From: H. Josef Hebert, Associated Press
Published June 15, 2005 12:00 AM

Senate Proposes Broader Energy Tax Package than Passed by House

WASHINGTON — Senate tax writers proposed $16 billion in energy tax breaks Tuesday as the Senate began debate on a massive bill that some Democratic lawmakers argued would do too little to wean the country off its heavy reliance on foreign oil.


The draft energy tax package would funnel nearly 40 percent of its incentives to promote energy conservation and efficiency and to develop alternative transportation fuels. The $16 billion over 10 years is roughly twice the amount approved by the House in April and substantially more than what has been described as acceptable by the White House.


Meanwhile, senators tentatively agreed on requiring refineries to use 8 billion gallons a year of ethanol, mostly from corn, as a gasoline additive, rebuffing attempts by some senators to reduce the requirement. Some details remained to be worked out on the ethanol provision, although it could be approved later in the day.


As the Senate began what was expected to be at least two weeks of debate over energy policy, the rhetoric focused on the need to reduce the country's dependence on imported oil. Lawmakers acknowledged that the bill does little to ensure reductions in oil imports, which accounted for nearly 58 percent of the crude oil used during the first three months of this year.


The Senate Finance Committee was expected to vote on the draft energy tax package on Thursday. After the vote, it will be rolled into nearly 800 pages of non-tax energy proposals already before the full Senate. Republican leaders hoped to finish the energy legislation before the July 4th recess, but not before tackling a string of contentious issues from climate change to easing the long-standing ban on drilling in much of the nation's coastal waters.


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The proposed Senate tax package includes incentives to buy hybrid gas-electric automobiles -- a tax credit of $400 to $2,400, depending on fuel saving -- as well as tax breaks for building more fuel-efficient homes, solar energy, wind power and certain energy-efficient appliances.


About $10 billion would be funneled to electricity and fossil fuel industries, including incentives to develop clean coal technology.


Senate Democrats, meanwhile, said they planned to propose reducing the growth of oil imports over the next 20 years. The energy bill already includes a provision that would direct future presidents to find ways to cut U.S. oil use by 1 million barrels a day by 2015.


But Sen. Maria Cantwell, D-Wash., said she wants to go further. She planned to propose a national goal of cutting oil imports 40 percent below what they are projected to be in 2025. Cantwell said the proposal doesn't pretend to outline how the reduction on oil imports would be achieved.


"The goal is simply a goal," said Cantwell.


The White House said it strongly opposed the provision to save 1 million barrels -- much less the Cantwell proposal. It said the directive would "effectively require a rapid, near-term increase" in federal automobile fuel economy requirements "and may well be impossible to achieve."


Senate Democratic Leader Harry Reid, D-Nev., said the president should support a goal of reducing imports if he's really serious about energy independence.


Cantwell said even if the goal were reached the United States would still be getting 56 percent of its oil from overseas in 2025.


Last year net oil imports averaged nearly 11.9 million barrels a day or 58 percent of the crude oil consumed, according to the Energy Information Administration, which projects imports to total 68 percent of consumption by 2025 under current conditions.


Environmentalists and fuel efficiency advocates said the oil savings measures would likely achieve little because they do not prescribe actions to be taken to meet the goals or include consequences should the goal not be met.


Source: Associated Press


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