House Democrats are pushing an energy bill that has some good and not-so-good provisions. But one thing is clear: While consumers will soon see longer lines at gas stations and be hit with much higher heating and cooling costs, there’s nothing in the bill to increase domestic energy production. This means that when gas and electricity prices go up, they’re not coming down.
While there are reasons for some reservations on this score, the good part of the bill is the billions of dollars worth of tax breaks, subsidies and other incentives for renewable energy and conservation efforts. This carrot approach is an appropriate way for the federal government to encourage Americans to switch to pricier renewable fuels and take other voluntary measures to reduce their energy consumption.
The bill has been characterized as a $16 billion tax on energy companies, but it’s really a repeal of the industry’s 2004 tax breaks — which led to record profits. So they shouldn’t whine about the loss of their “manufacturing” deduction, nor should Hummer owners complain about losing a tax loophole that allowed them to write off some of the cost of their low-mileage rides. Nobody is entitled to receive such benefits forever. When federal policy changes, the tax breaks should, too.
However, this $16 billion will inevitably be passed on to drivers at the pump, at the same time that oil companies should be investing in new technology to extract hard-to-reach domestic deposits. Specifically tailoring the tax benefit to increase domestic production instead of simply eliminating it would have been a much better idea.
Then there’s the stick, a mandate requiring investor-owned utilities to generate at least 15 percent of their electrical power from renewable sources, which now account for only 3 percent of the nation’s energy. This draconian measure will drive consumers’ electric bills up substantially with little corresponding drop in oil use. This is because most of the petroleum consumed in the U.S. is for transportation-related activities. Coal provides more than half of the nation’s electricity, yet this energy bill curiously includes no provision for more efficient use of this abundant natural resource.
The economic trade-off might be worth it if the sacrifices — including no more 100-watt light bulbs — meant that we’d be energy-independent at the end of the day. That’s still the goal, but this House energy bill doesn’t come close to getting us there.