26 July 2005PlanetArkTom Doggett and Chris Baltimore
To stretch America's gasoline supplies, the leaders of a joint Senate-House conference committee racing to finish a US energy bill agreed Monday to almost double production of the motor fuel additive ethanol to 7.5 billion gallons a year by 2012.
The ethanol compromise is larger than the 5 billion gallons approved by the House, but smaller than the 8 billion gallons called for by the Senate.
Ethanol, derived mostly from corn, is a popular political cause in farm country, where it is regarded as a homegrown answer to oil imports and a boon to farm income.
It is usually blended directly into gasoline in a mix of 10 percent ethanol and 90 percent gasoline, which makes motor fuel burn more cleanly to meet federal air pollution requirements.
Ethanol is more difficult for oil companies to transport because it evaporates more quickly than conventional gasoline, requiring refiners to remove more smog-forming emissions.
The federal ethanol requirement was set to be cleared Monday evening, when the full panel of Senate and House negotiators meet to finalize additional terms of the broad energy legislation.
Sunday, the bill negotiators dropped a proposal for legal protection for oil refiners that make a rival fuel additive -- methyl tertiary butyl ether, or MTBE.
MTBE is added to make fuel burn cleaner, but has polluted groundwater in many states. It makes water taste and smell like turpentine and is a possible carcinogen.
Rep. Joe Barton, Texas Republican and chairman of the energy bill conference committee, proposed creating an $11.4 billion fund to clean up MTBE contamination in return for shielding refiners such as Exxon Mobil Corp. from lawsuits. But the plan was roundly criticized by the oil industry, municipal water officials and key US senators.
While Barton was unable to win liability protection for the oil companies, he was able to include draft language in the bill to require MTBE liability lawsuits to be reviewed by federal courts, setting a higher bar for such lawsuits to proceed.
The negotiating session Monday night was expected to consider several important amendments to the bill.
House lawmakers will decide whether to accept a Senate proposal that 10 percent of US electricity must be generated by renewable sources such as solar and wind power by 2020.
House negotiators will also consider a Senate proposal to reduce US oil consumption by 1 million barrels a day.
Yet to be finalized is a multibillion-dollar package of energy tax breaks and subsidies. The House tax package totals $8 billion while the Senate's is $14 billion. Both are higher than the $6.7 billion sought by the Bush administration. Negotiators are working on a compromise tax package of about $10 billion.
White House spokesman Scott McClellan reiterated on Monday that the administration "doesn't think we need to be providing tax credits to oil companies when the price of oil is above $50 a barrel."
Bush spoke with leaders of the conference committee Sunday and urged them to approve a final energy package this week so the full Senate and House can clear it and then send it to him to sign into law by Aug. 1.
Under the draft language, US ethanol production on an annual basis would total as follows (in billions):
YEAR GALLONS
2006 4.0
2007 4.7
2008 5.4
2009 6.1
2010 6.8
2011 7.4
2012 7.5
