Letter to U.S. Senate on Pending Energy Bills

October 26, 2007

The Honorable Harry Reid
Majority Leader
United States Senate
Washington, DC 20510

The Honorable Mitch McConnell
Republican Leader
United States Senate
Washington, DC 20510

Dear Leader Reid and Leader McConnell:

The new Institute for 2l^st Century Energy was established to help formulate a national energy policy that is in the best interest of the country. As the President and Chief Executive Officer of the Institute, I am following pending energy legislation with great interest. I understand the House and Senate will attempt to reach agreement on an energy bill possibly without convening a conference committee, which places a critical responsibility in your hands.

Like you, we believe our nation must move forward in unity, and with urgency, to secure an affordable, diverse, efficient, clean, and growing supply of fuel and power to meet the needs of a growing population and a competitive American economy. We also recognize that we must do so while protecting national security and improving the environment.

We have looked closely at the pending legislation in both the House and Senate and are pleased that both bills place a strong emphasis on increased efficiency. Since 1975, the people and businesses of our country have made great strides in efficiency, producing each dollar of GDP today with just half of the energy required back then. Through energy education, market incentives, and reasonable regulations, we can do even more.

Unfortunately, the pending bills contain provisions that greatly concern us. Some of these provisions, if adopted, would saddle our economy with costly and unworkable regulations, which will drive up the price of gas and electricity for American families, while jeopardizing jobs in manufacturing and other sectors. Other provisions would make it more difficult to expand domestic energy supplies from all sources, at a time when we must do so to keep energy affordable, keep jobs in the United States, and reduce our dependency on foreign sources.

These are the specific provisions we find troubling:

• House provisions that would dramatically scale back provisions in the Energy Policy Act of 2005 designed to expedite oil and gas drilling on public lands and offshore areas. Any comprehensive energy strategy for the nation must first do no harm to existing and future domestic production.
• A Senate provision that would expand the current bio fuels mandate roughly five-fold to 36 billion gallons by 2022. We believe this, as well as President Bush's 35 billion-by-2017 proposal, are both unrealistic and unworkable. By asking members of the Senate and House to vote for such mandates, you are asking them to impose both higher gas prices and higher food prices on American families.
• A Senate provision that would raise CAFE standards for cars and light trucks to 35 miles per gallon by 2020. This is too steep a hill to climb in too short a time, and it could cost many more of our autoworkers their jobs. Additional CAFE improvements should be made, but they should be based on regulatory flexibility and realistic science and engineering, while maintaining distinct guideposts for different vehicle classes.
• A House provision that would require investor-owned utilities to provide a significant amount of their power from renewable sources by 2020. This unworkable mandate will result in higher electricity prices for American families and businesses. Incentives are much-preferred to mandates for encouraging investments and adoption of new renewable and conservation technologies.
• Provisions approved by both houses that would allow antitrust actions against OPEC nations in U.S. courts. More lawsuits won't solve our energy challenges. Furthermore, such measures would encourage international retaliation against American businesses abroad and damage our relations with other countries. Our standing in the world demands enlightened leadership where energy issues are concerned.
• Tax increases in the House bill which would require oil producers to pay for new renewable energy and conservation incentives. With most of the world's oil being increasingly controlled by government-owned companies, raising taxes on our private sector companies would put them at a competitive disadvantage in the race for resources. Our companies are already leaders in funding billions of dollars of alternative energy R&D.

I hope you will carefully consider these points and apply these simple but important tests to any legislation:

Would the legislation help produce more domestic energy from sources, traditional and alternative? That is what we must do to protect our national and economic security.

Would it unintentionally raise gas and electricity prices on American families and businesses through unrealistic regulations, mandates and taxes? To do so would place an unfair burden on our citizens and help drive jobs out of our country.

Would it realistically move us towards greater energy efficiency and a cleaner environment, while at the same time ensuring an adequate and affordable supply and a competitive American economy?

Thank you for your leadership I would be pleased to discuss these critical issues at your convenience.

Sincerely,
James L. Jones
General, U.S. es (Ret.)

Cc: Members of the United States Senate