Energy fix promises widespread effect

Changes: The new law will likely affect all U.S. residents in some way.

August 14, 2005|By Larry Williams | Larry Williams,PERSPECTIVE EDITOR

THE STOCK MARKET fluttered and President Bush worried aloud last week about the economic impact of sharply rising oil prices. By the end of the week, crude oil prices rose to $65 a barrel, 40 percent higher than a year ago.

"Energy is on our minds these days," said Bush after meeting with his economic advisers at his ranch in Crawford, Texas.

The president pointed to a sweeping $14.5 billion energy bill he signed into law last week as part of a long-term solution to the mounting problem of energy supply. Experts said the legislation's impact would be long-term and uncertain.

Truth be told, gasoline prices, currently hovering around $2.50 for a gallon of regular -- up about 27 percent from a year ago -- are likely to continue to climb, as is the cost of heating oil, jet fuel and other necessities of modern life. That's because China and other fast-developing countries are competing for a supply of oil that is growing slowly, if at all.

But soaring oil costs won't necessarily derail the nation's economy. Oil would have to top $90 a barrel to exceed the inflation-adjusted peak set in the nation in 1980, and energy is consumed much more efficiently than it was a quarter-century ago.

Still, very expensive energy is likely to have real economic effects, and the new law aimed at spurring supply and efficiency is likely to touch our lives in some interesting and occasionally surprising ways that reflect the complicated challenge of finding affordable energy in the 21st century.

Whether you are a farmer or a homeowner, a driver or a telecommuter, an environmentalist or a student, the law's provisions could change your world in ways large and small.

For starters, it appears likely to help change some of Western Maryland's mountain vista dramatically.

The law extends tax credits for some newer energy sources, viewed as vital by the developers of wind-power turbine farms planned for ridgelines in Western Maryland.

Synergics Wind Energy LLC of Annapolis hopes to build nearly two dozen tall turbines along Backbone Mountain in southern Garrett County. Clipper Windpower Inc. is proposing to build 40 windmills at its approved wind farm site in Garrett County, north of the Synergics site. And a company called Savage Mountain Wind Force plans up to 25 windmills in western Allegheny and Garrett counties.

Opponents of the projects said the turbines, at least 394 feet tall, would spoil the view of the Appalachian ridge tops and kill unknown numbers of birds and bats.

"We don't know what it's going to impact, and they don't know what it's going to impact," said Robert DeGroot, president of the Maryland Alliance for Greenway Improvement and Conservation.

Synergics said it wouldn't disturb environmentally sensitive spots on Backbone Mountain identified by the state. But to compensate for reducing the number of proposed turbines, it plans to make them bigger, enabling the wind farm to generate about 40 megawatts of electricity for sale on the wholesale power market.

Including blade length, some of the new turbines would be up to 548 feet tall, nearly as tall as the Washington Monument on the mall in the nation's capital.

Closer to home, the law will push the start of daylight-saving time up three weeks, from April to March, and push its end date back one week, from October into November. The change, which goes into effect in 2007, is designed to save energy by cutting the number of hours electric lights are needed.

The new law has upset some parents who worry that their children will be waiting for school buses in the dark on some mornings, and a few industries also are complaining. Airlines, for example, say they will have to make huge adjustments to their schedules to serve travel destinations in Europe.

Computer experts say the shift will require some adjustments to personal computer operating systems as well as computer datebooks and other software.

But as far as many businesses are concerned, more daylight hours means more business and more money.

Tax credits for autos

The new law provides tax credits for purchases of hybrid or fuel-cell vehicles, with the size of the credit linked to the weight of the vehicle and its fuel economy. But the vehicle credit has a hitch that could discourage some buyers.

Purchasers of vehicles manufactured by Toyota, which produces the most popular hybrid car sold in America, could quickly become ineligible for the credit because of a provision that eliminates the credit for any automaker in the second year after it sells 60,000 hybrids or advanced diesels.

There also will be a 30 percent tax credit for the purchase of residential solar water heaters or photovoltaic equipment through 2007 and a 10 percent tax credit for energy-efficiency improvements to existing homes, up to a maximum $500 through 2007.

The law offers billions in tax credits to energy utilities as well as oil, gas and coal producers and, in a big favor to Midwestern farmers, orders greatly expanded use of corn-based ethanol gasoline additive by 2012.

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