The scene, which took place just before Thanksgiving, was hardly the picture of energy independence that US policymakers have long held as a goal. Standing in the front yard of a Quincy family selected as the first beneficiary of an unusual home-heating oil discount program was US Rep. William Delahunt, whose office brokered the deal; Joseph Kennedy, the former congressman whose nonprofit Citizens Energy will help distribute the heating oil; and Bernardo Alvarez Herrera, an envoy from the government of Venezuela, whose national oil company directed its US subsidiary to ship some 12 million gallons of fuel to low-income Massachusetts residents and social service providers, for 40 percent off prevailing prices.
With Bay State residents shivering over the price of heating oil and natural gas—projected to be up 32 percent and 48 percent, respectively, over last winter, according to the Energy Department—the state’s congressional delegation has been making a lot of noise about energy prices. One problem: There isn’t much, if anything, Washington can do about them.
“In the short term, government can do very little,” says Henry Lee, director of the environmental and natural resource program at Harvard’s Kennedy School of Government. “You have a market, and the way you affect the market is by either increasing supply or reducing demand.”
That is, unless you can get a special deal, like the one Delahunt struck with Hugo Chavez, the Venezuelan president. Delahunt took some flak for his dealings with Chavez, a sharp critic of the Bush administration who some said was making political hay out of a Latin American leader extending humanitarian assistance to needy Americans. But the Quincy Democrat, who has made Latin America a specialty, seems willing to take the heat if it means low-income Massachusetts residents will have an easier time staying warm this winter.
The sledding has been tougher for the Bay State delegation’s other energy efforts. The state’s representatives in Congress have urged the Bush administration to release oil from the Strategic Petroleum Reserve, a short-term method for boosting supply. However, President Bush has been unwilling to open the reserve for anything short of a threat to national security. Bay State lawmakers have also backed legislation to combat price gouging. Studies following Hurricane Katrina found little evidence of such price manipulation, but that hasn’t stopped a bipartisan group of legislators, including some of our own, to consider tapping record oil company profits through a windfall profit tax. So far, these efforts have come to naught.
The same is true for assistance in paying fuel bills. The National Energy Assistance Directors’ Association reports that average season-long heating costs nationwide will be $1,666 this winter for families that use heating oil. For those using natural gas, the price is expected to hit $1,568. In chilly New England, where forecasters predict a colder-than-average winter, heating bills may well be higher. Last October, senators John Kerry and Edward Kennedy led an unsuccessful effort to pass emergency legislation that would have more than doubled the federal government’s funding for the Low Income Home Energy Assistance Program. Kerry and Kennedy wanted to more than double (or increase to more than $5 billion) fiscal 2006 funding for a program that spent $2.2 billion in fiscal 2005.
Lee predicts that higher heating bills may be with us for the next few years, but he’s hopeful that energy innovations and conservation efforts could reduce the pain in the years ahead. Rep. Edward Markey, the state’s lone voice on the House Energy and Commerce Committee, has been especially active on this front, last year amending an energy bill to extend daylight savings time for an additional four weeks, starting in 2007. Markey believes the change will help conserve energy, since people will need to use less electricity, and perhaps heating oil or natural gas, in the evenings. (He initially proposed a two-month extension, but that was shot down by groups ranging from airlines, which said the change would cause havoc with the scheduling of overseas flights, to the US Conference of Catholic Bishops, which said the proposal would endanger children by making them walk to school in the dark.)
Markey, like most Democrats, has focused on conservation. He argues, for example, that Congress should set more stringent fuel efficiency standards for new automobiles and provide financial incentives for the use of renewable solar and wind power.
The Republican focus, on the other hand, has been on boosting energy supplies, an approach Markey calls a “historic failure” that amounts to “bad energy policy, bad fiscal policy, and bad environmental policy.” Nonetheless, Republicans passed two energy bills last year, providing incentives and tax breaks to promote natural gas drilling on public lands, oil and gas pipeline construction, and expanded refinery capacity. The GOP is still seeking to open the Arctic National Wildlife Refuge and the waters off the Gulf Coast to oil drilling in the face of stiff opposition from Democrats and environmentalists.
Lee says that neither party has what amounts to a comprehensive energy policy. “I don’t sense that either party has a long-term agenda,” he says, arguing that this year’s bills devolved into mechanisms for distributing pork barrel projects. “They were fighting over who got bigger slices of pie, instead of creating a bigger pie.”
Meanwhile, parochial concerns have stood in the way of increased energy supply in Massachusetts, for better or worse. Local politicians and environmentalists are fighting efforts to build liquefied natural gas storage facilities in Fall River and on Outer Brewster Island (See “Congressional club,” CW, Fall ’05). Wind power might also help winter electricity costs, but Kennedy has been a leading opponent of a proposed wind farm off the coast of Cape Cod (a stance that puts him on the same page as Republican Gov. Mitt Romney). Wind supporter Alan Nogee, the Boston–based clean energy program director for the Union of Concerned Scientists, says that local concerns about the siting of wind facilities “should be weighed against the environmental impacts of the alternatives,” including oil and coal, which he argues are far worse.
Perhaps New Englanders will be more willing to face difficult choices after this winter of heating-bill discontent.
HOMING IN ON THEIR TURF
The Bay State’s red-hot housing market is, at long last, cooling down, driven by inventory and interest rates that are both on the rise. But it’s hard to feel too badly for anyone selling property in the Boston area, where the median sale price of single-family homes hit $515,000 in the third quarter of 2005.
Still, bankers, consumer groups, and discount brokers say that sellers are getting a raw deal because of laws that limit whom they can hire to sell their homes. Only licensed brokers or salespersons acting under the supervision of a broker are allowed to represent sellers in real estate transactions in Massachusetts. And those brokers, for the most part members of the National Association of Realtors, have zealously guarded their standard commission of 6 percent of sales price—which means commissions have grown as fast as home prices.
But now, the financial services industry is crying foul over the arrangement, and they have found a key ally in Rep. Barney Frank. The Newton Democrat, together with House Financial Services Committee Chairman Michael Oxley, an Ohio Republican, has introduced legislation that would allow federally chartered banks to enter the real estate brokerage business and compete directly with real estate firms. (Massachusetts is one of a handful of states that already allows state-chartered banks to offer such services.)
In 2001, the Federal Reserve and Treasury Department issued a ruling that would have allowed the federal banks into the action, but so far real estate agents have fended off the challenge, persuading Congress to include language in Treasury’s annual appropriations bill prohibiting implementation of the rule.
Frank says he has nothing against the established real estate brokers. “In my particular case, sponsoring this bill is not any indication of dissatisfaction with or unhappiness with Realtors and the service they perform, but one very specific disagreement,” Frank said in a June hearing on the bill. “I have generally taken the position that competition is a good thing.”
What bankers have to say is more harsh. The industry “is acting like an old-fashioned guild,” says Wayne Abernathy, executive director for fi-nancial institutions policy and regulatory affairs of the American Bankers Association and a former top Treasury official. “They want to make sure all the rules are designed to benefit their industry, not the customers.”
But crossing the real estate agents’ lobby is no easy play on Capitol Hill. The Realtors Political Action Committee is the nation’s most generous PAC, giving $3.8 million to candidates in the 2004 elections. National Association of Realtors spokesman Steve Cook shrugs off the Frank-Oxley bill, noting it has no other sponsors.
Meanwhile, real estate agents have, in the past six months, gotten new laws passed in several states—Ala- bama, Illinois, Iowa, Texas, Missouri, Oklahoma, and Utah—that require agents to provide clients with a minimum threshold of service, a move designed to fend off discounters. This, in turn, has attracted the attention of the US Justice Department, which considers the state laws anti-competitive. And in September, Justice sued the National Association of Realtors in an effort to force them to open up their Multiple Listing Service to discounters.
Before long, the battle over who can sell homes could get as hot as the real estate market in its heyday.