ENERGY UPDATE: U.S. House to Vote Next Week on Comprehensive Energy Package

• Royalty Reform: Oil Companies will finally pay their fair share for drilling on public lands by ensuring that they pay their fair share of royalties on flawed leases granted in 1998 and 1999.  Oil companies holding 70 percent of these leases issued in the Gulf of Mexico from 1998 and 1999 pay no royalties on this oil, costing American taxpayers about $15 billion.
• Repeal of Tax Subsidies.  Repeals a giveaway in the 2004 international tax bill (H.R. 4520) for the Big Five.  (Small, independent oil and gas companies would continue to benefit from the deduction at the current rate.)  It also closes a foreign tax loophole for large oil companies.  These will pay for critical investment in American renewable energy.  (H.R. 5351)
• Releasing Oil from the Strategic Petroleum Reserve.  Temporarily releases nearly 10 percent of the oil from the government’s stockpile (known as the Strategic Petroleum Reserve (SPR)), and replaces it later with heavier, cheaper crude oil.  Past releases have brought down prices by as much as 33 percent. (H.R. 6578)

Expanding Domestic Energy Supply

• Responsible Compromise on Drilling on the Outer Continental Shelf.  The ending of the current moratorium on September 30 allows drilling 3 miles offshore.
     o The compromise would permit leasing between 50 and 100 miles offshore if a State ‘opts-in’ to allow leasing off its coastline by enacting state law.
     o National marine monuments and national marine sanctuaries are permanently withdrawn from oil and gas leasing.  All leasing activities must protect the coastal, marine and human environment of the State coastal zones and OCS.
     o DOD authority to designate national defense areas remains in force and leasing must also take place in accordance with a Memorandum of Agreement between the Defense and Interior Departments.
     o Adhere to the 2006 law protecting some of the Eastern Gulf of Mexico until 2022.
     o The remaining Outer Continental Shelf beyond 100 miles would be open to oil and gas leasing.
• Makes Oil Companies Accountable for Drilling Process.  Strengthens requirements that oil companies produce oil on federal lands leased for drilling during the initial term of their lease. (DRILL Act, H.R. 6515).
• Increase Domestic Oil Production in Alaska.  Mandates annual lease sales in the National Petroleum Reserve in Alaska, which has more oil than the Arctic Wildlife Refuge; also the oil can be brought to market sooner.  Also requires the Bush Administration to facilitate completion of the oil pipeline infrastructure into the Reserve and the construction of the Alaska Natural Gas Pipeline, which could create up to 100,000 jobs, while banning export of Alaskan oil outside the U.S. (DRILL Act, H.R. 6515)
• Promote Natural Gas, E-85 Infrastructure. Includes incentives and financing mechanisms for installing natural gas pumps in service stations and homes and requires service stations owned by Big Oil to install at least one "alternative fuel pump"—such as natural gas or E-85.  Natural gas costs 40 percent less than gasoline, is 33 percent cleaner and is produced in North America.
• Carbon Capture & Sequestration.  Advances the development and deployment of carbon capture and storage (CCS) technologies to come up with a cleaner way to use coal by using funds from the 98/99 leases to invest in this critical technology.

Creating American Jobs, Investing in Renewable Energy Future

• Renewable Energy and Efficiency Tax Incentives.  Extends and expands tax incentives for renewable energy, including incentives for plug-in vehicles, and retains and creates hundreds of thousands of American jobs.  It expands and extends tax incentives for renewable electricity, energy (such solar and wind) and fuel from America’s heartland, as well as for plug-in hybrid cars, and energy efficient homes, buildings, and appliances.  Investments in renewable energy create three to five times as many jobs as investments in fossil-fuel energy. (H.R. 5351)
• Invest in Renewable Energy, Energy Efficiency and Provide Home Heating Assistance (LIHEAP).  Creates a Strategic Renewable Energy Reserve to invest in clean, renewable energy resources and alternative fuels, promote new energy technologies, develop greater efficiency and improve energy conservation.  It will also fund home heating assistance, weatherization, the Land and Water Conservation Fund, and carbon capture and sequestration. This is paid for by making oil companies pay their fair share for drilling on public lands (98/99 leases).  (H.R.6)
• Electricity from Clean Renewable Sources.  Requires utility companies to generate 15 percent of electricity from renewable sources -- such as wind power, biomass, wave, tidal, geothermal and solar -- by 2020.  A 15 percent Renewable Electricity Standard will reduce global warming emissions and lower energy prices, saving consumers $13-18 billion cumulatively by 2020.  It permits utilities to meet up to 4 percent of their target through energy efficiency. (H.R. 3221)

Greater Energy Efficiency and Conservation

• Strengthen Energy Efficiency in Buildings to Bring Down Costs.  Could save consumers at least $210 billion in energy costs through 2030 by updating energy codes for new buildings.  New residential and commercial buildings will have to realize a 30 percent improvement in minimum building standards by 2010, and 50 percent by 2020. The building sector alone accounts for approximately 48% of all energy consumed in the United States and of all U.S. greenhouse gas emissions.  (H.R. 3221)
• Incentives for Energy Efficient Homes. Provides incentives to lenders and financial institutions, including the Federal Housing Administration, to provide lower interest loans to consumers who build, buy or remodel their homes to improve their energy efficiency. The average American consumer spends 9.7% of their annual income on energy, while low-income households spend more than 16%.  (H.R. 6078, Rep. Perlmutter)
• Saving Energy Through Public Transportation Act. Reduces transit fares for commuter rail and buses and expands service.  The average commuter can save up to $8,000 a year riding public transit, based on today’s gas prices. (H.R. 6052)

Do Republicans Want Solutions for the Country or Slogans for the Campaign?
When the GOP energy bill passed in 2005, Republicans were confident that their policies would produce lower gas prices and make us less dependent on foreign oil. President Bush called it “a vital step toward a more secure and more prosperous nation that is less dependent on foreign sources of energy.”
 
Instead, the price of gas has risen by 59%. Since President Bush took office, the cost of gas is up by a total of 150%. Oil companies, on the other hand, have benefitted tremendous under Republican power. Last month, ExxonMobil posted a quarterly profit of $11.68 billion—the largest in American history.
 
Republicans main objection to the Comprehensive Energy Act is that it does not include revenue sharing for the states, which they deem necessary for states to “opt-in”.  We believe that the potential for job creation, as well as public pressure will spur state legislatures to act.
 
Congress will have a tremendous opportunity to chart a new direction in energy policy. Democrats are ready to seize that opportunity. But it remains to be seen whether Republicans are more interested in solutions for the country or slogans for the campaign.  We hope that they will join us in supporting this critical legislation.