Congress Divided On Energy Plan

As Gasoline Prices Soar, Both Democratic And GOP Proposals Face Difficult Odds

(AP)  As millions of people approach the summer vacation season under the threat of $4-per-gallon gasoline, Congress is scrambling to respond. But don't wait for anything that will drive down prices at the pump.

A Senate vote on a GOP plan is scheduled for Tuesday, and Senate Majority Leader Harry Reid has promised to bring up a Democratic package before the Memorial Day congressional recess. Except for halting the flow of oil into the government's Strategic Petroleum Reserve, neither plan is likely to go very far. Both will be challenged by filibusters by opponents, meaning they would require 60 votes to advance.

Here is a rundown:

THE DEMOCRATIC PROPOSALS

Enact a windfall profits tax on oil companies.

SPIN: Oil companies are making too much money, earning $123 billion last year while motorists faced soaring gasoline costs. Imposing a 25 percent windfall profits tax on the five largest oil companies and repealing $17 billion in tax breaks could help the shift away from fossil fuels toward alternatives. Taxes could be avoided if profits are used for refinery expansion or development of wind, solar or biomass projects.

FACT: Profits are large because the companies are huge, and oil now sells for well over $120 a barrel. The taxes could spur some new alternative energy projects, but economists say they also could reduce investments in oil and gas exploration, and are unlikely to affect prices. They could do more harm than good, says Robert Hansen, senior associate dean at Dartmouth's Tuck School of Business. "Anytime you put in a tax you create an incentive to avoid it," says Hansen.

Create a law against energy price gouging and new rules to stem energy market speculation.

SPIN: The government must police the energy markets with a federal law against price gouging and new rules against market speculation. The proposal creates a federal price gouging law with civil penalties of up to $5 million during a presidentially declared energy emergency. The law would prohibit refiners, wholesalers and retailers from charging an "unconscionably excessive price." Traders would be required to put up more cash collateral in the energy futures markets to curb speculation.

FACT: Energy price gouging laws now in 28 states are uneven and inadequate to deal with energy market abuses. Congress has considered a gouging law since 2005. Separate versions have passed both the House and Senate, but never gained final approval. Critics say gouging is ill defined and the law amounts to price controls. Bush has threatened a veto.

A former Federal Trade Commission chairman argued such a law could do consumers more harm than good and may result in higher prices if providers, fearing stiff penalties, avoid selling fuel when prices soar.

Increasing cash collateral, or margins, in energy futures trading could curb speculation, but there might be unintended consequences. Such new requirements, said a spokesman for the Commodities Futures Trading Commission, which would enforce the new rules, "may drive traders to unregulated trading or overseas" without reducing market abuses.

Take on the OPEC oil cartel.

SPIN: We need to stand up to the OPEC oil cartel. The Justice Department would be given authority to bring antitrust cases against countries that collude to fix prices as part of OPEC.

FACT: While politically popular, such a measure would probably not change OPEC production decisions and could provoke retaliation. Similar proposals have been debated in Congress since 2005. "It's a catchy phrase, but it doesn't have any substance," says energy consultant Robert Ebel of the Center for Strategic and International Studies.


THE REPUBLICAN PROPOSALS

Pump oil from Alaska's Arctic National Wildlife Refuge, now off limits.

SPIN: The coastal strip of ANWR, as the refuge is called, probably has 11 billion barrels of oil. At the rate of 1 million barrels a day, it would add to domestic production, reduce U.S. reliance on imports, lower prices and produce jobs. With modern technology wildlife and the environment can be protected.

FACT: Drilling in ANWR has been debated for 28 years and remains one of the most contentious environmental issues. Several times the House, under GOP control, has approved development; it passed Congress in 1995 only to be vetoed by President Clinton. Drilling supporters repeatedly have been unable to get the 60 votes needed to overcome filibusters and are unlikely to do so this time.

While ANWR has substantial oil, none would flow for 10 years. Even then, its impact on global production of 87 billion barrels a day will be minimal, energy experts say, as OPEC could adjust to compensate.

Develop vast amounts of oil and natural gas in offshore waters now off limits.

SPIN: For a quarter century, energy development has been blocked in more than 80 percent of U.S. coastal waters, depriving the country of vast oil and gas resources. States should be allowed waivers to the moratoria and get some of the revenues from development.

FACT: Most areas of federal offshore waters outside the western Gulf of Mexico and off much of Alaska have been placed off limits to drilling by a succession of presidential orders and congressional action to protect tourist industries and avoid the risk of spills and environmental damage. The House has twice approved giving states the right to opt out of the federal ban.

Ease permitting for new refineries.

SPIN: A shortage of refineries is fueling high gasoline and diesel prices. There has not been a new one built in 30 years, with environmental and other permitting problems contributing to the reluctance of oil companies to build new refineries.

FACT: The lack of new refinery construction has been more an issue of economics, not government regulations. While the oil industry has complained about permitting and environmental regulations, oil company executives also have said the permitting issue has not been a deciding factor over refinery expansion or construction. Refinery investments are based in expectations of increased demand.

Oil company executives, asked recently if they wanted to build new refineries, said no. In part, this is because of the growth of ethanol as a substitute for gasoline. The industry prefers to expand existing refineries.

Allow coal-based diesel be used as motor fuel.

SPIN: Coal is the country's most abundant energy resource, and technology exists to produce diesel fuel from coal. A mandate to produce 6 billion gallons a year of coal-derived motor fuel by 2022 would contribute to greater energy independence and spur the industry's development.

FACT: The process requires large amounts of energy and results in greenhouse gas emissions, running counter to efforts to combat global warming.

[wooleywews]

I think huge tax credits to any company developing alternative fuel, maybe even 100% tax free profits from alternative fuel production could work through the free market system. The less the government gets involved the better.


5. Can we just let the free marketplace set the price for this commodity? I don''''t know enough about economics to say. Maybe some folks do.

[wooleywews]

I think huge tax credits to any company developing alternative fuel, maybe even 100% tax free profits from alternative fuel production could work through the free market system. The less the government gets involved the better.


5. Can we just let the free marketplace set the price for this commodity? I don''''t know enough about economics to say. Maybe some folks do.

[dogband]

Oh goodness, now I know why I quit posting a few weeks ago.

Lets try something constructive, instead of destructive attacking.

1. Would lowering our usage of a limited commodity help our nations situation? I''m guessing yes.

2. Is it OK for a large portion of our population to use a hugely large disproportional percent of a limited critical resource, thereby driving the price thru the roof for the people in our society who are very poor, and need to use this resource to work? In my mind no, but if you have a different OPINION, express that differing opinion, do not degrade mine.

3. What solution of any kind do you propose?

4. Would it be OK for Detroit to make some superhuge vehicle that gets 1MPG for the filthy rich, and for tons of those folks to embrace these vehicles, driving gas prices to $15 / gallon for everyone. Again, in my mind no.

5. Can we just let the free marketplace set the price for this commodity? I don''t know enough about economics to say. Maybe some folks do.

6. If we could wave the magic wand, and go back 10 years, and make all our cars get 30 MPG + would we be better off? I''m guessing yes.

How about detailing what you see wrong with the plan, or how the plan can be used and improved, or better yet, how about detailing some alternate plan that would be helpful.

What is with attacking the person?

is it just easy?

Maybe, but it does not get us any further to a solution.

[dogband]

very much a democrat, and its my proposal to lessen our usage. Like I give a *** if you don''t like it.

I thought this was a place to post ideas and reactions to stories, not have junior grade my postings.

Stuff it up your ***. Go out on a limb, post some idea of your own, if you have any.

[deacon20081]

To dogband
I have seen some rediculas posts before but nothing compared to the nonsense ideas you propose.
What planet are you on?
You sound like a typical republican hack looking for more taxation.

[dogband]

How is it that all energy "plans" are unbelieveably absent of calling for the consumer to actually do anything ..... say like ...... decrease usage?

I know its a stretch for Americans.

Here is my plan:

Your yearly vehicle licensing fee should be based on the standard MPG rating that was issued for your car when it was purchased.

40 MPG = no yearly licensing fees, and possible rebate from pool of yearly fees below.

25-40 MPG, standard yearly licensing fees

20-25 MPG, yearly fee plus $500, to be put into energy research

15-20 MPG, yearly fee plus $2000, energy research

10-15 MPG, yearly fee plus $3000, energy research

5-10 MPG, yearly fee plus $5000 [if you want to drive a Hummer and drive everyone elses gas price up, then pay for it.]

Boats, yearly fee plus $1000 to $10,000 based on fuel consumption.

Off road vehicles, yearly fee plus $_____ based on fuel consumption.

Contractors [pulling construction equipment] and other similar service vehicle excempt based on business licenses.

Fraudently obtaining business licenese = $50,000 fine and seizure of all vehicles linked to fraudently obtained licenses.

Phase this in in 3-4 years so people have time to prepare, and dump these stupid gas guzzling monsters.

No one should have the right to drive a friggin hummer getting single digit MPG to the grocery store for milk. We should all begin silent protests on these monsters, and let the air out of their tires whenever possible.

[rf35]

Why the Congress and the President have not done this - I just don''''t know.

Posted by ramos937 at 05:49 PM : May 12, 2008

The President is an oil speculator and Congress is in a party deadlock, unable to override vetos.

[frantresa]

Our once great Congress is now a hollow non-working shell that takes our money to feed the Idiots that do nothing. www.theoandavirus.com

[sjc_1]

The profit tax disincentive line is just a stock line to pull out when you can not think of anything else. That is standard Republican. Don''t stop and think about how absurd it sounds, if it is one of the lines that we used before and it worked, use it again.

Half of the price increase in oil is due to the fall in the value of the dollar. If the dollar was still worth one Euro, we would be paying about $90 per barrel now. OPEC is talking about going to the Euro for oil payments. That would mean bad things for countries like China that are tied to our currency.

[n0rm1-2009]

I find it hard to believe that with Oil at 125$ a barrel that there is so much concern that the oil companies will not have incentive to find oil. Lets get real folks, the tax in question is marginal and oil has more than tripled in price since 2004. In any plan you have to distribute your resources.

[cfin5]

Posted by talkingham at 05:23 PM : May 12, 2008-----Well said. As I understand the markets intentions in the future for ethanol production, these other crops than corn are what farmers are willing to do (around here anyway) to make a living. Remember the industry is in its infancy, not to mention farmers are tooled with their equipment to harvest certain crops. Ever checked out the price of some of this equipment? If even available, you''ll need your welding goggles on to keep your eyes from getting fried......I purchased an E85 flex-fuel vehicle for these reasons: 1- I would rather hire an American Farmer to make my fuel than an Arab. 2- Said farmers spend their money in OUR economy, not a foreign one. 3- I now have two choices for fuel instead of one. 4- The fuel systems are stainless steel and non-corrosive which is a real benefit here in the salt induced rust belt.....I want to be able to buy an electric car someday for those quick trips that need to be done all the time. In short, ANYTHING to get us the heck away from the middle east mess!

[ramos937]

The actual costs of getting the oil out of the ground, refining it and delivering it as gasoline to your neighborhood station has not changed dramatically in the past few years except for one major factor - The speculators.

Oil speculation in oil commondities has seen a very dramatic increase in oil speculation. One speculator buys a bbl for $70 then sells it to another for $80 and that speculator sells it to another for $90 and so on and so on until it reaches the present price of $126 and will probably not stop until who knows when.

Someone smarter than I will have to find a way to stop this spiral. One way would be to impose a punitive tax on oil speculation solely. If it is not profitable to speculate, then the speculators will cease to do so.

Why the Congress and the President have not done this - I just don''t know.

[talkingham]

This story is a load of slop. Instead of really doing anything about biofuels we get the same old there''s nothing we can do about this. Complete lies. Even in the area of biofuels for some reason all you hear about is corn based ethanol- which is actually perhaps the worst of all the biofeuls in terms of yield per acre. Corn gives a tiny 18 gal per acre whereas something like sunflowers gives mroe than 100/gal acre, pecans 191 gal per acre, oil palm 635 gal per acre. Even mustard seds gives 61 gal per acre compared to corn''s 18.

But since Archer Daniel Midland has so much invested in corn, corn sweetners and corn killers liek high frutose corn syrup you aren''t goign to hear much about anything but corn in this corrupt country.

You heard me right. Corn = 18gal per acre
Avcado - 262 gal per acre, the list goes on and on- so why does the media focus on corn-based ethanol fuels, because the media which made the current conflict in iraq possible doesn''t care.

[stn_sage]

various comments
Posted by kennedy7955 at 04:55 PM : May 12, 2008
---------------------------------------------------
My response: You give a great description of the problem(s) and a solution. The govt ''making them'' take action by taxing them. What is taxing them?
Regulation! It''s NOT a dirty word. It''s what is going to happpen! It IS the only way out of this problem!

[kennedy7955]

Our energy companies have not invested in new refineries, green energy, the electrical grid or pay their fair share of taxes. Combine these facts with the misinformation they have spread through financing pseudo-science organizations and we have companies not operating in the best interests of this country. If these energy companies don''t have the sense to do the right things like reinvesting their massive profits in our infrastructure and renewable energy, then the government should force them through higher taxes.

[stn_sage]

I''d also expand solar, wind, and water-burning car technology!

[stn_sage]

I''m disappointed in all the posters who say, ''we tried that already, and it didn''t work''!
Well, if it didn''t work, it was because they didn''t want it to work!

My initial post ONLY included headings of actions I''d take, it didn''t include the ''fine points''. The details. And, it didn''t address additional actions I''d take outside of what was basically proposed by Congress!

In short, I enact more regulation. Regulation is not bad. It just has to be effective. That''s better than nationalization, and if oil companies don''t do a better job, someday down-the-road, ten or twelve years from now, it may happen anyway, huh?!

[steve668702]

Reading many of these posts leaves me frustrated as to the education people receive in this country. That said, windfall taxes will not work. They were tried by Jimmy Carter with the result of less exploration and investment in NEW technologies, a cutback in domestic production, and MORE oil imports. Increasing taxes on oil companies straight out will result in the costs being passed directly to us.

Renewable energy sources should be pursued and have been pursued. But they are limited in their ability to provide energy. You would need to completely blanket Arizona, New Mexico, and Utah in solar panels to meet our daytime energy needs which can''t be met at night. A similar discussion can be had about wind.

Nuclear is the best current option for energy production and the next generation of plants being designed will have a dual purpose. Provide electricity as they currently do AND provide O2 and H2 as a byproduct in abundance. Fusion or energy generation from space will be the best options for the future.

Nothing in the renewable arsenal today can come close to providing our energy needs.

The change in margins on speculators will do a lot for getting the fluctuations and flurry of activity the past year under control. The other factor nobody speaks to is the plunge of the dollar. How much would a gallon of gas today cost in a 2002 dollar? Less than 2 bucks......

[tomanyt]

Profit taxes were tried out in the 1970''s and failed.

[sjc_1]

Oil import fee would be preferable to a profits tax. OPEC might retaliate and we would have to consider that, but they told us that if we used the Strategic Petroleum Reserve as a market price mechanism they would retaliate. What is next? I for one am tired of having our chain yanked for 30 years. Let''s get on with hybrids and cellulose ethanol and tell them to pound sand. I hear they have lots of that too.