To have or have not

A few days before the final vote on the energy bill, the Environmental Protection Agency (EPA) decided to hold back a report on gas mileage efficiency of the U.S. automobile fleet scheduled for release last Tuesday. Over the weekend The New York Times reported that, according to the EPA. document, fuel efficiency is substantially lower on average now than it was in the 1980s. The law as passed contains nothing on fuel efficiency and little on conservation or reduction of dependence on fossil fuel; several amendments along those lines were proposed, but all were eventually eliminated from the legislation.

The episode puts a fitting bookend on the process by which the energy legislation passed last week was constructed. That process began, as it ended, in secrecy, with the Bush energy policy composed behind closed doors in 2001 by ex-Haliburton exec Dick Cheney and a group of oil industry lobbyists. Information about those meetings was denied to the public on account of Bush administration claims that it was not subject to open meeting laws, a claim recently upheld by an appellate court.

The resulting legislation, not surprisingly, is largely a bonanza for traditional energy companies, doling out goodies while eliminating a bunch of pesky regulations. Of roughly $14 billion in tax subsidies, these companies are receiving about $8.5 billion, despite the fact that record gas price levels are leading to record profits in the industry. The nuclear industry also did well, with provisions offering loan guarantees and “risk insurance” against regulatory delays for initial power plants to be built.

To be fair, there is some good news for alternative sources, with about $3.2 billion in subsidies to be provided. Ethanol probably did best of the alternatives, which makes sense when you look at a map and see how corn belts tend to coincide with swing states, but not when you consider the fact that it takes about as much energy in the form of fuel, pesticides and fertilizer to produce a gallon of ethanol as that gallon will itself produce.

Of special interest to Sullivan County is the impact of the legislation on wind energy, given the county’s recent push to research and develop the potential of this area. Here we do have some good news: in addition to the abovementioned subsidies, there will be an extension of tax credits to 2007 for investment in wind power. But an amendment that would have required 10 percent of all energy nationwide to have been obtained from alternative energy sources by 2015 was voted down.

The single most damaging provision of the law has received no coverage from the mainstream press: the elimination of the Power Utility Holding Company Act of 1935 (PUHCA). Part of the New Deal, this act required strict regulation of the ownership of utility companies in response to the meltdown of the then-unregulated industry which had been largely responsible for the depth and length of the Great Depression. Washington has been tinkering with the idea of dismantling PUHCA before; they exempted certain companies from it in 1992, for instance. One of the results was Enron, whose market manipulation and price gouging cost California consumers billions of dollars. Not deterred by this experience, Congress apparently decided that even more deregulation would be better. We can expect now to see an orgy of utility takeovers, mergers and speculative activity in the industry, and will probably wind up with three or four mega-companies dominating the country. With PUHCA, utilities could not be owned by companies in other businesses; now they can be, and they may well be bought by the same oil companies currently gouging you for gas and heating oil. If you haven’t noticed big increases in your electricity bills corresponding to gasoline price increases, get ready for a change.

What all this means for us locally is that when it comes to the cost of energy, we are pretty much on our own. It would have been nice if the new energy bill had focused more on incentives to convert to alternative energy and maintained regulations that protect consumers, but if the law’s bias towards traditional energy companies makes the conversion to alternatives more expensive than a better bill would have, it also makes it even more urgent. As large corporations exert more and more untrammeled control over the energy supply, it is going to become increasingly crucial that individual citizens and individual counties find ways to start producing at least some of the energy they consume. Over the coming century, those who can produce energy will be the haves and those who consume it the have-nots. If Washington won’t help us into the former category, we are going to have to help ourselves.

Dr. Punnybone

Ay, There's the Rub!