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SENATE GROUP DECLARES ENERGY PROPOSALS

By Aaron Sadler/STEPHENS WASHINGTON BUREAU
Friday, August 1, 2008 11:27 PM CDT

WASHINGTON — A group of 10 centrist senators on Friday urged that a ban be lifted on offshore oil drilling and that Congress launch an ambitious plan to get gasoline-powered cars off the road.

The bipartisan “Gang of 10” that includes Sens. Blanche Lincoln and Mark Pryor, both D-Ark., unveiled sweeping energy proposals just as Congress left Washington for its summer recess.

Lawmakers are stuck in a divisive battle over how to fix the nation’s energy woes and have so far produced no major legislation to ease high gas prices.

Group members said Friday they want to break the stalemate. They offered a plan that includes new coastal oil drilling that Republicans want as well as tax hikes for oil companies that would be favorable to Democrats.

“The American people have been clamoring for us to come together and that is exactly what this group did,” Lincoln said, adding that constituents in disproportionately poor, rural Arkansas are hit hard by $4-a-gallon gas prices.

Some Arkansas residents are spending as much as 11 percent of their income to fill up their cars, she said.

“They are desperate,” Lincoln said. “They are desperate and in need of relief from these high energy prices that we’re seeing.”

The group was optimistic that energy markets would notice if Congress was making progress toward a fix, causing fuel prices to decrease in the short-term.

In a nod to the group, Democratic leaders have agreed to convene a closed-door “energy summit” for senators in September. However, Senate Majority Leader Harry Reid, D-Nev., issued a lukewarm response to the proposal.

“Do I agree with everything they did? No, I don’t agree with everything, but even the 10 don’t agree with everything in the package. But I look forward to working with them,” Reid said.

The proposal lifts a decades-old ban on offshore drilling off the Atlantic coast and frees up new acreage in the eastern Gulf of Mexico for oil and gas exploration.

Virginia, North Carolina, South Carolina and Georgia could allow drilling, as long as it was at least 50 miles offshore.

The group set a 20-year goal of having 85 percent of domestically manufactured automobiles powered on fuels that aren’t petroleum based. They would fund the initiative with $20 billion in support for manufacturers and consumer tax credits.

The multifaceted plan also includes:

— Renewing tax credits and increasing money for research and development of alternative fuels like ethanol and biodiesel.

— Authorizing tax credits and incentives for purchase of highly fuel-efficient cars or hybrids and for construction of fueling stations and pipelines for alternative fuels.

— Providing grants and loan guarantees for coal-to-liquid fuel plants.

The estimated $84 billion proposal will be paid for at least partially by big oil companies. The group said at least $30 billion can be generated by decreasing an existing tax deduction that applies to those firms.

The proposal does not contain any provision dealing with energy market speculation, something Democrats have long decried as the primary culprit behind record-high fuel prices.

The group said it awaits a report due in September by the Commodity Futures Trading Commission, the government agency that regulates market speculators.

“The group decided to focus on increasing supply and reducing demand,” lawmakers said in a statement.

Sens. Kent Conrad, D-N.D., and Saxby Chambliss, R-Ga., led the “gang,” which met in private several times over the past six weeks.

In addition to the Arkansas duo, other members of the group are: Sens. John Thune, R-S.D., Lindsey Graham, R-S.C., Mary Landrieu, D-La., Johnny Isakson, R-Ga., Bob Corker, R-Tenn., and Ben Nelson, D-Neb.

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