House Passes Comprehensive Energy Plan

House Passes Comprehensive Energy Plan
April 29, 2005

The issue that has been most discussed around kitchen tables, water coolers and in business meetings throughout this year has probably been energy costs. From families filling up the car with gas, to manufacturers' considering expansion plans, and farmers planting crops that the nation depends on, record energy prices effect almost everybody. Recently the House approved a comprehensive Energy Policy for the fourth time during my tenure in Congress. I voted with a bipartisan majority of my House colleagues in support of this comprehensive national energy policy. Each time the House has acted, with Administration support, the Senate has failed to take action.

The Energy Policy Act of 2005 (H.R. 6) simultaneously: increases production of domestic energy sources; creates incentives to develop more energy from renewable sources and requires more conservation efforts. The legislation will also make our energy distribution system more secure. The legislation has a side benefit of creating jobs for American families. If passed by the Senate and signed by the President, the bill would reduce our dependence on Middle-Eastern and other foreign sources of oil and therefore is a matter of national security.

The legislation is one of the most robust pieces the House has passed. Since it covers such a wide range of important topics, this column will be a two part series. The first part of the series covers crude oil production and gas prices.

Gas Prices

We need this comprehensive plan to bring down gasoline prices. This legislation is a first step but not an immediate solution. Crude oil prices are driven by global supply and demand. Global demand is increasing and we are competing with countries like China, where demand is expected to grow by 800,000 barrels per day. Today, the United States depends on Middle-Eastern and other foreign sources for over 60% of our oil, compared to 30% just 30 years ago. Therefore, it is critical that the United States expand our domestic supply.

The legislation includes provisions for responsible domestic energy exploration. New opportunities for energy exploration included in the bill will produce an estimated 10.3 billion recoverable barrels of oil. That equals more than 1 million barrels of oil a day for 20 to 30 years.

Individual state requirements for the production of specialty "boutique fuels," like California's, create geographic supply islands which cause price spikes in times of a supply disruption. When supplies are tight, local requirements make it difficult for excess supply from another area of the country to make up the difference. This causes gas prices to be kept artificially high. The Energy Bill has provisions that will allow the EPA Administrator (in consultation with the Secretary of Energy) several ways to reduce gasoline prices, including the ability to temporarily waive certain requirements to avoid potential supply shortages and prices spikes.

Crude oil must be refined into gasoline. The United States has virtually no spare refining capacity. No new refineries have been built in the United States in nearly 30 years. Further, in about the same time period the number of refineries has dropped by more than half. The Energy Policy Act provides incentives to increase our nation's refining capacity by streamlining the regulatory and approval processes for the restart of idle refineries or the construction of new refineries. The incentives do this without waiving or diminishing any existing environmental regulations.

Renewables

The legislation also requires five billion gallons of renewable fuel, such as ethanol, be included in gasoline sold in the United States by 2015. This requirement will save 1.3 billion barrels of oil by 2016. Ethanol is good for both Ohio and the U.S. economy. The economic impact of this portion of the legislation is estimated to improve the trade deficit by nearly $30 billion over 15 years and add $135 billion to the American economy through increased agricultural demand and new capital spending.

Conservation

The energy bill recognizes that we can't drill our way to energy independence and therefore also increases oil conservation efforts. The legislation launches a state-of-the-art program to get hydrogen fuel-cell vehicles on the road by 2020. Further, the bill increases funding for the Department of Transportation to continue its work on improving Corporate Average Fuel Economy (CAFE) standards, which set fuel emission standards for cars and light trucks sold in the United States.

Next week this column will continue with information regarding energy conservation, tax provisions, the nation's electric grid and how this bill will create jobs while improving national security.

http://www.house.gov/miketurner/news/columns/4.29.05.shtml