Air Date: Week of November 18, 2005

Just this summer Congress was lavishing tax breaks and subsidies on the oil industry. Now lawmakers are talking about taking some of those goodies back and slapping a new tax on oil companies. Some propose seriously reducing the country's oil consumption. Living on Earth’s Jeff Young reports.

Transcript

CURWOOD: From the Jennifer and Ted Stanley Studios in Somerville, Massachusetts, this is Living on Earth. I'm Steve Curwood.

The price of gasoline may have dropped a bit recently, but the politics of oil is still center stage in Washington. In fact, there's a bit of a backlash against the major oil companies in Congress. This past week brought proposals to conserve oil, strip industry subsidies and impose a new tax on oil companies. And some lawmakers are even saying industry executives may have lied to Congress during this exchange in a Senate committee hearing.

LAUTENBERG: Did your company, or any representatives in your companies, participate in Vice President Cheney's Energy Task Force in 2001, the meetings?

EXECS: No. No. We did not, no.

CURWOOD: Living on Earth's Washington correspondent Jeff Young joins us from Capitol Hill to talk about this. Hi, Jeff.

YOUNG: Hi, Steve.

CURWOOD: Well, Jeff, it seems that this controversy over Vice President Cheney's Energy Task Force simply just won't go away.

YOUNG: Yeah, you know the administration probably thought this was settled last year. I mean the Supreme Court turned down efforts to open the Task Force's records. You'd think that was that. But, with that question from New Jersey Democratic Senator Frank Lautenberg, well, the issue is back. The Washington Post reported on a White House document indicating that those oil companies did meet with the Energy Task Force. The oil companies defend the CEOs' answers. But Senator Lautenberg wants the Attorney General to investigate.

LAUTENBERG: It's bad enough to hide the truth from the American people, but it's illegal to make false statements to the Congress whether you've raised your right hand or you haven't.

YOUNG: Now, if the Justice Department takes this up it could make public some information about just who had the Vice President's ear while he was writing energy policy.

CURWOOD: Now Jeff, just this summer it looked like oil companies were getting a pretty good ride in Washington. What, they got lots of tax breaks and subsidies from the energy bill that Congress just passed. What happened?

YOUNG: Well, in short, three dollar a gallon gas happened right after Hurricane Katrina. And when the oil industry reported quarterly profits of somewhere around 30 billion dollars, well, that just added fuel to that fire. So there is a strong desire in Congress now to show some further action on energy prices.

CURWOOD: So, just exactly what kind of action are we seeing?

YOUNG: A Senate tax panel approved something very similar to a windfall profits tax on oil companies. There's serious talk about repealing about a billion dollars worth of those tax breaks the oil companies got in the energy bill. And the action I think might prove most meaningful is a new bill aimed at cutting oil imports through conservation.

CURWOOD: Uh, conservation? Pardon me for being a bit skeptical but, I think going back to the Nixon administration, politicians have been calling for oil conservation while consumption and imports have just kept rising. What's different this time?

YOUNG: Well, it true we have a pretty spotty track record when it comes to conservation. But this bill seems serious. It aims to cut the country's oil consumption so that 25 years from now we'd be using 10 million barrels a day less than what current projections show us to be using. And it has impressive bipartisan support in both the House and Senate, including the very conservative Republican Senator Sam Brownback of Kansas. Brownback says those high gas prices make this politically feasible.

BROWNBACK: I think we're at a moment now where we can do this. That there was a mental sea change we saw in America when gas hit three dollars a gallon and people said "we've got to do something different."

CURWOOD: So, Jeff, what do they want to do to conserve oil?

YOUNG: Well, the bill calls for more hybrid vehicles and alternative fuel vehicles and it offers major incentives to the industry to make them and consumers to buy them. And it places a lot of emphasis on agriculture-based fuels-sort of spurring the next wave of ethanol-type fuels-and that, of course, wins a lot of support from the farm states.

CURWOOD: Now, Jeff, consumers have already begun to change their buying habits due to high gas prices by buying hybrids and smaller, and foreign cars. But what about an increase in CAFÉ standards, the corporate average fuel economy numbers? Uh, that issue has been stalled for years on Capitol Hill.

YOUNG: It is a very tough, very divisive political issue. So this bill just leaves CAFÉ out in the name of reaching some consensus. Now, a lot of energy policy experts that I've talked to say that's okay but somewhere down the road if you want to reduce oil consumption you're going to have to raise CAFÉ. And what this bill does, essentially, is just passes the buck on that.

CURWOOD: Jeff, if high gas prices spurred all this, what's going to happen to the political momentum if gas prices drop a bit more? I mean , just today I was able to buy gas for less than two dollars a gallon, only a little bit less but less than two dollars a gallon.

YOUNG: Well, clearly the high prices are what's giving this a sense of urgency. But the bill's sponsors are also linking this very explicitly to national security, making the argument that oil imports are making us vulnerable to a few energy supplying countries and some of those countries frankly just don't like us very much. And if you look at polls of what voters care about, national security and fuel prices rank both pretty high up there. So, I think it's a combination that could give this bill some legs.

CURWOOD: Well, keep us posted on these developments, please.

YOUNG: Indeed.

CURWOOD: Jeff Young is Living on Earth's Washington correspondent. Thanks, Jeff.

YOUNG: You're welcome, Steve.