Alaska pipeline, taxes stall energy legislation

Posted: Thursday, October 02, 2003

WASHINGTON - A disagreement over tax incentives for building a proposed $20 billion natural gas pipeline in Alaska stalled energy legislation Wednesday. At the same time, Democrats complained they have been given virtually no say in writing the bill.

Sen. Pete Domenici, R-N.M., chairman of the energy talks, said a big difference remained between House and Senate Republicans over energy taxes. One disagreement involves how much the public should pay for building the Alaska pipeline.

The Bush administration told lawmakers it strongly opposes a provision that would give tax credits to Alaska gas producers if gas prices fall below a certain level. The administration says such a subsidy would distort gas markets.

Prices are more than double what they were a few years ago and are expected to remain high, so there should not be any trouble attracting investment in the pipeline project, Energy Secretary Spencer Abraham said Wednesday after meeting with Republican energy negotiators.

Many U.S. gas producers have complained that Alaska gas should not be singled out if a pipeline is built. Project supporters contend that without the tax credit, companies would be reluctant to commit money because of the volatile history of gas prices.

The issue is a deal-breaker for Sen. Ted Stevens, R-Alaska, who has backed away from pushing for drilling in an Alaskan wildlife refuge in return for assurances the pipeline project will get the needed government tax incentives.

The goal is to try to find a way to resolve the conflict between Stevens and the White House, Domenici said Wednesday.

House Republicans have been cool to giving the $20 billion pipeline project any federal assistance - not even the $16 billion in loan guarantees and favorable tax treatment that the White House is willing to accept.

Rep. Jim McCrery, R-La., said everyone agrees the pipeline should be built but "it's a matter of what tools we want to use so it gets built."

Democrats renewed their complaint that they have been left out of the negotiations, which are supposed to resolve differences between energy bills passed by the House and Senate this year.

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