Feb. 28, 2001

Murkowski Energy Bill Increases Corporate Dependence
on Taxpayer Subsidies

Incentives Inadequate to Stem Demand, Reduce Reliance on Foreign Oil

WASHINGTON, DC -- An energy plan unveiled this week by Sen. Frank Murkowski (R-Alaska) would do little or nothing to address America s energy problems, despite the fact that it calls for spending billions in taxpayer dollars on corporate subsidies, according to a Public Citizen analysis of the bill.

Many of the billion-dollar subsidies included in Murkowski s bill (S. 388 and S. 389) would encourage the use of dangerous nuclear facilities and inefficient oil wells. Missing are increased fuel efficiency standards and other conservation strategies a glaring omission considering that two-thirds of America s oil consumption is used in transportation. The bill calls for opening up the sensitive Alaska National Wildlife Refuge to drilling, even though a 6 percent increase in auto fuel efficiency standards would, within three years, equal the total amount of recoverable oil estimated to be in the refuge.

The bill lavishes more than $1 billion on the nuclear industry, including $750 million in "production incentives," which would encourage nuclear reactors to cut corners on safety to increase production, Public Citizen believes. In addition, $20 million a year would be handed out to nuclear facilities for making investments to improve their efficiency by a paltry 1 percent.

The bill also directs Energy Secretary Spencer Abraham to seek ways to subsidize the high cost of nuclear power by any means necessary, including bestowing federal loan guarantees, federal price guarantees and special tax considerations, and extending taxpayer-funded insurance of the industry in case of Chernobyl-types of accidents, and by direct federal government investment. In one example of explicit promotion of government-subsidized nuclear energy, the bill adds $25 million to the Department of Energy s budget to map out the design and development of new nuclear energy facilities.

"This measure is a lavish gift to energy corporations, once again at the expense of taxpayers and consumers," said Public Citizen President Joan Claybrook. "We need to address our problems by taking serious conservation measures, not by offering billions of dollars to industry."

Increased dependence on nuclear power will create more stockpiles of high-level radioactive waste a problem the bill does not adequately address. For example, the legislation offers tax credits to utilities that store nuclear waste and would commit public dollars to research dangerous and discredited technologies for "recycling" nuclear waste.

The oil, gas, and electric power generating industries, however, receive the lion s share of the estimated $23 billion of taxpayer handouts. Power generators whose profits were one the highest of any industry group last year, with shareholder returns approaching 60 percent would receive more than $1.1 billion to use more coal to produce electricity.

The bill also provides incentives for oil and gas companies to drill on federal land. In addition to opening up the Arctic National Wildlife Refuge to drilling, cash royalty payments for drilling on public land would no longer be required, and offshore, deep-water rigs wouldn t have to pay royalties if the price of oil falls below a certain level. An additional $300 million would be provided to oil companies for extracting oil difficult to reach.

When the numerous accounting and tax credits are taken into account, taxpayers would be subsidizing these oil and gas companies to the tune of more than $10 billion.

The provisions for conservation incentives and renewable energy investments pale in comparison to the subsidies lavished on nuclear and fossil fuels.

"Handing taxpayer money over to energy companies won t do anything to address America s dependence on foreign oil," said Wenonah Hauter, director of Public Citizen s Critical Mass Energy and Environment Program. "Even if encouraging more drilling on public land produces a million more barrels of oil a day, it will represent little more than 1 percent of world oil production and have no impact on the OPEC cartel. A more sensible approach would be genuine investment in reducing demand through energy conservation and increased investment in renewable technologies, not renewing handouts to oil companies."

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