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Vol. 225 No. 11 |
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| JOHN MCCAUGHEY, CONTRIBUTING EDITOR, WASHINGTON |
Energy fails to gain traction, despite high prices. Energy issues (even $50 oil or the cost to gas up the family SUV) seemed to have had no legs with voters in the election campaign. This was true, despite a few efforts by Sen. John Kerry (Democrat – Massachusetts, and owner of at least five gas-guzzlers and a speedboat) to make energy a populist cause, and to flog the dead horse of US energy independence. But Congress, heading into a more-than-usually lame-duck session in mid-November, is doing its best to take up the slack left by the candidates.
Honking like migrating geese, and spewing steam, ash and hot air like Mount St. Helens having a burb-attack, Capitol Hill lawmakers have celebrated the session's end by pushing through measures so generously laden with pork as to make P. G. Wodehouse's famous prize-winning pig, The Empress of Blandings, seem anorexic. Gucci-shod energy industry representatives on the Hill were careful to include themselves in the Honor Roll of “No Lobbyist Left Behind.” The energy industry got nearly 20 provisions into the $140-billion corporate tax break bill (H.R. 4520).
Independent US oil producers benefited from a last-minute amendment to a jobs bill by a House-Senate conference committee. It gave independents a long-sought tax break for marginal (so-called stripper) oil and gas wells. Tiny in terms of individual output (at most, 15 bopd or 90,000 cfgd), these marginal wells nonetheless represent about 25% of the nation's now-meager oil production and 10% of its natural gas output.
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The US E&P industry has New Mexico Sen. Jeff Bingaman to thank for the tax breaks it recently won.
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There are more than 400,000 marginal oil wells in the US, plus another 250,000 marginal gas wells. Mostly, they are mom-and-pop operations. The independents can thank Sen. Jeff Bingaman (Democrat-New Mexico), ranking member of the Senate Energy and Natural Resources Committee, for pushing through the measure.
However, none of the last-minute jostling through jobs and corporate tax bills was of any help to President Bush's overall energy measure (S. 2095). It has been stalled since November 2003 and will require tow trucks and jump starts, just to get it defibrillating again. The main sticking point is a proposal to grant retroactive liability protection to producers of the fuel oxygenate (or gasoline additive), methyl tertiary butyl ether (MTBE). MTBE has been found to contaminate groundwater.
Bush also wants to open the Arctic National Wildlife Refuge to E&P. This is entirely sensible, but there are few votes to harvest from Alaska's Eskimos, and politicians in the rest of the US are terrified of annoying the environmentalists – the idea will go nowhere.
Desperate Republicans are now speaking of breaking up the energy bill (which they have long resisted) and trying to pass it in discrete sections. If that strategy goes ahead, it will at least keep Hill staffers and the energy trade press harmlessly employed and out of the public houses for four more years. The mood on the Hill is that anything can happen in the concluding days of a legislative session.
As this column went to press, the Senate had passed tax benefits for a number of energy concerns, including (and this was a big win for ConocoPhillips) language authorizing construction of an Alaska natural gas pipeline, plus lucrative tax-break provisions for it.
Unmentioned in all this hullabuloo is ratification of the Kyoto Protocol, designed to curb global warming (if such a thing exists among wobbly science). Global warming is a wonderful Washington political construct. The Bush administration refuses to have anything to do with Kyoto, arguing (correctly) that the economic damage and job losses that it would cause will prevent the Senate from ever ratifying it. So, they feel assured in opposing it.
For exactly the same reasons, the Kerry/ Democrat camp felt reassured in urging the US to endorse Kyoto, knowing full well that such a thing will never happen, as Bill Clinton and Al Gore realized but never said out loud. So, both sides are happy. On Kyoto and global warming, the Republicans and the Democrats essentially do not differ.
The problem with energy policy in Washington, regardless of the party in power, is that it is almost always redundant, useless and wrong. The Libertarian Cato Institute put it well in one commentary: “Nor is there any reason to think that spreading federal tax dollars like pixy dust over uncompetitive technologies will magically transform them from ugly market ducklings into beautiful economic swans.”
In almost all cases, this is correct. America traditionally has left investments to private investors, not to Politburo-style five- or 10-year plans. Still, the politicians will insist that they know best, although any sane person realizes that no energy strategy will cure anything that ails the economy. The best US energy policy would be No Policy.
But that will never happen. As it should be, there are always activists, such as 83-year-old Floridian, Theodore Cross, who has formed “Birders Against Bush.” He has rented billboards in his state to publicize what he calls the administration's “truly lousy record on birds.” Sweeping aside Mr. Cross, Congress has just renewed lucrative tax credits to make wind farms financially viable. Such windmills, it is now known by the ornithology crowd, act as Cuisinarts to slaughter any birds in their vicinity. But, one supposes, birds are a renewable resource, too. 
John McCaughey edits and publishes Energy Perspective, a Washington-based, fortnightly publication featuring in-depth coverage of major energy topics. Mr. McCaughey has written and edited for Irish newspapers, an international news agency, the London-based Financial Times and the U.S.-based Energy Daily newsletter, and contributed to many other newspapers. He regularly contributes to this column.
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