Posted: 06/16/2005
Senate Energy Mandates Bad and Ugly; Little Good
Senators Force Ethanol, Renewable Energy Mandates on Consumers
DALLAS (June 16, 2005) – The Senate energy bill currently under debate is bipartisan about the need to reduce U.S. dependence on foreign oil but there is little in the bill that will benefit American consumers, especially a vote mandating refiners to add 8 billion gallons of ethanol per year to gasoline supplies by 2012.
“If ethanol were truly cost-effective, then Senators would not have to mandate its use,” said NCPA Senior Fellow H. Sterling Burnett. “If it were really safe and environmentally friendly, then Congress would not have given its producers liability protection for potential health and environmental harms.”
The legislative outlook for the bill is dim, however, since mandatory caps on carbon emissions – either McCain-Lieberman caps or less onerous limits proposed by Sen. Jeff Bingaman (D-NM) – will lead to higher energy prices and slower economic growth. U.S. Energy Information Agency estimates show, for example, that the McCain-Lieberman caps would cost average households $444 more per year on energy and would reduce gross domestic product by $675 billion to $1.63 trillion.
“The renewable energy mandate proposed by Sen. Bingaman would be a disaster economically,” Dr. Burnett said. “It will guarantee higher prices for electricity and decrease reliability. Renewables are much more expensive and provide variable and intermittent output at best.”
A provision sponsored by Sen. Mary Landrieu (D-LA), which would allow incentives for governors to waive offshore drilling moratoria isn’t likely to survive, however, since it would reduce royalties that oil companies pay to the federal government.
“No bill would be better than a bad bill,” Dr. Burnett added. “And unless things change, no energy bill is what American consumers should hope for from this Senate.”