Energy bill is filled with surprising details
By Don G. Briggs, President – LOGA (Louisiana Oil & Gas Association)

On Nov. 15, the A. Wilberts Sons LLC No. 1 well, operated by Bridas Energy USA, drilled into a high pressured formation, causing the drilling rig to
On Thursday, the United States Senate passed the 2007 energy bill, H.R. 6 by a vote of 86-8. The energy bill will most probably be on the floor of the House this week and is expected to pass and be signed by President Bush.

Like most things that go on in our U.S. Congress, 99.9 percent of us folks back home have not a clue what's in the 1,000 page H.R. 6 energy bill. As they say, "the devil is in the details."

In time the press will enlighten us with some of the significant parts of the bill, and we will move on with our lives. You got it; I am going to share with you some tidbits of the bill.

One part of the bill that was struck from the final version before passage just blew me away. The Senate Finance Committee, chaired by Senator Max Baucus, D-Montana, unveiled a plan to tax the largest integrated oil companies, Exxon Mobil Corp., Chevron Corp., ConocoPhillips, BP and Shell Oil Co. for $9.4 billion over 10 years.

The tax revenues were to be used to fund a series of tax incentives promoting the development of alternative fuels. The members of the Finance Committee did not know how the alternative fuels tax incentives would be paid for and decided to tax the large integrated oil companies to fund the program.

You may think there is nothing wrong with this type of taxing policy. Obviously the Senate Finance Committee felt that way. Can you imagine if every time a government body needs funds to provide tax incentives, all they would have to do is single out some of the larger corporations and tax them?

The energy bill naturally provides for new Corporate Average Fuel Economy standards (CAFE). The CAFE standards in the Energy Bill require that by the year 2030 all automobiles must get a minimum 35 mpg. I look at it this way; 22 years ago, 1986, the cost of oil was $15 per barrel. Today it's $90 per barrel. Where do you think the price of oil will be in another 22 years?

If Congress wanted to do something that would really have an impact, how about 60 mpg by 2020. In other words, the 35 mpg by 2030 is window dressing.

The energy bill is loaded with incentives (subsidies) for alternative fuels, bio fuels, etc. Actually, the energy bill is a giant ethanol subsidy.

Ethanol will be a part of the energy mix in the future, but a very small part. I agree there is potential for the development of ethanol production from sugar cane; it has served Brazil well.

The Energy Information Administration (EIA) released their Short Term-Energy Outlook last week. The bottom line is global oil markets will remain tight.

"EIA projects that world oil demand will grow much faster than oil supply." Oil and natural gas will remain the fuels of choice into the next 30 years. Congress would serve us well by passing an energy bill that promotes the development of our country's oil and gas reserves.


Don Briggs is president of the Louisiana Oil and Gas Association. His column appears in The Advertiser twice a month.