2. ENERGY POLICY: Dems face difficult climb on renewable taxes, oil speculation votes (E&E Daily, 07/30/2008)

Ben Geman, E&E Daily senior reporter

The House and Senate will vote on energy bills today, but measures in both chambers face major hurdles as the partisan debate over high oil and gasoline prices continues.

The Senate will vote again today on whether to advance a package of renewable energy tax credit extensions, while the House turns to a bill that aimed at curbing "excessive" speculation in oil and farm commodity markets and increasing transparency.

The outlook for the Senate bill appeared grim yesterday evening as the parties remained at odds over energy despite signs of progress earlier this week.

A cloture vote on proceeding to the tax bill is expected this morning. But Minority Whip Jon Kyl (R-Ariz.) predicted the measure would fall short because Republicans want to keep the chamber on S. 3268, a Democratic bill to expand regulation of oil futures markets.

"Once again we will say 'let's finish energy first and then we will take it [the extenders bill] up,'" Kyl said on the floor yesterday evening.

Republicans see the ongoing energy debate as working in their favor politically. They are keeping the chamber on the energy bill because they want the chance to offer a suite of amendments on expanded offshore drilling, oil shale and other issues. GOP leaders have dismissed the idea that increased speculative investment is driving up oil prices.

Majority Leader Harry Reid (D-Nev.) yesterday said the GOP should agree to first advance the extenders package as part of an agreement on dealing with the other energy legislation. Republican leaders rejected a Reid proposal to vote on four GOP amendments, paired with Democratic alternatives, all requiring 60 votes.

Last night, a GOP leadership aide said negotiations were continuing. But a spokeswoman for Reid, in a statement about the status of the speculation bill, accused the GOP of failing to seek an agreement.

"Senator Reid has indicated that he is open to a broader deal to move forward on the speculation bill, but the Republicans have time and time again shown that they are not interested in negotiating. They know where to reach him," the aide said.

Reid also dismissed threats by GOP lawmakers to try block adjournment for August recess later this week in order to continue seeking votes on offshore drilling and related issues. "We don't need the Republicans permission to adjourn," he said, noting the Senate could instead simply stay in "pro-forma" session over the August break.

Up to GOP leaders?

Finance Chairman Max Baucus (D-Mont.) told reporters yesterday that the tax bill has broad support -- if GOP leaders allow their members to back it.

"It is all up to the leadership on the other side. If they let their people vote their conscience they will have 60 [votes] easily," Baucus told reporters yesterday afternoon. "It is either a 59 vote or a 70 vote if senators are allowed to do what they think is best for their people back in the home states."

The vote this morning will be on a wide-ranging, $120-billion-plus tax policy bill that includes extension of various personal and business tax credits, such as the research and development tax credit, as well as a "patch" for the alternative minimum tax, disaster relief, highway funding and other provisions.

The nearly $17 billion in energy provisions include extensions of the production tax credit for wind power, investment tax credits for solar power, incentives for plug-in hybrid cars, efficient buildings, coal projects that control greenhouse gas emissions, and other measures.

The renewable energy industry says the delay in extending credits that expire at year's end is putting new projects at risk due to the uncertainty.

It also includes a series of other legislative priorities, including an $8 billion addition to the highway trust fund that is designed to eliminate a funding shortfall and a four-year extension of funding for counties and school districts in timber country affected by the decline of logging on national forests.

Also potentially holding up the bill is the partisan fight over whether -- and to what extent -- tax credits must be offset with revenue-raising provisions. The bill includes roughly $54 billion in revenue-raising provisions, but many Republicans say extension of existing tax credits do not need offsets.

In the House

The House will vote today on commodity speculation legislation that cleared the House Agriculture Committee last week. Many Democrats and some Republicans say investment by pension funds, hedge funds and others in oil and other commodities has played a major role in price increases, but the subject is one of fierce debate.

The bill requires the Commodity Futures Trading Commission to establish position limits on investors, provides more staff for the commission and expands oversight of over-the-counter markets and trading on foreign exchanges. It would also require CFTC to gather more information gathering about index trading.

A Democratic leadership aide expressed optimism the bill could garner the two-thirds vote needed under expedited rules that the bill will be considered under -- the aide noted the bill's easy approval in committee and backing by Rep. Bob Goodlatte (R-Va.), who is ranking member of the Agriculture Committee.

Goodlatte last week called it an "acceptable compromise."

But the measure's prospects are highly uncertain as GOP leaders continue pushing for votes on domestic production issues like relaxing offshore drilling bans and developing the Arctic National Wildlife Refuge.

House Speaker Nancy Pelosi (D-Calif.) has declined to allow votes on easing offshore drilling bans that cover both coasts and the eastern Gulf of Mexico. Bringing the CFTC bill up under suspension of the rules prevents amendments or a motion to recommit.

A spokesman for Minority Leader John Boehner (R-Ohio) said Boehner would likely oppose the bill, both "on the merits" and because the House should be voting on "meaningful" energy measures.

Bush administration officials have downplayed the idea that speculation is driving up prices. In a speech yesterday, Treasury's International Affairs Undersecretary David McCormick said the effects of speculation and the weak dollar on oil prices have been small.

"The effects of these two factors are relatively minor in comparison to changes in the fundamentals that have been building up for a decade or longer," according to his prepared remarks before the Peterson Institute for International Economics.

"I am not dismissing them completely, but I want to put them in proper perspective," McCormick said. "We must not let concerns over these second-order factors distract us from focusing our attention on the root cause of dramatic increases in price -- a growing gap between the world's desire to consume oil and its capacity to produce it."

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