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Possibility of Ethanol Mandate Draws Closer

WASHINGTON -- The U.S. Senate approved legislation that encourages more efficient use of energy and the development of renewable fuels such as ethanol while doing little to ease record high gasoline and natural gas prices, according to Bloomberg.

The legislation revamping the nation's energy policy, approved 85 to 12 with bipartisan support, aims to reduce U.S. dependence on oil from other countries. The bill puts in place policies that will eventually ease prices for consumers, though not in the near term.

"This bill does not bring down the price of gasoline at the pump,'' Sen. Jeff Bingaman, a New Mexico Democrat who co-sponsored the legislation, told reporters today. "In the long term, it puts in place good policies that will move us in a direction that will be very beneficial to American consumers, American industry and America in general.''

The legislation now goes to a conference with the House, which passed an energy bill in April that contains less spending and includes liability protection for makers of the gasoline additive MTBE, a measure rejected by the Senate. A disagreement over MTBE liability contributed to the failure of a 2003 energy bill.

U.S. House Energy and Commerce Committee Chairman Joe Barton last week said lawmakers are close to a compromise on limiting liability for makers of MTBE, or methyl tertiary butyl ether, which makes fuel burn more completely. Rep. Charles Bass, a New Hampshire Republican, said the talks are focused on creating a company-financed fund to compensate communities whose groundwater has been polluted by the gasoline additive.

The Senate bill was passed after two weeks of debate on how best to deal with record oil and natural gas prices, as domestic oil production is at a 50-year low. Crude oil in New York rose to an all-time high of $60.95 a barrel Monday after surging 61 percent from a year earlier.

"From our standpoint it is an extraordinarily helpful bill,'' said Bob Dinneen, president of the Renewable Fuels Association, which represents U.S. ethanol manufacturers. The Senate measure would require oil companies to put 8 billion gallons of ethanol a year into the nation's gasoline supply by 2012 to reduce reliance on oil.

"For the first time we have in a federal law, assuming we get it through the conference committee, a provision requiring that a significant percentage of the nation's fuel supply not be traditional petrochemicals, but be renewables,'' said James Talent, a Republican from Missouri.

The renewable fuel mandate is one of three key challenges facing House and Senate negotiators as they attempt to reconcile different versions of the bill, Domenici said. Liability protection for MTBE manufacturers such as ConocoPhillips and Exxon Mobil Corp. and the size of tax breaks are the other two, he said.

The House bill waives liability for MTBE makers. The waiver is opposed by lawmakers in the Northeast, where the gasoline additive has seeped into groundwater supplies.

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