Iowa Public Television


House Approves Oil Drilling and Wind Energy Tax Credit

posted on September 19, 2008

Hello, I'm Mark Pearson. Jittery investors may be reaching for the antacids this weekend, after enduring one of the most tumultuous weeks on Wall Street since the Great Depression. By Thursday afternoon, The Dow Jones Industrials racked up a weekly loss of more than 800 points. But stocks rebounded when word circulated that the government was about to intervene in what could become the largest financial bailout in U.S. history.

While the details of the rescue remain to be determined, it's expected that the government will rescue banks from billions of dollars in bad debt, by purchasing distressed mortgages at deep discounts.

The Federal Reserve announced Friday it will expand its emergency lending and let commercial banks finance purchases of asset-backed paper from money market funds. The Fed also committed to buy short-term debt obligations issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

And the Securities and Exchange Commission on Friday enacted a temporary ban on the short-selling of nearly 800 financial stocks.

In the short-term, the plan appears to be working. Wall Street extended a huge rally Friday as investors stormed back into the market

While the crisis on Wall Street and subsequent government intervention dominated this week's headlines, lawmakers also worked on what many believe is the nation's next most serious problem…. Rising energy costs.

House Approves Oil Drilling and Wind Energy Tax Credit Amid accusations of partisan politics the U.S. House of Representatives passed a controversial energy bill this week which opens offshore drilling for the first time in 26 years. The bill, which passed through the Democrat controlled body, limits drilling to a region 50 to 100 miles off the east coast of the United States. And drilling would be allowed only if the states adjacent to the leases approve.

Members on the other side of the aisle were quick to call the measure a hoax. According to Republican foes of the bill, any drilling would barely touch 88 percent of the oil available offshore.

Rep. Mike Pence, R-Indiana: "...the drill nothing congress has brought about a bill that basically includes "drill almost nothing" provisions. They say yes to drilling, not in Alaska, not in the eastern gulf and not within 50 miles. On behalf of our constituents who are struggling under record gasoline prices, end this charade stop playing politics with America's energy independence."

But Speaker of the House Nancy Pelosi called on Republicans to adopt the measure for the good of the country.

Speaker Nancy Pelosi, U.S. House of Representatives: "Republicans must set aside their drill only mentality and embrace the provisions of this legislation which is balanced, which is comprehensive, which respect the needs of the consumer, the imperative that we are energy independent"

Other controversial elements of the bill include repealing nearly $18 billion in tax breaks for the five major oil companies. The newly available monies would be redirected to commercialize alternative energy development.

The Senate, which will take up the legislation in the next few days, is expected to make some changes. President Bush has stated he will veto the bill if it ends up on his desk.

One of the less contentious elements of the bill is an extension of the wind energy production tax credit, or PTC. Industry advocacy groups are lobbying hard for the extension to protect jobs and revenues of wind energy companies.

Randall Swisher AWEA: "If you do not extend the credit the size of the market will diminish significantly. There will be very substantial chaos in the market. Given the fact that wind will be one of the leading sources of new manufacturing jobs in the 21st century, given all of the momentum that we have today, this is one of the bright spots in the nation's economy. Why would we not choose to extend the credit and maintain this momentum? That's just silly."

The owners of the Florida-based FPL Energy are among the many U.S. companies that rely on tax incentives like the PTC to expand their wind generating capacity.

Mary Wells, FPL Energy: "Perhaps you've heard people say 'renewable energy and economical electricity are mutually exclusive.' We do not believe that. We believe they are one in the same. We believe that renewables are good for the economy, their good for us, we think they're good for our neighbors, and we think, overall, they are a very economical thing to do."

FPL, the nation's leader in wind generation with an estimated 5,600 megawatts of capacity, has erected wind turbine farms across the United States. New facilities are being sited and constructed on the high places throughout the wind corridor in the central region of the country.

Mary Wells, FPL Energy: "In the past when production tax credits have been allowed to expire, that happened a couple of years ago, there was virtually no wind construction that next year. And so, we are very hopeful that the production tax credits will be renewed."

In places like the Dakotas, Texas and this location in central Iowa, FPL leases a small portion of land to erect the wind turbine and put in a service road. The production tax credit assists companies like FPL pay for everything from infrastructure to land leases.

Ron Huhn, a local landowner, says he signed a 50-year lease that will net him $5000 annually for each of the 5 wind turbines sitting atop the ridges of his rural Iowa property.

Dr. Ron Huhns, Colo, Iowa: "The reimbursement for the land that is used for the towers is quite ample. It's almost like farmers used to have a cream check or a milk check when they milk cows this is regular income that will be coming in for them and they can assess the risks of their farming operation accordingly."

Tags: alternative energy Congress drilling energy policy government news oil wind wind power