George W. Bush tried to make it big in the oil business in the 1980s. Tapping into his family's network of contacts, he enlisted investors by arguing that even if a well turned up dry, they could always take advantage of tax write-offs. Now as President, Bush is again pushing a major energy venture: Selling the American public on his plan to reduce prices and ease supply shortages--and maybe even revive some of those tax breaks for his Oil Patch buddies.
Washington's energy lobbyists can't believe their gusher of good fortune. Not only do they have new friends in the White House, but OPEC on Jan. 17 agreed to cut production by 1.5 million barrels a day. The move adds to the pressure on Washington to "do something" as household energy bills soar--in some cases 100% higher than a year ago--and California struggles with electricity blackouts. "From a domestic energy point of view, we are at crisis level," says Lawrence B. Lindsey, Bush's chief economic adviser. "We can't afford to sit back and let nature take its course."
High on Bush's list are tax credits to boost domestic oil production, opening up federal lands such as the previously off-limits Arctic National Wildlife Refuge (ANWR), and a range of new laws to speed the regulatory process for construction of generating plants, oil refineries, pipelines, and electricity transmission lines. And Bush is expected to go along as Hill Democrats seek to add $1.7 billion to the Low Income Home Energy Assistance Program.
JAWBONE. Little of what the new President is offering will ease the short-term energy crunch. For that, Bush hopes to use his clout as son of the ex-President who won the gulf war in 1991. He plans to jawbone OPEC into increasing production, thus reducing crude oil prices worldwide. Indeed, Bush says he'll elevate energy from a domestic concern to a national-security matter under Secretary of State-designate Colin Powell and National Security Adviser Condoleezza Rice.
So will the energy lobby get everything it wants? Not quite. Topping its list is the right to explore in areas like Florida's Gulf Coast, an idea Bush opposed during the campaign. And his promise to open 8% of the ANWR to drilling has already set off a fierce lobbying campaign by environmentalists. Says Frank O'Donnell, executive director of the Clean Air Trust: "You're going to see pictures of baby caribou on the news every night."
But much of Bush's energy plan will be warmly received by Democrats from oil-producing states and by those in the Northeast and Midwest whose constituents are feeling the pinch of sky-high heating bills. Republicans and Democrats are already gearing up to offer tax breaks that would encourage companies to uncap dormant oil wells and create incentives to produce alternative-fuel vehicles. After being frozen out during the past eight years, now it's the Big Thaw for the energy industry.