Nov. 15, 2003, 1:07AM Dems doubt it will create jobs By DAVID IVANOVICH and MICHAEL DAVIS Copyright 2003 Houston Chronicle WASHINGTON -- Republican lawmakers announced Friday they have reached agreement, at least among themselves, on a comprehensive energy bill aimed at boosting domestic supplies. The measure will disappoint oil companies hoping to build a natural gas pipeline from Alaska, but it will grant makers of a gasoline additive the protection they sought from potentially devastating lawsuits. Insisting they have put an end to the infighting that had delayed the energy package for weeks, Republicans say they will unveil the massive, 1,700-page bill today. "We've succeeded," Senate Energy Committee Chairman Pete Domenici, R-N.M., declared. "A most difficult, difficult job, but we have put it together." The Republicans' timetable calls for House and Senate negotiators to vote on the bill in a conference committee Monday. Because Republicans control the committee, few -- if any -- substantive changes are anticipated and passage is all but assured. The House is then slated to take up the bill Tuesday, with Senate Republicans hopeful their chamber will bring the bill to the floor Wednesday. But even as Domenici and other Republican leaders declared the deal done, Senate Finance Committee Chairman Charles Grassley, R-Iowa, the chief tax writer in the Senate, insisted outstanding issues remained, sparking concerns that the oft-delayed bill might be postponed again. Staffers worked late Friday crafting last-minute legislative language for the bill. Senate Democrats, who won't get a chance to see the full bill until today, haven't said whether they will launch a filibuster, although they have come close to threatening just such a move repeatedly. The bill, Congress' answer to President Bush's call more than two years ago for an overhaul of the nation's energy strategy, is the most far-reaching energy legislation seen on Capitol Hill in more than a decade. In the hopes of generating more support for the legislation, Republicans are trying to cast the package as a jobs bill. As they calculate it, the legislation would create a million new jobs. "In short, this bill will put a stop to the job losses that make it difficult for this economy to continue to recover," House Energy and Commerce Committee Chairman Billy Tauzin, R-La., argued. Democrats are skeptical of those numbers. Sen. Jeff Bingaman, D-N.M., the ranking Democrat on the Senate Energy Committee, said Friday he is anxious to see "what concrete basis there is in the text that can prop up the claims that this is a jobs bill." While many of the details of the bill remained secret late Friday, the partisan battle was already in full swing: "I'm glad the proponents of America's first comprehensive energy policy in a decade overcame Democrat opponents who put environmental extremists before America's very real needs," said House Majority Leader Tom DeLay, R-Sugar Land. Rep. John Dingell, D-Mich., ranking Democrat on the House Energy and Commerce Committee, was dismissive of the bill: "I, like the rest of my colleagues, have yet to see the language of the Republican-only agreement, but I suspect it will needlessly endanger the environment, hurt consumers and investors, and provide unaffordable subsidies to the energy industries." The bill will not include a highly controversial proposal to open up the Arctic National Wildlife Refuge to oil and gas drilling. The legislation also will not order the federal government to assess the oil and gas potential in the nation's coastal waters, a proposal that was loathsome to many Democrats. Perhaps the most popular provision in the bill, in the wake of the power outage in the Midwest and Northeast, would require utilities to adhere to electricity reliability standards that, up to now, have been voluntary. The bill will include a provision to provide loan guarantees for a proposed $20 billion gas pipeline running from Alaska to Chicago. The legislation, however, does not provide a tax credit, which would give the owners of the pipeline -- ConocoPhillips, Exxon Mobil and BP -- a minimum price of $3.25 per thousand cubic feet for their gas. ConocoPhillips officials argue that, without the tax credit, the project will not be feasible. "We have been pretty consistent, saying in every appointment we have had on Capitol Hill that we have to have the wellhead provision: It is what makes this project economic," said Don Duncan, ConocoPhillips' vice president and its lead lobbyist for the project. The company would rather forego the construction loan guarantees than proceed without the tax credit, Duncan said. Because of DeLay, the bill will protect producers of methyl tertiary-butyl ether -- or MTBE -- from lawsuits claiming the gasoline additive is defective. MTBE, which is largely produced in Houston, was added to gasoline to make the fuel burn more cleanly. But the compound also has been blamed for polluting municipal water supplies from coast to coast. California, New York and Connecticut have already moved to ban the use of MTBE in their states by the end of the year. The bill would phase out the use of MTBE by 2015. Democrats, who are opposed to the liability protection for MTBE, have circulated a letter with more than enough signatures to threaten a filibuster. Whether the issue can spark enough anger to actually block the bill remains to be seen. The bill also would mandate the use of at least 5 billion gallons of ethanol, a corn-based alternative to MTBE, annually. To promote domestic oil and gas production, development of clean coal technologies and greater use of nuclear energy, the bill contains more than $20 billion worth of tax incentives. Proponents of the bill are hoping the ethanol provisions, which are popular among farmers, will prod enough Democrats, especially Senate Minority Leader Tom Daschle of South Dakota, to support the legislation. Unlike other energy bills in years past, the legislation would not force automakers to produce more fuel-efficient vehicles. Instead, it would instruct the National Highway Traffic Safety Administration to study ways to reduce the amount of fuel consumed by the nation's auto fleet by the 2012 model year. In a bid to help domestic oil and gas producers, the bill also would provide incentives to encourage pumping from smaller, "marginal" wells. Responding to complaints federal regulators drag out the process for granting drilling permits on federal lands, the bill would establish new, speedier deadlines for decision-making. ILLUMINATING THE ENERGY POLICY DETAILS A few highlights about the terms: •The bill does not open the Arctic National Wildlife Refuge to drilling. •Makers of the gasoline additive MTBE would be shielded from some lawsuits for water pollution. •Use of MTBE would be phased out by 2015. •The legislation does not provide a price floor wanted by companies hoping to build a gas pipeline in Alaska. •The legislation contains about $20 billion in tax credits for oil, natural gas and other conventional fuels. OBSTACLES •Democrats in the Senate are considering a filibuster. They have been shut out of the negotiations and will have only 48 hours to digest the 1,700-page bill. READ THE BILL •The approximately 1,700-page bill will be disclosed today on the Senate Energy Committee Web site: www.senate.gov/~energy/ -------------------------------------------------------------------------------- http://www.chron.com/cs/CDA/printstory.hts/business/2223748
Great news on the energy bill. I'm especially interested in the clean coal technologies, which I see as the most feasible long-term solution for cheap power in this country. Real mature quote here. "uh... I haven't seen the bill, but I'm sure it is terrible." I'm surprised he didn't throw in a couple "ENRON" or "HALLIBURTON" screams.
The legislation, however, does not provide a tax credit, which would give the owners of the pipeline -- ConocoPhillips, Exxon Mobil and BP -- a minimum price of $3.25 per thousand cubic feet for their gas. ConocoPhillips officials argue that, without the tax credit, the project will not be feasible. "We have been pretty consistent, saying in every appointment we have had on Capitol Hill that we have to have the wellhead provision: It is what makes this project economic," said Don Duncan, ConocoPhillips' vice president and its lead lobbyist for the project. I like this. We want to profit off of Alaskan oil, but you have to subsidize the project because it's too expensive otherwise. So much for the "there's tons of cheap oil in Alaska" theory.
Real mature quote here. "uh... I haven't seen the bill, but I'm sure it is terrible." I'm surprised he didn't throw in a couple "ENRON" or "HALLIBURTON" screams. You realize that just because someone hasn't read 1700 pages of details doesn't mean all the major provisions aren't known, right? I mean, this article lists several of them. I would imagine Senators know a little more about it than the article could summarize. If the provisions that Republicans have talked about for the past 2 or 3 years are in the bill, then the general content is probably pretty clear to the Senator already.
Uh...Major I do hope you know that there is a difference between oil and gas and how it is transported. The logic you use above suggests that you do not know the difference. Let's only provide our opinions on things that we know, mmmkay?
Uh...Major I do hope you know that there is a difference between oil and gas and how it is transported. The logic you use above suggests that you do not know the difference. Let's only provide our opinions on things that we know, mmmkay? Both oil and gas transported from Alaska have been deemed non-competitive with foreign sources of oil because of the costs of shipping them both. Drilling off the coast of Florida would be for more efficient and provide resources now instead of years down the road, but having baby Bush there and needing to win Florida ensured that won't happen. Let's only provide our opinions on things that we know, mmmkay? If we did that, you'd have to stop posting.
This reminds me of the time when Maynard thought Cheney was set to receive $100,000,000 for his Halliburton stock options (which were all below water). Major, if you had a better familiarity with the situation, you would know that Conoco, BP, Exxon are not in any way saying that the Alaskan project is non-economical. What they are requesting is downside protection in the case of a drop in natural gas. Just so you know, natural gas is selling for roughly $5 per thousand cubic feet -- well above the floor being requested by the majors. They are attempting to limit their downside risk in the case of a worst-case scenario. The reason they do this is to acquire cheaper financing. Banks and lenders prefer stability and certainty of cash flow. In general, companies with greater stability and less downside-risk are better credits and have reduced borrowing costs. It find it quite a leap in logic to say that the gas pipeline from Alaska to Chicago is representative of the drilling economics in the ANWR. Not only are they separate projects, but you aren't even interpreting what has been requested by the majors correctly. Your argument is severely flawed.
This reminds me of the time when Maynard thought Cheney was set to receive $100,000,000 for his Halliburton stock options (which were all below water). Major, if you had a better familiarity with the situation, you would know that Conoco, BP, Exxon are not in any way saying that the Alaskan project is non-economical. What they are requesting is downside protection in the case of a drop in natural gas. Just so you know, natural gas is selling for roughly $5 per thousand cubic feet -- well above the floor being requested by the majors. They are attempting to limit their downside risk in the case of a worst-case scenario. Wow. For someone who claims to know something about economics, I would have hoped you would understand that looking at the economic feasibility of a project includes looking at both the upside potential and downside potential and the risk involved. Bottom line is these companies aren't willing to do the work on its own merits - they need a guaranteed subsidy in case things go bad. The companies have determined its not worth the risk without that subsidy, meaning its not economically viable on its own. If it's that important to the companies, and Bush decides the resources are worth extracting, the government should trade the subsidy guarantee for a cut of the net revenues.
Laughable. You ignored your own words when you originally made your post. You *only* looked at the downside scenario when you made your flawed conclusion that the project was non-economical. The upside scenario would utterly obliterate your argument. Heck, the base case would destroy you. This isn't even speaking to the fact that you are wildly correlating success on the pipeline to success in drilling in ANWR. This part of your argument is just ridiculous. The economics of a natural gas pipeline are *completely different* than the economics of drilling. It is the *industry standard* for pipelines to earn regulated rates of return, often with floors to protect from dramatic price drops. The floor in this case being requested is in anticipation of a 35% downward price drop -- dramatic indeed. No credible energy analyst is predicting gas to drop to these levels, with storage levels where they are and industrial demand on the rebound. I wouldn't even call these floors a "downside" case -- I'd call them a "calamity case". Clearly, the majors are simply posturing in their negotiation, otherwise they wouldn't even be at the table if what you claim is true. Financing sources for pipelines are keenly focused on stability of cash flow and downside protection, and the majors are trying to accommodate these needs and lower their borrowing costs. You wildly assert that the majors aren't willing to do this, but this just puts your naivety to negotiating on display. What negotiator on a deal as large as this wouldn't attempt to maximize his return on investment? Because these price floors are so far removed from the current pricing picture for gas, this is a small request to make. Oh, and let's also not forget that you originally thought oil was going to be moving through this pipeline. That was rich.
But the devil's in the details. Just because the major provisions are known, doesn't mean the Dems know everything in the bill... and since the Repubs have kept it from them, you can bet there are some undiscovered gems in there. This is the kind of bill where you sneak in a provision on medicare or "tort reform" or any number of isues that the GOP does not have enough votes to pass. In addition, all the ramifications of the bill need to be explored. The way a major provision is written can dramatically affect whether it comes down as a bipartisan favorite or a divisive stepchild.
anything REPUBLICAN and ENERGY POLICY almost by definition will "needlessly endanger the environment, hurt consumers and investors, and provide unaffordable subsidies to the energy industries."
p.s. it should come as no great shock that DeLay's biggest political contributions come from Energy Corps and about 75% of all money contributed from the Energy & Natural Resources Industry go to Republicans so I wonder whose best interests this bill will serve? Industry's or the Consumer's ?? mmmmmmmm
The article mentions loan guarantees too. If this is the case, shouldn't this appease their financing? Seems the companies want both Loan guarantees and downside price protection? (actually -- the article mentions they would forgoe the loan guarantees for price protection...I'm curious why?) While the assumption of the downside risk by the taxpayer may not seem onerous given today's price, it certainly must be a much bigger deal than you indicate if the companies are willing to give up their loan guarantees over it. You acknowledge the companies are 'postering' and 'attempting to max their ROI" Nothing wrong with that. You seem, however, to have much greater faith in the government's negotiating ability that I have. Are price guarantees 'standard' in these types of deals? Here's your chance, Trader, if you choose, to 'take the other side.' Or seriously...do you think the price quarantees are a reasonable assumption of risk by the taxpayer. If so...why do you think the government chose to offer loan guarantees instead?
I am dissapointed by the Tom Delay special interesting pandering here. But that was expected because those who know Mr Delay understand that he is a lying hypocritical prick. Nuff said. But there is another thing I am waiting to see if will be repealed; The Synthetic Coal tax break is all but know as another corporate fraud going on now. Alternative fuel my behind. The level of high level fraud going in this country is troubling - troubling because the small man is used as scape goats while big Hunchos like Delay, the oil lords controlling Equitorial Guinea's oil and everybody else (left oder right) who is coming fraud at the top and using congressional and executive connections to cover their back sides
I believe you are talking about the SynFuel tax credits. The IRS has been taking a hard look at these things. DTE has come under a lot of scrutiny. I too believe that the users of the tax credits are not acting in a manner consistent with the spirit of the legislation, which was to encourage alternate fuels. They refer to the process of changing the coal to synfuel as the ol' "spray and pray" method.
bnb -- here's an article: http://biz.yahoo.com/djus/031029/1638001649_4.html Before I give you guys too much ammo, I would also like to point out that this fraud was alive and kicking for 8 years of Clinton.
Thanks for the link Trader. Wasn't aware of these. Not looking for ammo, as i'm trying to stay away from the p*ssing matches. As MadMax likes to say -- i blame bush (much easier this way ). Still curious on your take on whether the govenment should be insuring the energy companies downside risk on mega projects such as the Alaskan deal. Again -- i've no experience on how these deals are usually structured -- either in the US or elsewhere.
More tax breaks and welfare for corporate interests. Socializing the cost and privatizing the profit, as usual.
Truly this is not a democrat or republican thing because all citizens and residents of this great nation is being duped (our tax payments going to the weathier) for something that is not doing what it should do i.e. creat an alternative to heavy dependance on petroleum. I first learned of this from TIME mag and on my follow up findings I discovered that Synfuel tax credit is alive and well in Canada and reportedly yeilding good results but the law makers here have not been stricter of the companies here. If it is repealed maybe the money will hopefully be used for other beneficial things that need support or boosting. If not find better way of making the provision work so that tangible positive results can realized. Check out these links (you will need to pay to get the full story though): http://www.time.com/time/archive/preview/from_search/0,10987,1101031013-493241,00.html http://www.time.com/time/archive/preview/from_search/0,10987,1101031013-493289,00.html
