With the midterm elections quickly approaching, voters are increasingly concerned with the high cost of gasoline. Will the current energy crisis give Democrats control of the House or Senate? Or will a strong legislative push on energy issues help Republicans stay in command? During today's OnPoint, E&E reporters weigh in on the political ramifications of high energy prices. Plus, they discuss the outlook for energy measures that would allow more offshore natural gas drilling, open the door to ethanol imports and update fuel economy regulations.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today for a reporters roundtable are E&E reporters Ben Geman, Alex Kaplun and Darren Samuelsohn. Thanks for being here. Congress came back from spring recess promising to get a lot done, one of the major issues being oil, high oil prices. How successful have they been in actually moving things forward, Ben?
Ben Geman: Well, it's very, very difficult to get any kind of consensus on energy policy. There's been some somewhat minor things that have passed. There was a price gouging bill in the House of Representatives, but getting anything substantive done in the Senate or even anything substantive done in the House has proven elusive over these last few weeks despite a huge amount of tension. And I think one thing that's quite interesting is that there's sort of two major issues that are in play here. And to some extent they collide with each other a little bit. There's a tremendous amount of concern about efforts to address high gasoline prices. And that has, I think, in particular a lot of GOP lawmakers quite worried. There's also a lot of anger, for lack of a better word, at oil companies given that they're generating these just simply enormous first-quarter profits recently. One interesting thing is that some of the policies aimed at getting at the high oil company profits that deal with things like windfall profit taxes have been floated and other things like that. On the other hand, some of the efforts to increase domestic supply could almost even be seen as gifts to oil companies. So there is a real sort of push me/pull me going on.
Monica Trauzzi: Now offshore drilling is back on the front page. Congressman Peterson's plan is gaining strength. Explain what's going on there. What's the latest?
Ben Geman: Yeah, within the next few days there's likely to be a debate on the floor House of Representatives about whether or not to lift the congressional moratorium on offshore and natural gas drilling, oil bans that remain in place. And these are the bans that cover the eastern Gulf of Mexico, basically, and both coasts. It is important to remember that the executive level or the presidential bans would remain in place regardless of what happens right now at least in Congress. All that said, OK, so we have this amendment from Representative Peterson that succeeded in the appropriations committee that would lift the ban. And it has surprise a lot of people because it succeeded in that committee. There's going to be an effort to overturn that amendment on the floor. When this issue came to the House floor last year Representative Peterson's plan was beaten by a very, very large margin. But a lot of things have happened over the past year including an extremely aggressive campaign by natural gas consumers, agricultural interests, chemical companies and that sort of thing. You know, if I had to guess right now I think that the effort to overturn Representative Peterson's amendment stands a good chance of succeeding because you've got a lot of coastal lawmakers, of both parties, who are very concerned about this. That said I wouldn't want to handicap it too carefully because he succeeded in committee over the past few days and that surprised great many people.
Monica Trauzzi: OK. Alex, one of the major issues that you're covering is CAFE and Senator Trent Lott is saying that any attempts to raise standards will fail. But we also have the Bush administration who wants to gain more control of setting standards. What's the latest there? What's going on with CAFE?
Alex Kaplun: Yeah, the House Energy Committee approved a bill last week that will basically give the Bush administration authority to raise CAFE levels and sort of overhaul the whole system. The Senate's kind of moving ahead with that issue too. There was a hearing last week. It was probably going to be part of whatever energy package Senate leaders come up with. And it's pretty clear that legislation has the support of the Republican leadership on both sides. It's probably going to pass at some point relatively soon. It all kind of depends on what it gets wrapped up in. It's very clear that as far as Congress mandating a CAFE increase, the votes for that just aren't there. As you mentioned, Senator Lott said there's no way it gets pass the Senate. And he's pretty good about counting votes. In the House you have all the leadership against it. And when you have the leadership in both chambers against something like that there's no way it will get through.
Monica Trauzzi: But is the debate substantial, because changes wouldn't be implemented for least another five years?
Alex Kaplun: I mean it depends who asks. There hasn't been any change in CAFE for passenger cars in 20-plus years. So in that sense it is substantial. I mean obviously Democrats want something more. They want Congress to have set a number. But yeah, as you mentioned, this is something that's not going to take effect until after Bush leaves office. Democrats don't trust the administration to do anything really aggressive on CAFE and I think it's not going to be a big change. Really we're not going to see how significant it is until this rulemaking comes out and the folks adopt it. And that's three, four, five years away.
Monica Trauzzi: Darren, the House Appropriations Committee has stated its support for addressing global warming through a mandatory cap-and-trade system. What does this mean for the broader picture though? I mean how close are we to actually implementing a cap and trade system?
Darren Samuelsohn: It's not happening this year. It's possible, you know, after the 2006 midterm elections that something's going to happen. Again, this is just a resolution, a sense of the Congress, that's moved out of the House. A staffer told me that one of the things that Congressman Obey often says about these resolutions are they're worth a bucket of spit really. They don't mean anything. But they do symbolically have a big thing, they're important. You're going to have the House of Representatives, this week, voting on global warming legislation. I mean it's not a cap on global warming, but they're voting on a resolution and you've never seen a House of Representatives vote before on an issue of this magnitude. So in that sense it's important.
Monica Trauzzi: Ben, there's some interesting news coming out of Cuba this week regarding the drilling there. Explain the situation and how it's relating back to the U.S. now.
Ben Geman: Yeah, this is been quite an unusual week on the Cuba front. Here's basically what's happening. Cuba is engaged in these somewhat fledgling efforts to develop offshore oil and gas resources. And they're doing this, they're seeking partnerships with other countries such as India and Norway and Canada and even China I believe. There's been at least some discussion there. The precise nature of the agreement is not entirely clear to me at this point. So what we've seen in Congress is legislation that just got introduced by some fairly important lawmakers, that would essentially removes the restrictions which currently exist on U.S. oil and gas companies from participating in offshore drilling in Cuba. And that's motivated by a few things. There's a lot of concern, in particular, that at some point state controlled oil companies in China and India are engaged in a somewhat aggressive kind of global scouring, if you will, to find new supplies. It's not clear to me how much legs this legislation has, but it does have some fairly serious lawmakers on it. Senator Pete Domenici, the chairman of the Energy Committee, as well as the chairman of the Intelligence Committee, both signed their name onto it or sponsored it. So that's going to be a really interesting debate. We also have companion legislation in the house on that measure. There was a press briefing just a few weeks ago in which both the House and the Senate sponsors of the measures just flatly predicted they had enough support within their respective chambers for it. We'll see where that goes.
Monica Trauzzi: Alex, let's switch gears to ethanol, another major story. The issue of suspending the ethanol tariff is being discussed in Congress. Speaker of the House Hastert is weighing in on it. And just recently we had two northeastern senators who offered a bipartisan proposal. So talk about what's going on there.
Alex Kaplun: Yeah, I mean this is one of those things that getting a lot of interest because it's one of the few things they can do that really fairly short-term. There's been some talk, there hasn't been much sort of done on it about lifting the methanol tariff, making it easier to bring ethanol essentially from Brazil, in the Caribbean, into the country. There's a lot of division on that issue right now. You have some very key members of the House who are for it like Chairman Barton, John Boehner. Dennis Hastert was kind of waved on a little bit. He doesn't think this is really necessary. You look on the Senate side, Senate Finance Chairman Chuck Grassley is opposed to it, any sort of lifting of the tariff would need to go through his committee. It's really sort of hard to tell how it'll play out. There's a lot of people who are very strong on ethanol in the Senate and will really fight to protect sort of the domestic ethanol industry. And it's somewhat hard to see how it would get through that chamber, especially when you have key people on agriculture, on finance, saying that they don't want it.
Monica Trauzzi: So it might be a little tough for the tariff to actually be removed.
Alex Kaplun: I mean, it's still hard to tell at this point. I think it's one of those things where it's pretty easy to see how it would get through the House. Again, the Senate side, you're going to have a lot of ethanol interests, a lot of domestic ethanol interests really raising a lot of noise about this, saying, look, we built this industry almost from the ground up. It's sort of unfair for you to come in and undercut us at this point. It's also one of those issues that may not resonate with the American public all that much. They certainly see gas prices going up, but the whole sort of issue of MTBE versus ethanol, what's being used where. I mean that's not something that a lot of people know. So there might not be a lot of political pressure from the outside to lift that tariff.
Monica Trauzzi: OK. We're almost out of time. So finally, if we can just find out, the midterm elections are quickly approaching. What can we expect the candidates to really focus on and put all of their energy into?
Darren Samuelsohn: I mean gas prices is something where there have been polls released where people are disappointed with the Republican Congress and President Bush for not doing anything about gas prices, at least they're not seeing any action. And of course it gets really complicated when you start talking about the boutique fuel blends and MTBE and ethanol as you're mentioning it. You know it is really complicated in terms of what the president can actually do. He was saying during the energy bill debate last year, trying to lower expectations that he couldn't raise a magic wand over gas prices and he tried to drum that out there. But the public still thinks that President Bush is responsible. And certainly the polls that we're seeing and what we're hearing is that the Republicans are on the retreat and that they're in trouble. Whether or not it's enough, I mean there's a lot of seats that they need to, that the Democrats would need to win to win back the House.
Alex Kaplun: But one thing to sort of note is the whole gas price issue traditionally has been very fleeting. You have people get very angry over the summer when gas prices go up and then by November gas prices drop, people kind of forget about it. I mean there also seems there's a lot of anger directed at the oil companies. Certainly there is anger towards Congress and President Bush, but it seems the oil companies are really what people are angry at. They're not on the ballot, at least not directly. So we're still a few months away and it's hard to see exactly how this issue will play out.
Monica Trauzzi: OK. We are out of time. Ben, Alex, Darren, thanks for being here. This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
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