Partisan views on energy help stall gas compromise

BY JANIE LORBER | janie.lorber@newsday.com

June 29, 2008

WASHINGTON - Just two days after gas prices hit $4 a gallon nationwide, Democrats took their answer to consumers' pain at the pump to the Senate floor, with a windfall profits tax on Big Oil as the centerpiece.

But even that milestone wasn't enough to bring about compromise and the measure failed, with strong Republican opposition.

Two weeks later - with gas prices up another 10 cents - House Democrats blocked a GOP effort to expand offshore drilling when it looked like the Republicans had enough to votes to end a 27-year moratorium.

Polls show that the price of gas is the No. 1 issue on voters' minds, so constituent anxiety is turning up the heat on Congress to do something. Lawmakers have held 40 energy hearings this year - at least six last week alone. Presumptive presidential nominees Barack Obama and John McCain have jumped in with proposals as well.

But for all the talk, significant compromise in Washington has been out of reach in this pre-election summer, and few experts predict any sweeping legislation that could lead to a comprehensive solution to the energy crisis - or even put a serious dent in gas prices.

One reason, analysts say, is that both parties cling to long-standing positions on energy - then blame their colleagues across the aisle for blocking their efforts.

Democrats talk of helping beleaguered consumers by taxing Big Oil's big profits - a plan anti-tax Republicans fiercely oppose. The GOP presses for drilling in the country's coastal waters as a way to break dependence on foreign oil, but those ideas are nonstarters for many Democrats who fear environmental damage.

In recent weeks, there have been glimmers of a bipartisan effort to fight high gas prices. Just after a record surge sent the price of crude oil above $140 a barrel late Thursday, House lawmakers passed legislation to crack down on speculation in oil futures, 402-19.

House Speaker Nancy Pelosi (D-Calif.) cites experts who say reining in speculation could reduce the cost of oil by $20 to $60 a barrel.

But even that one moment of unity may be less than meets the eye, several analysts said. For one thing, experts are divided on whether curbing speculation would do all that Pelosi says. For another, even Democrats acknowledge the bill mainly asks the federal Commodity Futures Trading Commission to do its job.

"This is more symbolic than real," Norm Ornstein of the American Enterprise Institute said of the legislation. "That's why you got the [number of] votes that you got - to basically say, we are doing something about gasoline prices. In reality, they are doing nothing about gas prices."

The Democrats who control Congress strongly dispute that. They point to a series of bills dating back to last year that show they are confronting high gas prices, from raising mileage standards on U.S. autos for the first time in three decades, to suspending deliveries to the Strategic Petroleum Reserve in order to put more oil on the market. The House last week passed a bill to send $1.7 billion in aid to mass transit systems, including New York's.

At the same time, House Democrats this week failed to pass two other energy bills - one that would slap heavy fines and possible jail time on those who artificially inflate prices at the pump, and a second to force oil companies to drill or give up the leases they hold on 68 million acres of undeveloped federal land. Republicans blocked the lease proposal, saying not all land is productive.

To be sure, market forces - including increased worldwide demand, supply interruptions in unstable areas like Nigeria and the weak dollar - play a major role in the high prices. For that reason, few of the ideas being debated in Congress have much chance of impacting gas prices in the short run - even if they could pass, experts say. "There is little Congress can do that would have any impact in the short term," said Thomas Mann of the Brookings Institution.

That hasn't stopped McCain and Obama from getting into the act. McCain's decision to support offshore drilling put him in step with Bush administration goals - even though just weeks ago, McCain still argued against massive exploration off U.S. coasts.

Like most Democrats, Obama supports a windfall profits tax on oil companies, like the one backed by Sen. Charles Schumer (D-N.Y.) in the Senate bill that failed. That measure will come up again before August, said Schumer, who predicted public pressure would force Republicans to reconsider their opposition.

Schumer said both sides need to move past knee-jerk reactions to their opponents' plans - suggesting Democrats might need to be open to offshore drilling but only if its paired with investments in energy efficiency.

"We do have to come up with sort of the grand compromise here - where Democrats sort of hold their nose a little bit and figure out ways to increase supply," Schumer said. "Frankly, I don't think this administration can pull it off. ... But either President Obama or President McCain might be able to do that."

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