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Katrina Spurs New Debate on National Energy Policy

Hurricane Katrina (search) has reopened a national debate on energy policy, generating new congressional support for more stringent automobile fuel economy requirements and a fresh push by the oil industry for drilling in areas now off-limits.

Just over a month after President Bush signed into law a massive energy bill (search), lawmakers are talking about the need for a second one. If it emerges from Congress, it will carry the stamp of Katrina and the vulnerabilities the storm exposed to the nation's energy system.

"Hurricane Katrina exposed the harsh reality that we have been skating on thin ice when it comes to this country's energy concentrations on the Gulf Coast," said Sen. Pete Domenici, R-N.M., chairman of the Senate Energy Committee and an architect of the energy legislation passed this summer.

Domenici, in an interview and an appearance Sunday on cable TV's C-SPAN channel, also said the Gulf disaster and the skyrocketing gasoline costs it unleashed has made it clear more needs to be done to reduce energy use. That includes requiring automakers to significantly increase the fuel economy of their fleets, he said.

The hurricane was "a serious wake-up call that we have to do something both on the supply side and the conservation side" that before was politically impossible, Domenici said. He added that he is a convert to increasing auto fuel economy standards after first believing it should be left to the marketplace.

Repeated attempts to require automakers to make their vehicles more fuel efficient have failed because of strong bipartisan opposition in Congress.

The White House strongly opposed proposals earlier this year that would have required SUVs (search) to attain the same fuel efficiency as cars and increased fuel standards from the current 27 miles per gallon to 35 mpg over the next decade.

Domenici said those political barriers may be overcome in the wake of Katrina and likely high gasoline prices (search) for years to come. That is possible, he said, if auto fuel economy improvements are coupled with opening new areas for oil and gas development, including the resources in offshore areas that have been under an exploration and drilling ban since 1980.

Reflecting a widespread view among GOP lawmakers, Domenici also was optimistic about easing environmental requirements that the oil industry argues have prevented new refinery construction.

Some of the clean-air requirements suspended by the Environmental Protection Agency in the aftermath of Katrina to ease the flow of gasoline supplies should be permanently repealed, Sen. George Allen, R-Va., argued.

All these issues remain highly controversial and the disagreements will not be resolved easily. The auto industry remains strongly opposed to requirements for a major increase in fuel economy (search) mandates, as is the Bush administration.

If gasoline prices decline and stabilize, it "could take the wind out of" some of these efforts such as the push for an expansion of offshore drilling, says Christine Tezak, an analyst with Stanford Washington Research Group.

Environmentalists will fight any easing of clean air and clean water requirements on refineries or motor fuels. They argue that market considerations — not excessive environmental rules that help reduce air pollution — have kept oil companies from building new refineries.

In addition, many lawmakers from coastal states say they want the bans on offshore drilling outside the central and western Gulf of Mexico kept in place. Environmentalists still hope to stave off legislation to open the Arctic National Wildlife Refuge (search) in Alaska to drilling, but they acknowledge Katrina has made that even harder.

Domenici predicted that the drilling ban on the Alaska refuge will be lifted.

The oil and gas industry, believing it likely already has won the Alaska refuge issue, has focused its attention on opening up areas of the Outer Continental Shelf to drilling, if not for oil at least natural gas.

"These areas must follow the example of Louisiana and many other states in sharing these energy resources," Bob Slaughter, president of the National Petrochemical and Refiners Association, told House and Senate hearings last week.

Today, 85 percent of these resources are not accessible because of offshore-drilling moratoriums, said John Engler, a former Michigan governor and now chairman of the National Association of Manufacturers. He wants Congress to give states the ability to waive the federal bans.

Such a proposal almost made it into the energy bill earlier this year, only to be blocked by a threat by Florida's senators to filibuster the legislation if it were included.

Under the proposal, states could petition for a waiver of the offshore drilling ban. In return, they would receive a large chunk of the royalties the federal government collects from sales of drilling leases.

Lawmakers from coastal states have opposed tinkering with the offshore-drilling ban, fearing that energy development — even far offshore — could lead to spills or otherwise affect tourism.