Recent Congressional Action on Energy Legislation.
Last year, the House passed two pieces of energy legislation in the forms of H.R. 3221 and H.R. 2776. These bills combined would have mandated energy standards on private and public sector businesses regardless of the feasibility of such standards in unrealistic time frames while at the same time created a plethora of new government programs ripe for waste and abuse and increase our reliance on foreign energy sources instead of addressing oil and gas production here at home. That having been said, I was pleased to support an amendment offered by Rep. Tom Udall (D-NM) that establishes a national renewable portfolio standard (RPS) for electric suppliers. This amendment would require electric utility companies, other than rural electric cooperatives and governmental entities, to provide 15 percent of their electricity using renewable energy resources by the year 2020. This policy, which builds on a RPS already in place in the Wisconsin, is an important tool that will diversify our country's energy portfolio, provide consumers with environmentally friendly and cost effective electricity, and encourage investment in alternative energy producing technology. At the same time, studies conducted by the Department of Energy show that a national RPS, such as the one proposed by the Udall amendment, would reduce the cost of natural gas. The Udall amendment was successfully included to these energy bills with my support by a vote of 220 to 190.
Specifically, these pieces of legislation:
* Prohibit surface occupancy of leases issued for federal minerals in the Roan Plateau, Colorado, essentially cutting off production from a large, clean natural gas field in Colorado. Some estimate that this provision would prevent access to 4.2 trillion cubic feet of natural gas.
* Amend existing law to establish a slower approach to a commercial leasing program for oil shale and tar sands resources on public lands - running the risk of driving investors overseas and costing manufacturing jobs. (Of the 2 trillion barrels of oil shale in the U.S., about 80 percent are on federal lands.) Estimates are that the U.S. oil shale reserves hold enough energy to supply all of our nation's oil needs for 228 years.
* Create a $6 billion slush fund for green pork projects, financed by a new class of bonds (tax credit bonds) that is particularly costly and inefficient. Furthermore, there's no guarantee that the proceeds from these bonds will be spent on worthwhile projects. For example, the money could be spent on hybrid snowmobiles for ski resorts or for a Wal-Mart building with a handful of solar panels.
The Senate chose not to adopt these two proposals and instead adopted legislation that was more limited in scope. Unfortunately, this new energy bill contained a sharp increase in the federally mandated corporate average fuel economy (CAFE) standards. Under the Senate's proposal, each manufacturer's fleet of passenger vehicles would have to average 35 miles per gallon by 2020, a roughly 40 percent increase over current standards for cars and trucks. Higher CAFE standards - especially aimed at light trucks - would be particularly harmful to truck and auto building industries that have long and proud legacies for providing quality jobs and raising the standard of living in our communities. Some improvements in these products may be feasible - and I understand that the automakers are working hard through improvements in conventional technology and the development of advanced technologies (like hybrid electric vehicles) to provide these improvements. However, arbitrary and rapid increases of the CAFE standards could disrupt this orderly process of development and require automakers to restrict product offerings or make changes that are too expensive or not valued by American consumers.
Most importantly, however, this CAFE requirement would have meant that Wisconsin autoworkers would lose out to foreign producers. While GM, DaimlerChrysler and Ford have been working hard to increase fuel economy of light trucks, they are still below the CAFE level of Honda, Nissan and Toyota. An increase in the CAFE standard over the next five model years will be much more difficult for American automakers to meet than our competitors. As a result, the Big Three automakers will simply have to stop producing the larger SUVs, which are in high demand by American consumers, leaving the market wide open for imports of Toyota Sequoias and Land Cruisers in the short run. Raising the CAFE standards would shift market share from U.S. automobile manufacturers to their foreign competitors and result in fewer Janesville, Kenosha, and U.S.-built SUVs and more foreign-built models.
We must also affect the demand side of increasing gasoline prices. Energy conservation and responsible fuel efficiency improvements can go hand in hand with our efforts to expand our economy. Initiatives such as requiring efficiency improvements on a vehicle class by class basis, rather a company by company basis, are proposals that can help reduce the demand for gasoline while not undermining U.S. auto manufacturers. It is my hope that Congress will pass legislation that will reduce energy consumption in an efficient manner, protecting both industry and ensuring lower energy prices for consumers.
Any successful energy reform legislation must be built around five principle goals such as increasing our domestic supply, addressing our refining capacity, reforming the "boutique fuel" problem, promoting alternative energies, and conservation. From a long-term perspective, I also support the development of alternative fuel vehicles. American automakers have already taken strides in this area with the production of cars and trucks that run on ethanol, electricity, hydrogen and natural gas. Equally important, this course of action also has many benefits for our environment. To that end, I was pleased to support H.R. 547, the Advanced Fuels Infrastructure Research and Development Act. This bill instructs the Environmental Protection Agency (EPA) to implement a program of research and development of materials to be added to biofuels to make them more compatible with existing infrastructure used to store and deliver petroleum-based fuels to the point of final sale. This legislation addresses this need, and passed the House with my support on February 8, 2007, by a bi-partisan vote of 400-3. I am hopeful that the Senate will act quickly in passing this important legislation.
Increasing Our Domestic Supply.
Last December I voted to open up the resources available to America in the Outer Continental Shelf. On December 15, 2006, Congress passed a comprehensive legislative package that included a measure to allow oil and natural gas exploration in two specific areas of the Gulf of Mexico. I voted in favor of this measure and was glad to see this provision pass into law on December 20, 2006.
ANWR oil exploration will also significantly increase the domestic supply of oil in the United States. Our society continues to demand more gasoline, but we have not increased our domestic supply of crude oil and are forced to import more and more to meet our needs. Currently, we import approximately two-thirds of the crude oil that we use and are expected to import 80% by 2020. This leaves the price of gasoline in the U.S. subject to the actions of the Organization of Petroleum Exporting Countries (OPEC) and the political conditions in countries like Iraq, Saudi Arabia, and Venezuela. According to the U.S. Energy Information Administration (EIA), the mean estimate of technically recoverable oil in ANWR is 10.4 billion barrels. This would represent a 50 percent increase of the total U.S. proven reserve and would increase domestic production by nearly 20% within 20 years. At an expected production level of 1.5 million barrels per day, the oil from ANWR would replace the equivalent of our imports from Saudi Arabia for 20 years. This oil can be recovered from the ANWR region by using only a small fraction of the ANWR land. Only 2,000 acres of the Coastal Plain of the 19.6 million acres in ANWR would be affected. This represents only 0.01% of the total ANWR acreage. As a strong supporter of wildlife and land conservation, I would not support exploration in ANWR if I thought it would carelessly or permanently damage excessive areas of the arctic tundra. Thanks to new technology that minimizes the environmental impact of this drilling, we can take steps to ensure that the ANWR region remains environmentally sound while providing relief to consumers.
I also support reforms to our regulatory regime to allow for new refineries to be built in the U.S. We have not built any new refineries since 1976. This has imposed substantial constraints on our ability to refine the gasoline that we use on a daily basis and has forced us to import more and more of the gasoline that we use. To that end, I voted in favor of H.R. 5254, the Refinery Permit Process Schedule Act, which was considered on the House floor on May 3, 2006 and passed by a vote of 237 to 188. This legislation would take multiple steps to cut down on the bureaucratic requirements that have prevented the establishment of new refineries. Additionally, this bill would have instructed the President to designate at least three closed military installations as potentially suitable for the construction of a refinery. Unfortunately, the House and Senate were unable to resolve their differences before the 109th Congress adjourned and, as a result, the bill did not become law. I am hopeful Congress will reconsider this legislation soon.
Addressing the Boutique Fuels Problem.
In addition to problems with supply, we pay more for gasoline because of an outdated reformulated gasoline policy that requires different areas of the country to use different blends of fuel to meet environmental requirements. This fragmented system results in the under-production of certain blends and allows refineries to charge more for the unique boutique fuels that they produce due to a lack of competition in the marketplace. The use of boutique fuels also causes price spikes any time that there is a supply disruption, such as a refinery fire or pipeline break, because there are few refineries that can make the special blend to cover the loss in capacity. Furthermore, areas like Southeastern Wisconsin that are required to use different fuels during the winter and summer months experience price spikes when the transition between fuel types is made.
In 2005, I was able to make significant progress on this issue when legislation that I authored was signed into law which caps the total number of fuels that are used in the U.S. and allows for fuel waivers to be provided in the case of supply emergencies such as Hurricane Katrina. During the 110th Congress I have again acted on addressing this problem by introducing H.R. 2493. This bill takes aim at the proliferation of specialized "boutique" fuels to prevent further fragmentation of America's gasoline supply. This bill aims to reduce our fuel blends to a small, manageable number of blends so that gasoline supplies are much more stable. Unfortunately, my legislation has experienced opposition from the oil industry and oil state legislators. I will continue fighting this opposition so we can bring common sense to our fuel distribution system, which will help lower prices and prevent future price spikes.