. The fossil fuel age is winding to a close. There will be fossil fuel vehicles for decades, but they will have to use the fuel much more efficiently, and they will have to move to a greater diversity of fuels. As mentioned, other economic models (such as renting an SUV or pickup for special occasions) should reduce the percentage of these vehicles sold in comparison to the total market place.

All of the above is true of the mandate for renewables in electric production, by the way. The PV solar companies can already deliver those kind of results, and are scaling up to do so. The electric power will not be as cheap, at least for awhile. But if we cannot do a 15% market penetration 13 years from now, we're toast.

Thank you.
Roger Conner Jr.

The 35 MPG is already met or nearly met by more vehicles than you think. I believe the bill proposes using the antiquated EPA measuring system, which means a variety of small cars already get 34 MPG or more, including the 4-cylinder automatic versions of the Toyota Camry and Honda Accord. Using 2007 (or earlier) EPA figures, MPG = 0.55 * city/0.9 + 0.45 * highway/0.78.

The catch is the "light truck" loophole, which will be altered to a sliding scale based on footprint (wheelbase * width). The sliding scale will promote making light trucks wider and longer whereas the current situation merely promotes making trucks instead of cars.

We should certainly have very serious problems with nat gas, oil, coal availabilites etc. in 2-3 years so the pork barrel mindset of this bill is just the last hurrah of an outgoing era, something like passing stock tax breaks for the rich in 1928, making it simply weird thinking about it 3-4 years later on, as if you can't imagine how life could have been back then. Essentially we should ignore this and move on.

Much too little, much too late, mostly the wrong stuff, and all an exercise in futility anyway.

Robert - I'm sure you'd add as key points of the bill the following
Renewable energy incentives:

* Extends tax credits to produce energy from renewable sources like wind, biomass, geothermal, landfill gas and trash-burning facilities. Tax credits extended by four years through Dec. 31, 2012. Cost is $6.6 billion over 10 years.

* Extends 30 percent investment tax credits for businesses to install solar, fuel cells, and 10 percent tax credit to install microturbines through the end of 2016, and gives new 10 percent tax credit for combined heat and power projects. Cost is $602 million over 10 years.

* Extends tax credit for home energy efficiency projects like roof-top solar arrays, solar water heating and fuel cells for six years until end of 2014, raises tax credit cap to $4,000. Total cost is $317 million over 10 years.