Above All, a Spark for Big Industry
Promoted as a way to safeguard the nation’s future, the energy plan unveiled Thursday by the Bush administration would heavily reward many of the stalwarts of the old economy.
If Congress enacts President Bush’s proposal, the major winners would include big oil and gas companies, coal producers and giant construction companies, as well as labor unions, energy experts said.
Critics complained that the plan offers no more than modest incentives for firms specializing in renewable energy or energy-saving technologies. The story is the same for other interests, such as mass transit, that might have the potential to substantially change the way Americans live and work.
But those left the most empty-handed probably are consumers and business owners who held out hopes for a quick fix for high electricity, gasoline and natural gas prices. Environmentalists and even property rights advocates also say they came away as losers.
The plan’s more than 100 recommendations are intended to encourage more domestic power production and the building of new oil refineries. It envisions more than 1,300 new power plants, including nuclear facilities, as well as more than 38,000 miles of pipelines and 263,000 miles of distribution lines. The plan calls for opening Alaska’s Arctic National Wildlife Refuge to exploration for oil and natural gas, and some increased spending on research into cleaner-burning technologies.
As a result, the plan could stimulate hundreds of billions of dollars of investment in energy infrastructure, said Chris Ellinghaus, an energy analyst at Williams Capital Group, a New York-based investment banking firm.
Ellinghaus sees that money going to not just the large energy companies, such as Exxon Mobil Corp., and electricity producers--including Calpine, Reliant, Dynegy, Duke and Mirant--but also companies that make components for refineries, power plants, pipelines and transmission wires.
“The trickle-down is going to be tremendous,” Ellinghaus said.
Most of the new business, however, is likely to go to the traditional energy industries--oil, gas, utilities and coal--that helped Bush raise more money than any other candidate in history, according to an analysis by the nonpartisan Center for Responsive Politics.
Bush received $2.9 million from the energy and natural resources sector of the economy, which was among his leading contributors. By contrast, Democratic presidential candidate Al Gore received $328,000.
Texas’ Enron Corp. gave Bush $113,800, more than any other energy company. The nuclear power industry, which received a boost in the Bush energy plan, contributed $290,209 for his presidential bid.
American Petroleum Institute President Red Cavaney acknowledged that members of his energy-industry trade group would be helped by the Bush plan. However, he said, such a plan, by increasing production, would help bring down energy prices--which in turn would benefit consumers and industries that use large amounts of energy.
“At the end of the day, our members are helped when you have a healthy, strong economy and their customers are doing well,” Cavaney said.
Labor Unions See No Losers in End
Bush administration opponents in organized labor offered only tepid criticism of the energy plan. Bill Samuel, legislative director for the national AFL-CIO labor federation, expressed concern that the Bush plan pays too little attention to the “immediate crisis faced by consumers” in California and elsewhere.
But, he said, under any comprehensive energy plan to emerge from Washington, whether it is something resembling the Bush plan or a Democratic alternative, “I don’t see any losers. . . . It would create jobs and much-needed energy.”
The Teamsters, for example, would benefit from proposed pipeline construction in Alaska. Likewise, the United Mine Workers could win from increased coal production, and an array of construction unions would profit from the building of new power plants and transmission systems.
Californian consumers and businesses complained about the lack of relief from high electricity prices. Yet among the first to benefit from the plan would be power plant engineering companies, an industry dominated by such California-based companies as the Southland’s Fluor Corp., Parsons Corp. and Jacobs Engineering, along with San Francisco’s Bechtel Corp.
Mark Stevens, head of strategic planning at Aliso Viejo-based Fluor, said he huddled with staff members Thursday to figure out where the Bush plan could mean increased business for the company. “In an initial glance, we came up with three areas: Alaska, coal-fired co-generation plants and conservation,” he said. In Alaska, the company is already at work on “front-end engineering” for the planned natural gas pipeline that will bring gas from Prudhoe Bay to Alberta, Canada.
Despite the warm rhetoric from the White House, the renewable energy industries generally consider themselves big losers in the plan. While extending the production tax credit to wind and biomass technologies, the administration refused to do the same for geothermal or solar power.
“When you look at the net pluses and minuses, we’ve gotten recognition and some nice rhetoric, but the substance is still severely lacking,” said Karl Gawell, executive director of the Geothermal Energy Assn., an industry trade group. He said most of the ideas the task force looked at--from promoting the use of renewable energies by government facilities to adopting a production tax cut for solar and geothermal--”were left on the cutting room floor.”
The Energy Department’s research and development budget for renewables was cut 50% in Bush’s budget request, and the industry was disappointed that the plan did not include a commitment to restore or increase federal investment to help level the playing field between renewables and other energy sources.
“I think that is unfortunate because the area facing the most severe energy problems is the far West. California, Oregon, Washington, Nevada and Idaho are all facing severe problems right now,” Gawell said. “These are states unlikely to build nuclear power plants. . . . These states don’t have coal. But these states have a wealth of renewable resources.”
‘Missing Chapter on Climate Change’
From the standpoint of environmentalists, the key issue was the plan’s silence on carbon dioxide emissions and global warming. The United States has made international commitments to reduce its emissions of carbon dioxide, one-third of which come from power plants.
“We’re still looking for the missing chapter on climate change,” said Jeremy Symons of the National Wildlife Federation. Rather than producing a plan to shrink emissions, the president is “putting out a plan that locks in a pathway of ever-increasing greenhouse emissions.”
A Cabinet-level commission is reviewing the Bush administration policy on global warming, but environmentalists said the energy report signals that no serious effort will be made to cut emissions of carbon dioxide and other greenhouse gases.
The auto industry might get a boost from the plan’s provision for tax credits for purchasing hybrid-powered cars and trucks, but not soon. The benefits will go to relatively few consumers at the start.
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Silverstein and Rivera Brooks reported from Los Angeles and Shogren from Washington. Times staff writers James Flanigan, Jerry Hirsch and John O’Dell contributed to this story.
