DailyViews: Editorial

Energy fixes mostly hot air

Congress is spending a lot of energy talking about what to do about escalating fuel prices, but the only prospects of any actual impact would be largely based on generating energy from the wind created by the political dialogue.

On the Democratic side, there are desires to institute a windfall tax on oil companies, write a new law against energy price gouging, create new rules to quell energy market speculation and take a hardline against the Organization of Petroleum Exporting Countries.

Republicans, meanwhile, favor drilling in and pumping oil from the Arctic National Wildlife Refuge and off-shore locations, easing the permitting process for new refineries and using coal-based diesel for motor fuel.

While politicians talk a good game, the bureaucrats actually do the heavy lifting. In a broad energy bill passed last December, giving false information to a federal agency about oil prices became illegal and those who do it risk $1 million in fines. The same legislation empowered the Federal Trade Commission to pursue price manipulation in the oil markets. The FTC announced recently that it was beginning the process of developing the groundrules, which aren’t likely to be in place until December.

So, does anyone have an actual good idea in the meantime? The Associated Press this week did a fact-check on the more popular congressional proposals. here is how they checked out.

• WINDFALL TAX: A 25 percent tax would be imposed on the largest oil companies and $17 billion tax breaks would be done awaty with. Such taxes could spur on more alternative energy projects, but economists say they would be unlikely to impact prices and could have the effect of reducing investments in oil and gas exploration.
• ENERGY GOUGING LAW: While laws in 28 states inadequately and unevenly deal with the idea of energy price gouging, Congress hasn’t been able to arrive at a law it has been able to give final approval to, and President Bush has threatened to veto any that Congress sends him. Critics say the definition of gouging is too ambiguous.
• ENERGY SPECULATION RULES: Raising the cash collateral in energy futures trading might curb speculation, but the Commodities Futures Trading Commission that would enforce new requirements say they could drive traders overseas where there are no trading regulations and still not reduce market abuses.
• STAND UP TO OPEC: Giving the Justice Department the authority to bring antitrust cases against nations that collude on oil prices as part of OPEC is a toothless tiger. OPEC isn’t likely to alter its production decisions, though it might spark retaliation.
• DRILL IN ANWR: Estimates are that 11 billion barrels of oil are beneath the arctic refuge and drilling was approved by Congress in 1995, but vetoed by President Clinton. If drilling started today, none would flow for 10 years. The rate of production, 1 million barrels a day, would have little impact on the world production of 87 million barrels a day and OPEC could adjust its output to keep the impact as minimal as possible.
• OFFSHORE DRILLING: Drilling in coastal waters except for the Western Gulf of Mexico has been limited by presidential orders and acts of Congress designed to protect tourism and the environment. The closest states have come to being allowed to opt out of the federal ban have been two House approvals, but it’s never gone further than that.
• EASE REFINERY PERMITS: Economics, not government regulations, has been the bigger issue in keeping any new refineries from being built in the last three decades. Oil company executive say they want to expand exisiting refineries, not build new ones, in part because of the growth in ethanol.
• COAL-BASED DIESEL: The process requires large amounts of energy and results in greenhouse gas emissions.

So far, there are a lot of disconnected “answers” that don’t necessarily respond to the question. The bottom line is if gas hits $4 a gallon this summer like many are predicting, about all Congress is going to do is grumble like the rest of us at the gas pump.

The Albany Herald Editorial Board

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