High-octane energy fight

Soaring fuel prices and concerns about a Chinese company buying a major US oil producer give a long-stalled energy bill its best shot at passage since George W. Bush took office.

The Senate Tuesday passed its version of energy reform by a bipartisan 85-12 vote, opening the door to tough talks with the House to reconcile differences over issues from drilling in the Alaskan wilderness to a controversial liability waiver for a gasoline additive that pollutes drinking water.

But with the price of crude oil topping $60 a barrel, the pressure on Congress to move an energy bill is all but irresistible.

Adding to the momentum, China's bid for the California oil group Unocal sent shock waves across Capitol Hill last week, fueling speculation that the global rush for the world's oil reserves is on.

"We are going to get the president an energy bill," says Rep. Joe Barton (R) of Texas, chairman of the House Energy and Commerce committee, who predicts a compromise by the August recess.

The deal likely to emerge opens the door to a new generation of nuclear power plants, a new natural-gas pipeline from Alaska's North Slope to the lower 48, and billions in subsidies for energy producers. Both bills also challenge existing bans on oil and gas exploration in pristine areas. The Senate bill requires an inventory of oil and natural-gas resources on the Outer Continental Shelf - a highly charged proposition for states like California and Florida that currently ban drilling along their coasts. The House bill permits leasing part of the Arctic National Wildlife Refuge (ANWR) for oil and gas development.

US business interests lobbied heavily for a new energy bill. The energy sector contributed more than $50 million in the 2004 election cycle, 75 percent of it to Republicans, according to the Center for Responsive Politics. Vastly outspent, environmental groups gave $1.9 million, 88 percent of it to Democrats.

For industry groups, the key selling point for an energy bill is jobs. Without an agreement, the US stands to lose 2 million jobs, especially in industries fueled by natural gas, according to a study by the National Association of Manufacturers (NAM). The plastics industry has already lost more than 150,000 jobs. The US chemical industry has lost some 90,000 jobs. Of the 120 chemical plants priced at $1 billion or more being built today, only one is in the US.

"A balanced energy policy is long overdue," said National Association of Manufacturers President John Engler in a statement after the Senate vote. "We will put the pedal to the metal to get a good bill for manufacturers."

The House bill, debated only two days, strongly favors fossil-fuel producers and traditional energy sources. The Senate version is deliberately weighted toward subsidies for conservation and renewable energy sources.

They're not the bold new visions for energy independence many promised. Both bills are long on subsidies for energy producers, short on mandates to conserve energy or import less foreign oil. Neither mandates curbs on imports of foreign oil, caps on carbon emissions, or better fuel efficiency for SUVs. Nor are they expected to lower prices at the pump anytime soon. Environmental groups called the Senate vote a missed opportunity.

Energy policy has always been tough to move through the Congress, because the issue breaks along regional, not partisan, lines. That makes energy bills magnets for special interest spending.

"The Senate bill is a lobbyist's dream and a taxpayer's nightmare. [It] is less a coherent policy than a grab bag of giveaways for special interests," says Tom Schatz, president of Citizens Against Government Waste, in a statement.

These are the key areas of contention, as the House and Senate seek to reconcile energy bills designed to boost US supplies and increase efficiency:

SENATE BILL:

Cost: $16 billion.

Tax incentives: $14.1 billion over 11 years, tilted toward incentives for conservation, alternative fuels, and renewable energy sources.

MTBE: No liability protection for refiners of methyl tertiary-butyl ether.

Ethanol: Requires use of 8 billion gallons annually in gasoline by 2012.

Renewable Energy: "Renewable portfolio standard" requires utilities to generate at least 10 percent of their electricity from renewable energy sources by 2020.

Arctic refuge: No provision regarding Alaska's Arctic National Wildlife Refuge (ANWR).

Offshore energy: Calls for inventory of oil and natural gas resources on the Outer Continental Shelf.

HOUSE BILL:

Cost: $8 billion (assumes $2.6 billion in expected revenue from ANWR oil leases).

Tax breaks: $8.1 billion over 10 years, almost all for traditional fossil fuels and electric utilities.

MTBE: "Safe harbor" provision protects methyl tertiary-butyl ether refiners from product liability lawsuits.

Ethanol: Requires use of 5 billion gallons annually in gasoline by 2012

Renewable Energy: No "renewable portfolio standard" for utilities

Arctic Refuge: Approves oil and gas development in the Arctic National Wildlife Refuge.

Offshore energy: $2 billion in government support for research into ultradeep-water drilling.

Source: AP and Congressional Research Service