On Tuesday, the Democrat-controlled Congress passed new energy legislation meant to fool the American people into thinking that they are actually doing something about the high price of gas. In fact, the bill will likely do more to raise the price at the pump because of the $30 billion in new production taxes it contains.
In an attempt to pull the wool over the public's eyes, the bill touted by Speaker Nancy Pelosi (D-CA) as a "solution" only authorizes drilling that takes place 100+ miles off the coastline (50+ miles with state approval). There's just one tiny problem: according to industry experts, the vast majority of the offshore oil reserves exist within 50-miles of the coastline. Thus, if any drilling occurs at all, it is likely that the rigs will be pumping dry holes or produce barely enough to cover costs. Practically, this means that costs to oil companies will increase without a corresponding increase in supply - costs that will inevitably be passed on to consumers in the form of higher energy prices.
Further increasing the cost of energy is a provision in the bill that increases taxes on energy companies and redistributes that revenue to finance the development of alternative energy. Now, I fully support the development of alternative sources of energy, but increasing taxes on energy companies and redistributing that money is not the way to accomplish this goal. Again, the short-term result is an increase in the cost of doing business for energy companies, which will be passed along to consumers in the form of - you guessed it - higher prices. This provision is essentially a socialist policy and will do more to prevent the economy from progressing toward alternative energy than move it toward that goal. The free-market system has consistently been proven to spur innovation through the incentives that it provides and should be allowed to work. The solution is simple - energy companies are in the business of producing energy and know better than anyone that oil is a limited commodity. Thus, it is in the interests of the energy companies to pursue economically viable alternative sources of energy. However, the world economy currently runs on oil and production must continue in order to prevent the economy from stalling. Rather than telling the energy companies that we are going to increase their tax burden and cost of doing business, we should be promoting market-based policies that would increase the incentive for energy companies to be the first to produce an economically-viable replacement to petroleum.
Finally, the Pelosi package requires that 10% of the Strategic Petroleum Reserve to be released into the market. The Strategic Petroleum Reserve is an emergency supply of oil reserved for catastrophic events and crippling disruptions in supply. By law, any oil that is removed from the reserve must be replaced. Since oil is rarely removed from the SPR, the oil that is being released was put in at a lower cost than that which exists in the current market. Thus, the 10% that would be released under this bill would have to be replaced - likely at a much higher price.
Although Speaker Pelosi and the House Democrats claim that their package is meant to encourage alternative energy it completely ignores nuclear power. Currently, nuclear power is the only alternative energy source that has proven to be both completely clean and economically viable. It is not often that I look to the French for inspiration. However, this is one area where they have gotten it right. Nearly 80% of all electric power in France is produced by nuclear power. This seems to not matter to the Pelosi-wing of the Democrat party, which seems to prefer to play politics than find real solutions.
The bill will now head to the Senate where it will compete with three alternative proposals. Senators have a very limited time frame in which to take action because the current Congressional ban on offshore drilling is set to expire on September 30. Given the alternative, it seems that allowing the ban to expire will do more to increase domestic supplies of oil and ease the pain at the pump.
Subscribe to:
Post Comments (Atom)
3 comments:
Crazy! All I know is Congressman Sam Graves, whom I am working for as his youth coordinator, voted against the bill! The right choice, a hard decision since he's up for re-election, but right choice!
Oh, so many things to say, so little time :) Interesting point: several of the major car manufacturers (my former employer Honda being one of them) already have the technology for alternative fuel; yet the vehicles are not in mainstream production because fueling stations are not widely available. You can lease a hydrogen fuel cell vehicle from Honda only if you live in Southern California near one of the nation's four hydrogen fueling stations. Pretty cool, huh? Check out the FCX- Clarity www.hondacars.com
I recognize that the innovation is happening, that's why I always talk about "economically-viable" alternative fuels.
While it is true that car manufacturers are producing alternative fuel vehicles, these are often too expensive or not practical for many low-income households. These are the blue-collar workers who often live in rural areas because they cannot afford to live in cities or the suburbs. These are also the folks who need to drive pickups in order to make a living. Low-income and blue collar workers, on average, have to drive older (and thus less fuel efficient) vehicles a longer distance. By not allowing the supply of oil to increase in the short term, Congress is making the heavy burden of high gas prices even heavier on these individuals.
The point is that the solution is not one or the other as Pelosi and many of the Dems in control claim. We can have simultaneous development of economically-viable alternatives while increasing our supplies of oil in the short-term. It's called putting smart, responsible development over politics.
Post a Comment