Energy Policy is Contributor Reward Policy

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The Bush so-called energy policy should really come as no surprise. It might better be called the energy business reward policy, as its major beneficiaries are likely to be the oil, mining and electrical power industries many of whose members were substantial contributors to the Bush campaign and the Republican Party. In justifying the call for increased oil production, use of coal, and a return to nuclear power the administration invoked two current but unrelated problems -- the electrical crisis in California, and the recent jump in gasoline prices. The fact that the proposed solutions have nothing to do with the current problems is the best rhetorical sleight of hand since Bush advocated the tax cut as a cure for the current economic slump.

Contributor Reward Policy Scorecard
Winners
Coal producers and manufacturers of coal-burning equipment. $2 billion toward research in "clean coal" technology.
Oil producers and refiners. Proposes increasing the oil refining and distribution infrastructure to meet the demand for gasoline, diesel, and home-heating fuel. The Environmental Protection Agency and the Justice Department are directed to review their enforcement of pollution laws in light of the potential to discourage refinery expansion.
Power plant operators. Limitations on mercury, sulfur dioxide, and nitrogen oxide emissions would be monitored in a "market-based" program. The plan proposes allowing power plants to upgrade their pollution controls without environmental reviews.
Companies that construct and maintain energy transmission systems (pipelines, tankers, electrical power grids, etc.). Orders expedited processing of permits and re-licensing. It proposes re-examining (with a view toward lifting) economic sanctions against oil-producing countries, and repealing the 1935 Public Utility Holding Company Act. Repealing the Public Utility Holding Company Act would likely trigger a wave of mergers in the power industry.
Losers
Consumers. No price caps (deregulation is no guarantee of lower prices). No recognition of energy efficiency as a resource. Legislation limiting the liability of nuclear power plant operators in case of accident.
Science. A proposed cut in the funding of energy efficiency research is left in place.
Environment. No reduction in smog or global warming pollution. The plan proposes establishing a federal nuclear waste site. It eases the requirements to obtain permits related to environmental impact for refineries and pipelines, including access to nonpark federal land in the Rockies, Alaska, and the Arctic National Wildlife Refuge. The Alaska Lands Conservation Act, signed by Carter in 1980, already permits drilling for oil at all offshore locations, and all but 5% of the potentially productive onshore areas. The Arctic National Wildlife refuge, in which drilling and mining was prohibited, was first designated by President Dwight Eisenhower in 1959.

To heighten the atmosphere of crisis, the administration relied heavily on comparisons to the energy shortages of the 1970s, warning "America in the year 2001 faces the most serious energy shortage since the oil embargoes of the 1970s….A fundamental imbalance between supply and demand defines our nation's energy crisis." Independent analysts quoted by the LA Times disagreed, citing no "generalized mismatch of supply and demand," and suggesting that the situation in California was the result of regulatory blunders rather than an underlying shortage. In the words of William W. Hogan, a Harvard economist and former Nixon administration official, the situation in California is, " not going to get solved by anything in this report." Almost none of the electricity in California is generated from oil.

Meanwhile, on Thursday California Public Utilities Commission President Loretta Lynch told the Los Angeles times that there was evidence that power companies contributed to the power shortage in California by taking plants off line. Plant shutdowns have been a key factor in the increasing cost of power in California, which has shot from $200 per megawatt hour in December to $1900 last week. Declaring that enough evidence had been gathered to take legal action against some power companies next month, Lynch described a suspicious pattern in which plants that didn't' need repairs were pulled off line when electricity reserves dropped below 7 percent.

"The plan would pick the taxpayers' pockets to continue giving handouts to the coal and nuclear industries. It threatens America's natural heritage by throwing our wild lands wide open to drilling. And it does little to address global warming, irresponsibly dumping a costly burden on our descendants."

As Jimmy Carter pointed out in his May 18 piece for the Washington Post, in the 70's an OPEC boycott and the Iran-Iraq war compounded the domestic oil shortage. Energy prices more than doubled within a twelve month period. "No energy crisis exists now that equates in any way with those we faced in 1973 and 1979," Carter wrote. "World supplies are adequate and reasonably stable, price fluctuations are cyclical, reserves are plentiful, and automobiles aren't waiting in line at service stations." Since 1980, when Carter signed his energy bills, and the present, the nation's Gross Domestic Product (GDP) has increased by 90% while energy consumption has increased only 26%, and gasoline prices (in constant dollars) have declined by 41%.

To ensure that experienced oil, chemical and energy business people are installed in place ready to administer the energy business reward policy, Bush earlier this week filled several senior environment-related positions with pro-business lobbyists. For deputy administrator of the EPA Bush nominated Linda J. Fisher, who most recently headed the office of government affairs for Monsanto, a multinational chemical company. For the No. 2 job at the Department of the Interior, Bush chose Steven Griles, a lobbyist for the mining industry who previously worked in the Reagan administration. Subsequently Mr. Griles became an executive of the United Company, an oil and gas development firm. Most recently he worked as a lobbyist for National Environmental Strategies, where his clients included National Mining Association, Occidental Petroleum, Edison Electric.

In addition to belonging to the group of businesses that will benefit most directly from the Bush policy, executives in Occidental Petroleum and the Edison Electric Institute were among the Bush campaign "pioneers," who each raised $100,000 in contributions to the Republican Party. Roughly 10% of the more than 100 fund raisers are executives in or have ties to energy businesses. Notable among the pioneers is Allan B. Hubbard, whose E&A Industries owns several Indiana-based Chemical companies. Hubbard, who was a domestic policy advisor to the Bush presidential campaign, was a business school classmate of Bush's, served on the White House Council on Competitiveness in Poppy Bush's administration, and was former Vice President Dan Quayle's chief of staff.

In a preview of what we can expect from the current administration, Hubbard reportedly used his position on the White House advisory body to advocate relaxing regulations affecting sulfur dioxide emissions by utility companies. At the time he owned stock in a holding company that controlled 15 utility companies in Indiana and had been identified by the EPA as a major polluter. Other actions by the council to weaken emission regulations benefited World Wide Chemicals, Inc., in which Hubbard owned a 50% stake. Associated Press reported that World Wide Chemicals paid Hubbard more than $2 million between 1989 and 1991.

Echoing to some extent his Public Utilities Commissioner, California Governor Gray Davis labeled many of these same companies the enemy. "We are literally in a war with energy companies, many of which reside in Texas," Davis told the Associated Press on Friday. Republicans for Environmental Protection criticized the plan, as well, saying that it did not meet the test of conservative leadership. Executive Director Jim Scarantino said, "It perpetuates our dangerous dependence on oil, a national security risk. The plan would pick the taxpayers' pockets to continue giving handouts to the coal and nuclear industries. It threatens America's natural heritage by throwing our wild lands wide open to drilling. And it does little to address global warming, irresponsibly dumping a costly burden on our descendants."


References:

Gosselin, Peter G. "Bush Off by a Few Decades, Experts Say" Los Angeles Times. 18 May 2001

Carter, Jimmy "Misinformation and Scare Tactics" Washington Post. 17 May 2001

"At a glance: Energy plan's winners and losers" Associated Press. 18 May 2001
Seelye, Katharine Q. "Bush Picks Industry Insiders to Fill Environmental Posts" NY Times 12 May 2001

"Under the Influence.George W. Bush: Pragmatic, With Ties to Corporate America" The Center for Public Integrity.

"List of George W. Bush's Advisors" Associated Press. 17 Nov. 17, 1999

"Power companies accused of orchestrating Calif. energy crisis" Associated Press.19 May 2001

"Production in Mind, U.S. Reconsiders Enforcement of Pollution Laws" NY Times 19 May 2001

Behr, Peter. "Bush Places His Bet on Energy Industry" Washington Post. 18 May 2001

"Backlash Hits Bush Energy Policy" Environmental News Service. 18 May 2001