Senate to take up bill to cut gasoline demand

WASHINGTON (Reuters) - The Senate will begin debate this week on legislation to reduce America's gasoline demand by increasing the fuel economy of cars and trucks and boosting the use of non-petroleum fuels like ethanol, Senate Majority Leader Harry Reid said on Monday.

The bill tackles gasoline demand -- the biggest share of the 21 million barrels of oil the United States consumes each day, most of which has to be imported.

"Our addiction to oil has grown into a three-pronged crisis: threatening our economy, our national security and our environment," Reid said in a speech to the Center for American Progress think tank, where he outlined the legislation.

To help cut fuel use, new cars and trucks would have to get 35 miles per gallon by 2020, with the fuel standards then increasing 4 percent annually.

Reid said the toughest part of the energy bill to get through the Senate would be the stronger fuel standards. Lawmakers from major automobile-producing states are expected to try to weaken the fuel requirements during debate on the Senate floor.

Nonetheless, Reid said the message he gave to the leaders of the big three automakers at a meeting last week was simple: "The debate on raising (vehicle fuel) standards is over. It will happen," he said.

The legislation also authorizes the Energy Department to make loan guarantees for fuel-efficient vehicle manufacturers and related parts suppliers.

To help reduce America's reliance on foreign oil, the bill would increase the amount of ethanol and other renewable fuels used in motor vehicles to 8.5 billion gallons in 2008, then steadily boost it annually to 36 billion gallons by 2022.

The legislation would also give the federal government more authority to go after oil companies that manipulate gasoline supplies and overcharge consumers at the pump.

"This Democratic Congress will not hesitate to take action when energy companies gouge the American people," Reid said.

If the legislation is accepted by the Senate, it still must be approved by the House of Representatives and signed by President George W. Bush before it could become law.

Reid said was he more worried about the Senate passing the energy bill than the possibility of a presidential veto.

Lawmakers are set to offer several amendments to the bill.

Sen. Jeff Bingaman of New Mexico, the chairman of the Senate energy panel and major co-sponsor of the bill, will try to include language in the bill requiring that 15 percent of U.S. electricity supplies be generated by solar, wind and other renewable energy sources by 2020.

Sen. Jim Bunning of Kentucky will push to add a provision to the legislation to have more use of fuel made from coal.

Other provisions in the bill would:

* Require the federal government to increase its purchases of renewable electricity to 10 percent of total supply by 2010 and 15 percent by 2015;

* Reduce energy consumption in existing federal buildings by 30 percent by 2015;

* Create appliance energy efficiency standards for dishwashers, clothes washers, refrigerators and dehumidifiers, saving consumers $12 billion annually in energy costs;

* Provide more government money to help weatherize low-income family homes with insulation and storm windows.