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  • Reid’s Lame Duck Energy Bill: More Money for Special Interests, Higher Costs for the Rest of Us

    It’s highly unlikely that we’re going to see any large energy bills like a cap and trade or renewable electricity standard passed during the lame duck session, but that isn’t stopping Senator Harry Reid (D–NV) from moving forward with bad energy policy.

    Undeterred by an American electorate that shouted clearly that it was done with Washington-centric, special interest politics, the majority leader filed procedural motions to vote on S. 3815, the “Promoting Natural Gas and Electric Vehicles Act of 2010.” The bill is laden with handouts to promote vehicles powered by natural gas and electric. And to pay for this corporate welfare, the bill would call for an increase to the Oil Spill Liability Trust Fund tax from $.08 per barrel to $0.21 per barrel.

    This means that everyday Americans would be paying more at the pump to subsidize industries that Washington has deemed politically correct. S. 3815 “would spend $4.5 billion over the next ten years on tax rebates for buyers of natural gas vehicles and subsidies for manufacturers of the vehicles. It also authorizes $1.5 billion over the next ten years for research and development effort related to plug-in hybrid electric vehicles.”

    The bill is symbolic of everything that is wrong with Washington when it comes to energy policy. The government spends money on proven technologies even though these decisions would be better left for the private sector. When the government selects political winners, it’s usually a good indicator that the technology or energy source is a market loser. After all, if the venture was a profitable one, it wouldn’t need privileged treatment from the government.

    A study from J. D. Power and Associates says there will be very little demand for electric vehicles over the next decade, even with lucrative federal handouts. But that’s not the only one. There are many studies pessimistic about the environmental and economic purposes of the electric vehicle, including ones by Deloitte Touche, Boston Consulting Group, Roland Berger Strategy Consultants, Professor Henry Lee of Harvard’s Belfer Center for Science and International Affairs, and the Massachusetts Institute of Technology’s Energy Initiative.

    Both natural gas vehicles and electric vehicles may be a part of America’s vehicle fleet, but Congress should not wastefully spend money to prematurely rush them into the marketplace. The vehicles we drive today will most likely look very different from the ones we drive 20 years from now and may well run on alternative fuels as producers offer new products to meet consumers’ needs. But the most productive and efficient way to achieve these changes is not through a predetermined evolution created by bureaucrats and central planners. Instead, Washington should step aside and allow the marketplace to guide innovation and technological advancement. As economist Friedrich Hayek said in The Fatal Conceit: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

    To pay for the government’s program, Reid insists on using the BP oil spill to pay for it, and—in what has become the most overused phrase in Washington—not let a crisis to go to waste.

    If Congress wants to address issues surrounding the oil spill, instead of increasing taxes, it should implement actual reforms that would fix many of the problems that became apparent after the accident. For example, Congress could fix the offshore oil and gas liability cap. Instead of lifting the cap, raising it to another arbitrary number, or increasing the per-barrel tax, Congress should establish a liability and claims process that fully assigns risk of offshore oil and gas operations, allows victims to be fully compensated, and protects companies from frivolous lawsuits.

    A better way to promote natural gas in the U.S. is to open off-limit areas for exploration and production and ensure that the Environmental Protection Agency (EPA) does not create new rules and regulations to crack down on hydraulic fracturing, a process to extract natural gas. Hydraulic fracturing has been safely done for decades, and former EPA Administrator Carol Browner wrote in defense of “fracking” 15 years ago:

    There is no evidence that the hydraulic fracturing at issue has resulted in any contamination or endangerment of underground sources of drinking water (USDW). … Moreover, given the horizontal and vertical distance between the drinking water well and the closest methane production wells, the possibility of contamination of endangerment of USDWs in the area is extremely remote.

    What’s worse, Reid’s lame duck energy policy could be a preview of the smaller energy bills mentioned by President Obama after the election on which Republicans and Democrats could agree. These are not conservative policy ideas, nor are they rooted in the free market. These policies benefit a concentrated interest group and spread the costs to the American consumer or taxpayer—depending on how the government chooses to fund its projects. Unfortunately, in many instances, it’s both.

    Posted in Energy [slideshow_deploy]

    12 Responses to Reid’s Lame Duck Energy Bill: More Money for Special Interests, Higher Costs for the Rest of Us

    1. Jake, San Diego says:

      In general, I agree strongly we should let the market select the winners. However in some cases, the market does not always do so efficiently, as it does not account for all costs. In such cases, subsidies are warranted…and this is just such a case.

      A classic example is the costs of America's continued dependence on imported oil for our transportation fuels. Such costs that the market may not include are the costs to cover adverse health effects (for example, from increased air pollution) which especially comes to play if we retain a socialized healthcare system.

      Also, implied volatility of prices – in part the result of international events – has a "cost" to our US society as well, which are not included in a global market for oil. We don't "pay at the pump" for all the costs of the US defense department.

      When you look at it, technology like using Compressed Natural Gas (CNG) for transportation fuels make a lot of sense. CNG here already (and most of the gas is located in "Red States"), and it’s cheaper and cleaner than diesel, but not widely available at fueling stations – in part given government bureaucracy, such as red tape from the US EPA (conversion certifications, etc) and elsewhere.

      But for every 18 wheeler converted from diesel to CNG is the emissions equivalent of taking 300 passenger cars per year off US roads (Source: PickensPlan.com Website). And given lower fuel costs, it reduces costs for shipping US goods and services – which is a clear benefit to us all.

      This is clearly a bill both parties can get behind.

    2. Matt, Reno says:

      "Such costs that the market may not include are the costs to cover adverse health effects"

      Even though the health effects are minuscule, we already have gas taxes for this purpose. The more you pollute, the more taxes you pay at the pump. Rather than subsidize certain corporations that lobby the government to sell their latest "green" invention, why not raise the gas tax, and lower some other tax so it's revenue neutral? I see $6 billion in new spending here without any tax increase. I see GM winning and the tax payer hurting, again.

      "This is clearly a bill both parties can get behind."

      So you or your employer can benefit financially, right?

    3. Louis Petrik says:

      If we should not subsidize new "green" technologies and just get out of the way so the marketplace can pick the technologies that make the most sense, then why are we subsidizing oil and coal? I am all for smaller government but let's make the playing field level. It just seems funny to me that if the Dems want to do anything then they get lambasted by the Right for adding to the deficit but if they find a way to pay for it then ANY increase to ANY industry is portrayed as a GREAT NEW TAX on Americans. What is even funnier is when the Right takes power back in the Spring then most likely this whole process reverses and now the Left gets to scream foul with any move that the Right takes (how are you going to pay for all of those hugely expensive nuclear plants that you want to build). This is why Congress is broken. America did not elect the Right to push a far Right agenda. America voted out a broken Congress. We want one that works together for the American people to get things done for our country. Unfortunately if looks like the Right didn't hear the message.

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    5. Jake, San Diego says:

      Hi Matt,

      Thanks for the comments, though you are clearly skeptical of my motives.

      You should reread the bill. Just as you suggest, this bill is cost neutral. It is paid by raising the tax on a barrel of oil to 21 cents from 8 cents – part of the increase for liabilities for oil spills like we just had in the gulf. I'm not sure, but I think this was a requirement of Orin Hatch (R-UT). Like you, I agree this is the best method rather than just increasing the debt.

      "So you or your employer can benefit financially, right?"

      Sadly, no. I am an unemployed biotech (cancer) researcher. This is not an industry in which I have an employment stake.

      But I do drive a gas guzzling SUV when I go camping with my family here in Southern California. Ideally, I'd like to convert it to cheaper & cleaner CNG. If I could, I (and everyone who does the same) would be able to save money on cheaper fuel and less emissions. But currently, to do so is technically illegal in CA as one can only modify a vehicle with EPA certified conversion kits. I am aware of a few companies that makes such a product, but they are not certified for my vechile for road use… given the cost of EPA certification. It is not that the kits will not work – it is that government red tape prevents useage.

      This bill would provide credits to the companies for the EPA required tests. And then there is the issue of availability, which this bill also helps to address.

      So, other than the fact I like to breath, and perhaps save some coin by converting my SUV into a CNG bi-fuel, I have no stake in this bill.

      But you say, "heath effects are minuscule". I challenge you to state your source. I bett you will not find any. As a cancer researcher, I am aware of the mountains of research from the EPA and the CDC that state that vehicle emissions are some of the worst avoidable pollutants to which we Americans subject ourselves.

      This bill promotes US CNG over OPEC oil, which will save money plus reduce emissions.

      Anyone against this bill is suspect to be either uninformed as to its actual text or in the pocket of the oil industry.

    6. Pingback: Michelle Malkin » Lame-duck session alert: Food police, feminism run amok & enviro-handouts on Senate floor today

    7. Jerry McDonald Monta says:

      Sadly your conclusions are based on false or misleading information. Petroleum exporters and their surrogates in the oil industry have bought an uneven playing field for natural gas vehicle fuels through Federal excise taxes on liquified natural gas and onerouse EPA regulation that is both out of date and unrealisticlly biased in favor of petroleum. The proposed legislation of S.3815 would simply level the playing field.

      Your budget impact also ignores the revenue positive of the equation by leaving out the Fed, state and local treasuries that would be bolstered by severance taxes and lease revenues, Not to mention the positive impact from balance of trade offsets through diminished petroleum imports.

      Your attack on environmental regulation of fracking betray's your true allegance to Haliburton, the ONLY fracking company that fails to disclose their fracking fluid constiuents. Haliburton's worthless exercize is more pride than prejudice" they know full well they hold no secret sauce in fracking fluid, in fact their fracking fails at a higher frequency due to their outdated approach, Just 1 more time that the Red H is milking the cow. Typical Lazy H practice.

      If you really want to be conservatively helpful attack the EPA on their enforcement of Memorandum 1A. Unrevised since 1999 this regulation foists a huge peanalty on vehicle owners looking to use gas fuels in conjunction with petroleum to increase economy. EPA's antiquated "anti tampering" policy meant to prohibit '70's era musle car owners from shunting factory installed emissions controls adds a 10x cost burden on sensible gas fuels aftermarket and OEM conversions at no sensible value to the environment or the treasury (EPA has never sucussfuly collected a single dollar of fines for Memo 1A.)

      So save all you huffing and puffing your message benifits the enemies of America.

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    9. Matt, Reno says:

      "So, other than the fact I like to breath, and perhaps save some coin by converting my SUV into a CNG bi-fuel, I have no stake in this bill."

      1) I doubt you've had or will have any trouble breathing without this bill.

      2) I doubt even more that you would "save some coin" converting your SUV.

      I don't need to read the bill word for word (like Obamacare, they're designed to be vague) to know that it's better for the private sector to pick winners and losers than the government picking them. If private citizens see their energy prices go up, they can choose cheaper and cleaner alternatives.

    10. Pingback: Michelle Malkin: Lame-duck session alert: Food police, feminism run amok & enviro-handouts on Senate floor today | Katy Pundit

    11. Jon - Delaware says:

      This re-emphasizes the federal government's fundamental failure to cope with PRIVATE SECTOR, FREE MARKET ISSUES. It also serves to underscore the democratic party's total disconnect with the electorate and the whole of the American populace. Obama, Biden, Reid,Pelosi, Boxer, Dodd, Frank et al are interested only in perpetuating BIG GOVERNMENT and progressing the cause of SOCIALISM IN AMERICA. All must be either voted out of office or prosecuted/impeached for failure to protect and defend the Constitution of the United States of America and its citizens. For failure to respond to the will and demands of the people.

    12. Hans Wall, Denver says:

      I lived the past seven years in the beautiful colonial town of Queretaro, Mexico where about 80% of public transport runs on compressed natural gas as mandated. If market forces had their way the UN world heritage site would be a stinking hole filled by exhaust fumes like e.g. Mexico City. The oil industry and her right wing cohorts at managed to kill S. 3815, the “Promoting Natural Gas and Electric Vehicles Act of 2010" for for good. A chance to promote clean air, energy independence, and American prosperity has been wasted.

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