In article <bpd2bt$2sp1$1@pencil.math.missouri.edu>, Mark Graffis says...

ENN News Story - Energy bill has $23 billion in tax breaks, mostly for
energy companiesTuesday, November 18, 2003
By H. Josef Hebert, Associated Press

http://www.enn.com/news/2003-11-18/s_10502.asp

WASHINGTON - Two-thirds of the $23 billion in tax breaks in the
Republican-drafted energy bill would go to the oil, gas, and coal
industries. Democrats slammed the legislation, one describing it as "a
hodgepodge of subsidies for the politically well-connected."

Congressional estimates released Monday put the cost of the package, the
first overhaul of the nation's energy priorities in a decade, at $32 billion
over 10 years, including about $9 billion for nontax-related measures and
revenue losses.

A House-Senate conference began considering a string of Democratic
amendments, but few if any were expected to survive. GOP conference leaders
said they were determined to complete the legislation so the House could
take it up as early as Tuesday.

"This is a solid agreement," Sen. Pete Domenici, R-N.M., declared as he
opened the conference where House and Senate conferees were to cast their
final vote on the bill. He said the GOP bill, which includes 1,148 pages,
was the product of delicate compromises between the House and Senate, and
changes could jeopardize the package. "I don't think we can take a risk of
undoing this," said Domenci.

Final details of the bill's tax section were completed during the weekend to
end closed negotiations on the bill that spanned 2.5 months.

Among the bill's major provisions:

* Giving tax incentives totaling $14.5 billion for oil, natural gas, and
coal industries.

* Allocating more than $5.2 billion in tax credits and other tax benefits
over 10 years for developing renewable energy sources, including tax breaks
for corn-based ethanol.

* Doubling use of ethanol in gasoline, a boon to farmers and widely
supported by both Republicans and Democrats.

* Implementing federal rules and standards for high-voltage power lines to
lessen the likelihood of cascading power failures like the one that produced
last August's blackout from Michigan to New York and into Canada.

* Funding $1.8 billion research project to develop clean coal technology and
tax benefits for a new generation of nuclear power plants to ensure
diversity in energy sources for electricity production.

* Speeding up permits and easing environmental rules to develop of oil and
gas resources on federal land.

"We provide billions of dollars in dozens of ways to reduce our dependance
on foreign oil," said Rep. Billy Tauzin, R-La., chief of the House
negotiators.

Democrats argued the legislation falls short of what is needed.

Rep. Jeff Bingaman, D-N.M., said the bill lacks enough incentive to promote
domestic production or foster energy conservation to reduce America's
reliance on oil imports or guard against problems in the electricity
industry that led to soaring power prices in the West two years ago or the
blackout last August.

"The tax goodies go to huge energy conglomerates, and most subsidize things
that the companies already are doing," complained Sen. Ron Wyden, D-Ore.,
another of the conferees. He described the bill as "a hodgepodge of
subsidies for the politically well-connected."

Republicans countered that the tax incentives, estimated to total $22.9
billion over 10 years, and other provisions amount to a blueprint for
diversifying the nation's energy sources and improve the reliability of
electricity transmission systems.

Most of the tax incentives and other financial benefits - loan guarantees,
royalty relief, or direct government spending - would go to energy
industries. Only about $1.5 billion in tax breaks over 10 years is earmarked
for energy efficiency.

The legislation's overall cost was put at $32 billion, according to a
preliminary estimate by the Congressional Budget Office. Some private tax
advocacy groups have put the potential cost at twice that. Rep. Henry
Waxman, D-Calif., maintained that the bill actually would authorize spending
as much as $135 billion, although much of that amount may never be spent
because it would depend on appropriations or involve mechanisms such as loan
guarantees that may never be needed.

Other measures in the legislation include:

* Spending $2 billion over eight years to help the manufacturers of the
gasoline additive MTBE, which is found to contaminate drinking water, and to
pay for transition expenses as the additive is phased out.

* Providing $1.1 billion to six states that have offshore oil and gas
development to deal with coastal erosion. More than half of the money would
go to Louisiana, a major oil and gas producer.

* Giving loan guarantees of up to $18 billion to carry natural gas from
Alaska's North Slope to the Midwest.

* Granting tax credits for biodiesel fuel made from soybeans or restaurant
grease.

Among provisions that would affect consumers directly is a tax credit of up
to $4,000 for the purchase of hybrid gas-electric cars. The amount of the
credit would depend on fuel savings and how much of the car's power would
come from electricity. Hybrid cars such as Toyota's Prius now in showrooms
could get credits of about $2,000 under the sliding scale.