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Energy Bill Falls Short, Business Owners Say

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August 9, 2005--With President Bush's signing of the energy bill yesterday, small-business leaders in the energy sector see some bright spots but say there's still much work to be done.

The bill, which is more than 1,700 pages long, offers $14.5 billion in tax breaks and incentives spread out over 10 years, with $9 billion earmarked for oil and natural gas exploration, improving electricity reliability and investing in coal pollution reduction projects. The remainder (just under $5 billion) goes to promoting and expanding renewable energy use as well as encouraging energy efficiency -- focusing mainly on funding further development of wind-generated power.

Congress dropped language from the bill approved by the Senate which mandated gas mileage requirements on so called "gas-guzzlers" as well as a requirement that 10% of U.S. electricity be produced by renewable sources by 2020, disappointing some in that sector.

"This bill encourages very little motivation for companies to go out and be proactive in seeking alternatives to how we produce energy," Paul Thomas, CEO of Green Mountain Energy, an Austin-based marketer of power, said. "Overall, we're encouraged by the bill, but it's still a long way away from where we should be."

Some of the incentives promised in the bill include tax breaks for the purchase of hybrid vehicles and for energy-efficient home improvements like adding solar panels.

The bill also mandates doubling current ethanol requirements in gasoline by 2012.

Large steps were also taken toward making natural gas a larger part of the U.S. power portfolio. According to the Department of Energy, nearly 25% of all U.S. power produced is via natural gas -- with 85% to 90% of that gas drawn domestically. The bill gives control of Liquid Natural Gas terminals, the most efficient way of importing and exporting natural gas, to the Federal Energy Regulatory Commission and not the states.

"This is a bright spot in the bill because it will expand the global natural gas market," Kemal Farid, CEO and founder of Merrick Systems, a Houston based maker of fossil fuel extraction technology, said. "This is a crucial step in stabilizing the price of natural gas."

The U.S. already has an extensive natural gas infrastructure in place and according to the Department of Energy, 900 of the next 1,000 power plants built will use natural gas.

However, Farid points to a shortfall on a crucial issue -- little money is dedicated to making our existing infrastructure more efficient.

"The oil industry has peaked or will peak in the next few years," Farid, said. "Spending more money on making the existing infrastructure more efficient, and less on exploration, will buy more time to find alternative sources and will foster the transition to those alternative sources."

However, despite the bill's shortcomings, both Thomas and Farid agree that the bill is a step in the right direction and sets the stage for more, further-reaching legislation in the future.

"Real progress has been made here and there's acknowledgment that change is needed. That's promising," Thomas said.

Last updated: Aug 9, 2005




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