Energy Policy

GOP Rep. Terry of Nebraska, Public Citizen's Slocum debate House energy bill

The House energy bill seems to have something for everyone. But does it give too much away to oil and energy companies at consumers' expense? And does it do enough to promote renewables and energy independence? Watch OnPoint for a lively debate between Rep. Lee Terry (R-Neb.) of the House Energy and Commerce Committee and Tyson Slocum, research director of Public Citizen's Critical Mass Energy and Environment Program, on the energy bill now on the House floor.


Colin Sullivan: Welcome to OnPoint. I'm Colin Sullivan. Today we're joined by Congressman Lee Terry, Republican from Nebraska, who sits on the House Energy and Commerce Committee, and Tyson Slocum from Public Citizen. We're debating the energy bill today with the energy bill on the House floor. Thank you both for being here.

Lee Terry: Thank you.

Colin Sullivan: Congressman, I'd like to start with you. A lot of critics have said here we are again with the same old energy bill on the House floor that hasn't passed the last two Congresses. What's different this year? Why do we think we might get an energy bill this year as opposed to the last couple years?

Lee Terry: Well, I think it's a battle of attrition. We just got to keep pushing. We absolutely need a comprehensive energy policy. I think what's created a little bit of critical mass for us this year as opposed to last year's is the prices of gasoline at the pumps has put some constituent pressure on us elected officials, as well as the price of natural gas.

Colin Sullivan: But what's different this year? Well, I mean a lot of people say that this bill's not going to do anything about prices in the short term, perhaps in the long term, but specifically what can you point to that says consumers can look at and say prices are going to come down now?

Lee Terry: Well, I think that's a fair criticism of this bill is that it doesn't deal with anything in the short term, but then again, I'm not sure there is anything that can lower the price of gas overnight, considering it's a supply-and-demand issue. Now, if this bill would have been passed two years ago or four years ago, I think it would positively affect with lower prices at the pump and on our electricity and heating bills.

Colin Sullivan: Tyson, what about that? Do you think that there's something more that Congress could be doing now to lower prices and address gasoline in this country?

Tyson Slocum: Yeah, no question. I mean one of the biggest problems right now is that the energy trading markets that really determine the price of a lot of energy commodities, including oil and electricity, natural gas, are under-regulated. Congress in 2000 passed the Commodity Futures Modernization Act, which heavily deregulated these trading exchanges, and that's what expanded the ability of companies line Enron to manipulate markets, and so we've supported efforts in the House and the Senate to re-regulate aspects of these trading markets to limit the ability of speculators on mostly hedge funds and investment banks from speculating on energy commodities to drive the prices up. That is clearly something that Congress could do to make our markets more transparent and more responsible. Overall, the energy bill, I think, takes a very misguided approach, because it focuses entirely on providing subsidies and regulatory benefits to energy producers, when, really, the energy problems in the United States right now have nothing to do with a lack of adequate production. Remember that the United States is the third largest crude oil producing nation in the world. Even if we produced as much oil as Saudi Arabia did every day, we'd still be importing half of our oil. The problem is on a demand side. Reducing our demand, becoming more efficient at that, and providing more incentives to renewable energies.

Colin Sullivan: What about that, congressman? Is the answer more regulation?

Lee Terry: I don't believe the answer is more regulation; and, certainly, transparency in the market is an appropriate goal; but I'm not convinced that there's fraudulent manipulation that's occurring at this point that's causing the prices to go up. It's simple demand; and when we talk about the simplification of the permitting process is what we're talking about, is trying to get some of the refineries to expand or build new ones. And, yes, permitting new facilities faster so we can get them up generating electricity or pumping oil or natural gas, particularly from existing facilities. So I, you know, this type of simplification is what will get the product or the commodity onto the market sooner, as opposed to more regulation, which in my mind equals more delays.

Colin Sullivan: So there's some language in the energy bill put in there by your chairman of the Energy and Commerce Committee, Joe Barton, called the refinery revitalization provision. This would essentially make it easier to build refineries, but at the same time environmentalists would argue it would also make it easier to trump the Clean Air Act. Do you support that language? Is that the right approach?

Lee Terry: Well, they still have to, I think it's the right approach, to answer you succinctly, and it doesn't say that you get to violate the Clean Air Act. In fact, it has to comply. What it does, is put pressure onto the federal regulators that are -- and state regulators that are part of the permitting processes to do their job more thoroughly and more quickly.

Colin Sullivan: Tyson, what about that? What about this language from Barton?

Tyson Slocum: We find it very disturbing, because it clearly restricts the ability of local communities to have adequate input into major proposed energy projects. The fact is, the reasons why we don't have enough oil refineries in the United States is because there isn't adequate financial incentive for the oil industry to expand refinery capacity. Because we've allowed so many recent mergers in the oil industry, the merger in 1999 creating Exxon and Mobil. 2001 we allowed the merger of ChevronTexaco, and in 2002, the merger of ConocoPhillips. The top five oil companies in the United States now control over half of the U.S. oil refining capacity, and the top 10 oil companies control almost 80 percent of the refinery capacity. That kind of market concentration means that these oil companies have no financial incentive to expand their refinery capacity, which is exactly why they haven't applied for any permits in the last 25 years.

Colin Sullivan: So if you're --

Tyson Slocum: So the solution here is to introduce more competition. It is not an issue where environmental regulations are too strong. We saw similar arguments during the California energy crisis when electricity companies blamed power blackouts and rising prices on environmental laws in California. We then learned that it had more to do with market manipulation than with environmental laws.

Colin Sullivan: Congressman, what about that? He's pretty much saying that oil companies have a vested interest in restraining refinery capacity. What do you think?

Lee Terry: Well, I disagree with that; and most of what I've researched is that these companies haven't built new refineries. What they've done is expanded old ones, tried to make them more efficient. So they put their capital where the regulation is basically pushing them in, to try and avoid the permitting processes. We believe, on our committee, and why the language is in there is that when you loosen those regulatory restraints and make it easier, that those companies will invest their capital in new refineries.

Colin Sullivan: Now, moving onto another issue, natural gas, liquefied natural gas, excuse, import terminals, there's some language that you support in the Barton energy bill that would essentially transfer jurisdiction from state to federal authorities on the siting of LNG import facilities. Can you talk about why you supporting that?

Lee Terry: Yeah, first of all, you got to talk about a comprehensive natural gas policy, and just remember that natural gas is really important to our economy. Even in the middle of America, 65 percent of my constituents heat their homes with natural gas, let alone what it means to the ag community. So you have to have the comprehensive which includes domestic exploration. It means a pipeline from Alaska. And, by the way, my personal opinion is we probably got a decade of politics before we'll ever get to a gas pipeline. But, even with domestic and Alaskan pipeline, we're still going to be short in 20 years by about 20 to 25 percent of our natural gas means. We can't sustain the current prices and be productive, so we have to have LNG, and it's caught up in the NIMBY, not in my backyard, mentality, and we have to do something a little bit different, and that's giving one authority a lead jurisdiction, and I believe that should be the federal regulators here, since it is interstate commerce and international commerce that's being impacted.

Colin Sullivan: Tyson, you're opposed to that language. Why not give the Federal Energy Regulatory Commission more authority to site these terminals that we're probably going to need in the future to satisfy demand growth in the power sector?

Tyson Slocum: Well, because there's significant safety and security concerns of liquefied natural gas; and many communities on the coastal United States have expressed extreme concern about what impact these huge facilities will have on their communities. That's why Public Citizen supports the ability of states and local communities to have an adequate independent regulatory input on the siting and construction of these LNG facilities. We simply don't think that unelected bureaucrats at the Federal Energy Regulatory Commission should be making decisions that will greatly impact local communities. And, also, we have a concern about national security. Increasing our reliance on liquefied natural gas will mean increasing our reliance on OPEC member nations for our energy needs. Currently, 20 percent of LNG imports come from OPEC member nations; and that's only going to increase if we build more LNG terminals.

Colin Sullivan: What's the alternative, though? It seems to me that environmentalists often say, "Well, we need to put more money in solar and to wind power," but is that realistic? Is there room in an energy policy you'd write for coal and nuclear power and natural gas, these traditional fossil fuels?

Tyson Slocum: Well, surely, we shouldn't be giving more subsidies to fossil fuels; and, unfortunately, that's what the current draft energy bill in the House does. Of the $8 billion in tax breaks, for example, 95 percent, or $7.6 billion, is targeted towards fossil fuels and nuclear power. We simply cannot afford to continue providing these kinds of subsidies to dirty and dangerous fuel sources. We'd much rather see that $8 billion poured into renewable energy, clean energy, and energy efficiency. That would be a much better use of the taxpayer dollar.

Colin Sullivan: Yeah, I was actually reading your briefing document on the energy bill yesterday, and I was surprised to see you were opposed to the $3 billion they'd be sending to clean coal technology. Do you think that clean coal is a myth, and it's a bad idea to spend money on clean coal for that reason?

Tyson Slocum: Well, yeah, absolutely. I mean you still have to mine the coal, and that has a negative impact on the environment, and it still has emissions. If taxpayers are going to underwrite new energy sources, they should be underwriting clean energy sources that aren't going to be harming our communities.

Colin Sullivan: Congressman, I know you agree with that; but isn't there room for coal?

Lee Terry: Sure, I think there has to be room for coal. I think a policy, an energy policy that doesn't center on diversification of your energy needs is really dangerous in an economic sense. So we need to be diversified, but we want clean air, so we want to encourage the rollout of clean coal technologies. We want to use natural gas in generating power and electricity, because it is the cleanest burning fossil fuel. We need to have nuclear, which we didn't get into, and water. But we also need to focus on renewables, and good portion of our package looks at future technologies. We do subsidize wind by a tax credit, solar. In fact, even methane from livestock and landfill gases, to capture those, as well as fuel cell technologies. In fact, there's a tax credit for the rollout of commercial use of fuel cells. And trying -- use alternative, more efficient technologies like the fuel cell.

Colin Sullivan: Now, you're a supporter of ethanol. You're from Nebraska.

Lee Terry: Absolutely.

Colin Sullivan: But your majority leader is not necessarily a supporter, given that an energy bill that Tom DeLay would support or Joe Barton would support has to have liability protection for producers of the fuel oxygenate called MTBE. How is this problem going to be resolved? I mean you have the speaker of the House aligned with you. He's from Illinois, supporting ethanol; and then you got the majority leader of the House saying we need to have -- the only way we're going to have a bill is with MTBE in the bill. How is this problem going to be solved this year?

Lee Terry: Well, it's going to be solved through a conference and negotiations with the Senate; because, at least from what I'm hearing from some of my Senate friends, an MTBE liability language such as we have in our bill won't bring some of the northeasterners onboard that we absolutely need to pass this bill. So they're continuing their negotiations and discussions between the House and the Senators to find a middle position that's agreeable. I wouldn't be surprised if the Senate version had absolutely no MTBE provisions in it.

Colin Sullivan: Do you support the language that's currently in the House bill?

Lee Terry: I support the ethanol provisions. Unfortunately, the two are married.

Colin Sullivan: Does it put you in an awkward position with your leadership to not support Tom DeLay's position on MTBE?

Lee Terry: Well, it doesn't necessarily put me in an awkward position. We just happen to be on opposite sides on that; and that's a difference of being representative of Houston and a representative of Omaha, Nebraska.

Colin Sullivan: Right.

Lee Terry: And we both recognize and respect that position.

Colin Sullivan: Tyson, do you see any way out of this? I mean this is a logjam that derailed the bill last year over MTBE. Do you see any way out? Is it going to kill the bill again?

Tyson Slocum: We certainly hope so. I mean we saw a lot of the opposition in the Senate to the MTBE liability waivers from Republicans who are concerned about the enormous cost to their communities. And the fact is that these oil companies were aware of the problems with MTBE, but remained silent about it. So they should be held accountable for polluting these water systems, and we will continue to organize against this energy bill if it contains these kinds of handouts to the most profitable industry in the U.S. economy. Remember, since 2001, just the top five oil companies in the United States have enjoyed after-tax profits of $205 billion. They are financially very strong right now. They don't need more taxpayer protections. They should be able to stand on their own two feet.

Lee Terry: Can I -- I just want to add two cents there, and not to stick up for the MTBE provision, 'cause that's not my dog in this energy battle. But what it does is eliminates the strict liability. I was a practicing attorney before I ran for Congress. It doesn't eliminate the negligence cause of action. And, if there's evidence that the manufacturers knew that this was harmful to groundwater and still sold it without telling anyone, there's a valid cause of action of negligence there that still exists for those communities.

Colin Sullivan: Well, another criticism of the energy bill, I'm sorry, that we're going through all the criticisms, but, you know, that's what we're going to get into in the show. Is that it doesn't do anything to address climate change. Do you think it's time that Congress stepped in and did something about climate change?

Lee Terry: Well, and we want to; and we're going to do that through the president's clean air initiatives. We need to have a series of hearings that I'm hopeful our committee will undertake. But we also do a portion of that, most of the clean air issues revolve around coal and the issue of generation of electricity there, and the clean coal technology and trying to incent the companies to implement that with new and retrofit old facilities. Takes a big step in the right direction.

Colin Sullivan: You bring up the president's clean air initiatives, but his Clear Skies bill doesn't address carbon dioxide. Is it time to address carbon dioxide with mandatory controls on CO2?

Lee Terry: I think we need to look at that and have a national discussion. But realize that the technologies out there regarding CO2 are very difficult to implement, and so what we need to do is make sure that we're putting the dollars into research and development to attain those type of goals of gashouse emission CO2.

Colin Sullivan: Now, there's a current dynamic in the Republican Party with John McCain on one side believing that CO2 is causing global warming. Jim Inhofe on the other saying the science behind climate change is not proven. Where do you come down on that debate?

Lee Terry: Well, I'd come down somewhere in the middle. I tend to simplify as much as possible. And do I believe that we should do a better job? Absolutely. Do I know if it's exclusively caused by industry? No. Do I think that we can do a better job of controlling CO2 emissions and other particulates that impact our environment? Absolutely do.

Colin Sullivan: Tyson, it seems to me that John McCain's strategy for moving climate change legislation through the Congress eventually is working. I mean he wants to educate the members. It's becoming a more pressing issue year after year after year. Is it fast enough, and are you satisfied with the level of progress on climate change?

Tyson Slocum: Well, we're very supportive of what's Senator McCain is doing, but we just wish that more senators and representatives were backing his effort, because there's pretty much a scientific consensus that global warming is a fact. That we need to regulate carbon dioxide, and that the president's so-called Clear Skies initiative would actually weaken our current framework of environmental regulations. If the United States is going to continue to be prosperous in the 21st century, we have to be a more healthy nation. And, in order to do that, we have to better regulate emissions. And, right now, the current proposals coming out of Congress don't go far enough.

Colin Sullivan: Well, how do you do that? As an environmentalist, how do you reach out to Republicans to educate them on this issue? It seems to me that Americans have spoken, and they've Republicans in the White House, in Congress, in the House and the Senate. Is there a problem right now with environmental movement being too much aligned with the Democratic Party and not reaching out to the Republican Party?

Tyson Slocum: Sure, I think that might be one of the problems. You know, we're very supportive of any member of Congress, regardless of party, as long as they support consumer and environmental initiatives. You know, I think that the bottom line, however, is it's an uphill fight when you have to deal with the campaign contributions that the energy corporations shower on Congress. In just the last election alone, energy corporations gave over $50 million to federal candidates, with over three-quarters of that going to the Republicans. So until we do something about reducing the campaign contributions and that influence, we're going to continue to have an uphill battle in this debate.

Lee Terry: Yeah, and I always get a little ruffled when I hear that type of argument. My perspective, I come from a public power state, all right. And two points I'd like to make is No. 1, I'm serving my constituents, and I'm not going to go back to my district and say, "I'm going to raise your electric rates." You know, my position then will be an ex-congressman if I'm the one that goes back and says, "I'm going to raise your rates," or "I'm going to adopt policies that will cause you to have to pay more for heating and lighting your homes." So it's more constituent-driven, that we don't want to be the ones responsible. But also I'd like to throw out to the environmental side, because I've asked the same question. You know, how can we work together? My perception as the Republican is that sometimes, particularly with CO2 emissions, the bar is set so far to one side or the position that we can't force -- we can't go to that particular point without substantial political damage to us, i.e., forcing incredible electric rates or increasing electric rates.

Colin Sullivan: So, in a sense, you're saying environmentalists have unrealistic goals. They're setting the bar too high. Like with CAFE standards, for example, you know, Markey is going to have an amendment on the floor, Representative Ed Markey, on the floor this week, that would push it up to 33 miles per gallon. Is that the kind of thing that's unrealistic? Is that what you're pointing to?

Lee Terry: Yeah, I am. And do I think we should move into that direction? Yes. But usually we force such a large jump that many of us become extremely uncomfortable with that level of movement.

Colin Sullivan: Tyson, this is the last question. What's your response to that? Do you feel like environmentalists have set the bar too high?

Tyson Slocum: Absolutely not. To promote a better, healthier America is not setting the bar too high. The fact is that energy and automobile companies have always complained about regulations. In the 1980s, the auto industry said that they would all fail if fuel economy standards were implemented and raised. And the fact is, it actually helped the U.S. auto industry, while cleaning up our air at the same time. Fact is, there are current technologies available to increase our national fuel economy standards to 33 miles a gallon that would greatly reduce our dependence on foreign sources of oil and clean up our air at the same time.

Colin Sullivan: Well, I hope you guys have an opportunity to work together. Here you are today.

Lee Terry: Yes, we are.

Colin Sullivan: Thank you both for being here.

Tyson Slocum: Thank you.

Colin Sullivan: Join us tomorrow for another edition of OnPoint. Until then, I'm Colin Sullivan for E&ETV.

[End of Audio]



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