Stalled Energy Bill May Be A Good Thing

The U.S. Senate did not get enough “yes” votes to send the wide ranging energy bill that will raise fuel economy standards by 40% to the White House.

While it is probably just as well, since President Bush vows to veto the bill, it will clearly play into the hands of Democrats running for the 2008 Presidential election.

This is one screwy energy bill. Automakers have gotten behind the provision that will raise the Corporate Average Fuel Economy regulation by 40% by 2020. That automakers would get behind such a new rule should be a tip off that it’s not what it seems.

It’s not what it seems. The original writing of the bill called for cars and trucks to be treated evenly. That’s a change from today that allows trucks and SUVs to have much lower fuel economy than cars. Good. If the bill were written honestly, the result might be that prices of vehicles, as well as the price of oil, would drive a lot of people who do not need trucks and gas guzzling SUVs into cars and smaller SUVs.

Automakers got their wish that their credits for producing flex-fuel vehicles will offset the fact that their trucks and SUVs will continue to get lousy fuel economy. Flex fuel vehicles can run on E85 (ethanol) as well as gasoline. There is nothing in the bill that will dramatically expand the infrastructure so that flex-fuel vehicle owners can more readily find E85 pumps. By the way, fuel economy for E85 is worse than for gasoline powered vehicles.

Given the fact that Detroit seems ready, willing and able to produce millions of new flex-fuel cars, it will be pretty easy for them to meet the new CAFÉ reg, while the fact of all those flex-fuel vehicles on the road will do little to improve the environment or our dependence on foreign oil. Bravo! Pat yourselves on the back for a job well done.

The White House threatens to veto the bill anyway, because of the proposed removal of tax breaks for oil companies. Remember, the President and Vice President owe a lot to oil companies. The Senate stop-lighted the bill because it requires utility companies to jack up their use of renewable fuel. Utility companies got to their Senators complaining that some of them either don’t operate in good wind areas and don’t want to invest in solar technology. Also, they generally hate to be regulated on anything environmental.

So, unless something breaks in the bill, like getting rid of the utility and oil company provisions, we’ll get no bill. The auto companies, of course, look just fine, because it doesn’t require them to do much. Also, their lobbiests knew that the oil companies and utility companies would do their work for them anyway.

All of this plays into the hands of candidates like Senator Barack Obama and Senator Hillary Clinton and former Senator John Edwards. None of them will spotlight the futility of the state of play on ethanol as they are trying to win the Iowa Caucus where ethanol is King. But they can certainly talk up the need, in their view, to have an aligned Democratic White House, Senate and House in order to get a real energy bill that will have some teeth.

Unfortunately, if the Congress and White House stay log-jammed, that means no bill until at least the Fall of 2009, two solid years away. But given the screwiness of this bill, maybe, despite the fact that most reasonable people believe we need a real energy bill now, it’s better if we wait for a time when oil companies and utility companies, perhaps, won’t have as much to say about how the bill is written.

Or perhaps that’s just wishful thinking on my part.

A special pat on the back to Rep. Joe Barton (Republican) of Texas, who warned that higher CAFE standards will likely lead to vehicles costing thousands of dollars more than they do today. This is the same Joe Barton who last year did all he could do to stand in the way of a bill that would research a possible connection between vaccines for kids and the incidence of autism. Barton has been heavily funded by oil and pharmaceutical companies.

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