On Energy, It's the Gulpers vs. the Sippers

The price of oil hit an all-time record in July, when a barrel of so-called light, sweet crude moved north of $78. It was a not so subtle reminder that the nation needs to do something about its energy policy. But we are a nation divided when it comes to the best course of action.

Broadly, the debate involves two fundamentally different approaches. On one side, conservatives argue that increasing domestic energy production should be the centerpiece of any new policy. Call them the gulpers. On the flip side, most liberals and environmentalists would rather increase energy efficiency. Instead of gulping, they prefer sipping. So call them the sippers.

It's like the difference between chugging beer at a kegger and tippling a Cabernet on the terrace while watching the gardener trim the lawn (with a push mower).

For the moment, Democratic leaders in Congress seem to favor sipping. Energy measures now under consideration in the House consist of a confusing array of incentives, tax breaks and, yes, even new taxes, all of which are designed to encourage greater energy efficiency. So far, energy-producing initiatives, such as opening up offshore and wilderness areas to new exploration and drilling, are essentially off the table.

Small businesses, of course, have an enormous stake in the outcome. Collectively, they consume 50 percent of the nation's energy. But when it comes to choosing a course of action, they seem to be just as divided as everyone else, according to a sampling of small business advocacy groups.

One such group, the Small Business & Entrepreneurship Council in Washington, D.C., thinks the Democratic approach is wrongheaded. It warned recently that measures currently under consideration would discourage energy development on federal lands and unnecessarily delay domestic oil and natural gas exploration and development.

"U.S. energy companies would be at a distinct competitive disadvantage; investment in energy development would be restrained; U.S. businesses and consumers would face higher energy costs; and the economy would suffer accordingly. This is not a sound course for energy policy," wrote the group's president, Karen Kerrigan, in a letter to congressional leaders.

But two-thirds of those who responded to a survey by the National Association for the Self-Employed (NASE) said they were already weighing the environmental impact of their business decisions. An equal number also said they were more likely to buy goods and services from an environmentally friendly company. In a separate survey, NASE, which represents businesses with five employees or fewer, found that owners were just as likely to support tax incentives to increase energy efficiency as they were to encourage drilling in environmentally sensitive areas.

"Microbusinesses are very conscious about the role business can play in affecting the environment," said Kristie Darien, NASE lobbyist, in a statement. "Microbusinesses are doing a lot more to set the standard for environmentally friendly business practices than many of their counterparts."

Among the steps that small business owners are taking, 22.4 percent said they routinely recycle paper, plastic, glass, and aluminum; 22.3 percent recycle old toner cartridges from computers, printers, and faxes; 18.6 percent buy recycled products; and about 15 percent use energy-saving fluorescent lightbulbs and electronics, appliances, and office machines that have received an "Energy Star" for efficiency.

As it turns out, those business owners are one step ahead of the curve. The proposed Democratic legislation includes provisions to raise energy-efficiency standards for dishwashers, lightbulbs, and numerous other appliances, even though critics say many of these standards have already reached the point where higher costs will outweigh any savings in electricity.

What troubles critics most, however, is the claim that the new legislation will effectively gut the 2005 Energy Policy Act, which expedited energy development on federal public lands. The bill would thwart timely review of permit applications, designation of energy right-of-way corridors on federal land, and timely leasing of lands for oil shale and tar sands for exploration and drilling, they say.

There is also a "get real" component to their argument. Essentially, we are an energy-hungry nation. In short we've been gulpers and that's unlikely to change. By 2030, we are projected to consume 28 percent more oil and 19 percent more natural gas compared with 2005 levels. Fossil fuels -- gas, oil, and coal -- are still expected to provide 86 percent of our energy needs. Without more domestic production, it stands to reason that costs will only go up and dependence on foreign oil will increase. And that's not good news for small businesses.

Although gasoline prices at the pump are moderating -- the national average for a gallon of regular fell 9 cents in July, according to the AAA -- small businesses are being hit hard by rising costs. A "whopping" 74 percent of microbusiness owners said that high gas prices were either "significantly" or "moderately" hurting their business, up from 67 percent in 2005, according to the NASE survey. Two thirds (66 percent) have curbed their personal driving.

Fortunately, the legislative package includes some provisions specifically targeted at small businesses. If the measures pass, the Small Business Administration will have 90 days to set up an energy information clearinghouse. The SBA will also come up with programs to help businesses promote telecommuting. Small businesses would also move to the head of the line for grants to research energy-efficient technology. In addition, businesses would be eligible for loans to switch to renewable fuel sources.

What the legislation fails to include, however, are stricter mileage standards for cars. Chalk that up to the gulpers and powerful House Democrats such as Speaker Nancy Pelosi, D-Calif., and Rep. John Dingell, D-Mich., who chairs the House Energy Committee and has protected the car industry's interests for decades. Apparently, what's good for General Motors is still good for the U.S.A., at least on Capitol Hill.