The climate change legislation on the floor of the Senate this week would be the most important piece of energy legislation ever – if it had a chance of becoming law. Instead the debate is, as Sen. Byron Dorgan (D-N.D.) put it, a “dress rehearsal.”

If it had a chance of passing, it would steer tens of billions of dollars of energy investment toward efficiency projects, renewable resources such as solar and wind, and nuclear power. More money could also end up in demonstration plants designed to capture and store carbon dioxide emissions from coal-fired power plants. The legislation would do all this in a roundabout, but theoretically politically palatable way: it would establish caps on emissions with a set of rules for companies to trade permits and offset credits needed to meet those caps. While commonly known as cap-and-trade, which sounds pithy and free-market oriented, a more accurate but less sexy-sounding name would be a system of tradable rationing coupons. In plain English, that would mean putting a price on greenhouse gas emissions, which would raise costs for anyone burning fossil fuels, whether in a gasoline tank, a coal-fired power plant, or a natural gas stove. (Columnist Robert J. Samuelson gives his views of the whole mess.)

But if all this is a dress rehearsal, why care?

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From the United States, the prospect of endlessly high prices for oil and gas looks unrelentingly grim. Just this morning, the Commerce Department announced a bigger than expected trade gap for April and it’s clear who the villain is – crude oil imports accounted for just under half of the nation’s net trade deficit.

From the other end of the international oil pipeline, however, things look pretty good. No giant sucking sound there, just the happy gurgle of oil revenues flowing into the government cup that is running over.

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The Qatari oil minister Abdullah Bin Hamad Al Attiyah was visiting the United States this week and at a dinner reception he told a story about oil prices. About two years ago, he said, a British official met him and urged him and OPEC to increase output to lower oil prices. The Qatari minister responded with an offer: If Britain would share its tax revenue on oil products 50/50 with Qatar, Qatar would give Britain the oil for free.

His point was this: Taxes on petroleum products in Europe are greater than the price of the petroleum itself. Put it another way: European governments make more money on oil product sales than the oil producing countries.

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*Correction Appended*

What sort of commitment did Saudi Arabia really make to ultimately expand oil output to 15 million barrels a day – and is that even possible?

That’s been a major subject of debate since last Sunday’s big oil consumer-producer pow-wow in Jeddah , Saudi Arabia. And thus the Saudi pronouncement has had hardly any discernable calming effect on oil markets, especially since it would take several years to reach that 15 million barrel a day level in any case. Meanwhile, the kingdom has talked of nudging production up by 200,000 barrels a day from current levels next month -- and current prices remain as high as they’ve ever been.

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A week ago newspapers reported that a handful of the big Western oil companies were close to unveiling contracts for work in Iraq, whose underexploited oil reserves are probably second only to Saudi Arabia’s. One well-read paper said the contracts would be announced next Monday.

It’s the kind of story that whips up attention because of the persistent suspicion that access to Iraqi oil for Western companies was wrapped up in the Bush administration’s decision to invade Iraq in 2003.

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