Bush Aides Kill Tough Measures in Energy Plan

Conservatives in the Bush Administration have succeeded in gutting the most ambitious energy conservation provisions contained in a proposed new national energy plan drafted by the Department of Energy, knowledgeable officials said Friday.

In a rancorous internal debate over the direction of long-term energy policy, advocates of tough conservation measures, such as higher car mileage standards, lost out to Administration officials opposed to virtually any new governmental intervention.

After months of infighting, senior White House officials--including Chief of Staff John H. Sununu, Budget Director Richard G. Darman and Michael J. Boskin, chairman of the President’s Council of Economic Advisers--have forced the Department of Energy to rewrite its initial draft of the energy plan.

Sources familiar with the debate said that the department has toned down or eliminated many provisions of the original plan that called for increased federal regulatory activity designed to encourage more energy conservation.

The revised plan is expected to call for few, if any, sacrifices by American consumers, the sources said, and will propose no energy-related tax increases. Sources said that the document is unlikely to offend any major political constituency--with the notable exception of environmentalists, who favor tougher measures.

Officials said provisions that would have called for more government intervention in the private sector have been reworked to more closely fit the pro-business philosophy of President Bush, who once ran a Texas oil company.

The sources said that top White House officials are generally satisfied with the rewritten plan, which was presented to senior economic policy-makers on Dec. 21. Bush is expected to announce his acceptance of the strategy sometime in the next six weeks.

Although White House officials apparently have succeeded in winnowing out measures that free-market conservatives might find offensive, they have preserved others that are likely to rankle environmentalists.

For example, the White House has agreed to preserve a highly controversial provision that calls for oil exploration within a 1.5-million-acre coastal region of the environmentally sensitive Arctic National Wildlife Refuge in northeastern Alaska.

Environmentalists have argued that any effort to increase drilling in the refuge should be offset by placing new demands on auto makers to build much more fuel-efficient cars, but the White House appears unlikely to make such a trade-off.

Officials said, however, that the Administration plan will not renew a push to expand oil drilling off California’s coast, which would touch off a far greater political firestorm than the campaign to expand Alaskan drilling.

In recent months, Bush has stressed repeatedly that he will stand by his pledge to keep California’s coast off limits to new drilling. Even so, he has warned that California eventually will have to open its coastal areas to increased drilling activity to help reduce U.S. dependence on foreign oil.

Although the Administration is expected to approve a final version of the plan in the next few weeks, officials said that it remains unclear whether Bush will announce any of the plan’s provisions during his State of the Union address on Jan. 20.

The Administration has not officially released details of the plan, and officials cautioned that a number of the more controversial measures--including one calling for more incentives for development of alternative-fuel vehicles--remain under review and could be altered.

Several officials noted that the initial plan presented by the Energy Department resembled a broad list of options rather than a set of strong policy recommendations. As a result, it has been relatively easy for senior Administration officials to force key, last-minute changes in the plan, even though the Energy Department spent 18 months developing the strategy.

“This is really a National Energy Laundry List,” said Philip K. Verleger Jr., an energy analyst at the Institute for International Economics in Washington. “Fundamentally, this whole process has been flawed, because (Energy Department officials) didn’t establish any goals or basic principles to guide their study. First, they have to have some goals before they can have a strategy.”

Still, the emphasis of the plan clearly has been altered in response to White House pressure, officials said. The revised document is likely to emphasize greater incentives for expanded oil production in the United States and in friendly nations outside the Middle East, as well as noncontroversial incentives for research and development of new energy technologies.

The plan will not propose a bold new governmental campaign to encourage energy conservation, the sources said.

Critics said that the timing of the Administration’s decision to back away from more ambitious attempts to promote energy conservation could hardly be worse.

The United States appears poised to go to war in the Persian Gulf, largely to secure American access to Middle East oil, the critics charge, while the U.S. economy is plunging into a recession brought on, in part, by a severe oil price shock--the third in two decades--that followed Iraq’s Aug. 2 invasion of Kuwait.

“I’m struck by the fact that it seems easier to develop an international consensus to stop one man from dominating the Middle East’s oil fields than it is to develop a domestic energy policy,” observed Daniel Yergin, an energy consultant and author of a book on the history of the oil industry.

Administration officials acknowledged that it may be politically awkward for the White House to espouse a free-market energy policy if American military forces are forced to fight to protect U.S. access to the Persian Gulf oil fields.

But the officials insisted that the new energy plan is designed to provide the United States with a long-term strategy and should not be influenced by temporary considerations like the Persian Gulf crisis.

One Administration official noted that the official announcement of the new energy policy might not occur by the time war breaks out in the gulf.

“If you are going to put together a long-term strategy, you don’t do it overnight,” the official said. “And, for the long term, free-market measures work best. This is a pragmatic approach, and we feel that we are on the right track.”

BACKGROUND

The Energy Department has spent 18 months developing a national energy strategy designed to help the Bush Administration formulate energy policies for the coming decade. The agency held hearings across the nation to obtain the views of businesses, consumers and environmentalists, and it conducted a detailed review of world energy markets. A revised version of the national energy strategy was presented to the Administration’s top economic policy-makers just before Christmas.