Bush administration concerned over Senate energy bill costs

Bush administration concerned over Senate energy bill costs

Washington (Platts)--14Jun2005


A battle could be brewing over the cost of the energy bill, with the Bush
administration taking exception to the Senate Finance Committee's first draft
for energy tax provisions, which call for $16-bil in funding including
incentives for refiners and nuclear plants. 

In the current high-price environment, subsidies to oil and gas companies
should be eliminated, the administration said in a statement released Tuesday
by the White House's Office of Management and Budget. It urged the Senate "to
be consistent" with the president's fiscal 2006 budget request, which proposed
energy tax incentives of $6.7-bil over 10 years dedicated solely to
alternative and renewable fuels, conservation, energy efficiency and
emissions-free energy. The OMB also said the administration opposes the energy
bill's requirement that Bush implement measures to reduce US petroleum demand
by 1-mil b/d.

"The administration believes that it would effectively require a rapid,
near-term increase in corporate average fuel economy standards, which would
likely have undesirable safety impacts and may well be impossible to achieve
under existing legal authorities," according to the statement. The policy
statement weighed in on the current debate over Outer Continental Shelf
revenues, with the administration saying it opposes diverting federal OCS
revenues to oil and gas producing states. 

On the issue of climate change, a topic ignored in the current Senate energy
bill but expected to be addressed during the amendment process, OMB said the
Bush administration "is not convinced of the need for additional legislation
with respect to global change, and will oppose any climate change amendments
that are inconsistent with the president's climate change strategy."

OMB said the president favors increasing the use of ethanol in motor fuels and
"strongly supports the inclusion of complementary provisions, particularly the
repeal of the Clean Air Act's oxygenate requirement for reformulated gasoline,
which would enable greater flexibility in the nation's fuel supply." 

Not surprisingly, the Bush administration reiterated that it "strongly
supports" opening the Arctic National Wildlife Refuge to oil and gas
development, and encouraged the Senate to adopt an ANWR provision similar to
the one included in the House-passed bill. "Opening ANWR is key not only to a
truly comprehensive energy policy by increasing domestic production, but also
to creating tens of thousands of new jobs for American workers," OMB said. 

It noted the administration supports language in the Senate bill that
clarifies the US Federal Energy Regulatory Commission authority to exclusively
regulate siting of LNG terminals onshore or within state waters.

This story was originally published in Platts Electricity Alert
http://www.electricityalert.platts.com

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