Tuesday, June 28, 2005

Dump the Energy Bill

The United States Senate passed its version of the Energy Bill today on an 85-12 vote.

The estimated cost of the Senate bill per the Congressional Budget Office is $16 Billion over ten years in contrast to the House version which is $10.6 Billion*. The White House wanted a $6.7 Billion price tag. No doubt that after the House and Senate get out of conference committee, it will probably be closer to $20 Billion. Don’t worry though, we can always count on the White House for a veto

Both versions offer generous corporate welfare subsidies to agricultural interests in the form of ethanol subsidies. The House version would require a minimum of five billion gallons of ethanol be used by 2012. The Senate version calls for eight billion gallons. At an average subsidy of $.52 per gallon; the House and the Senate have voted to transfer approximately $2.6 Billion and $4.16 Billion of your tax dollars to Archer Daniels Midland and to a lesser extent, corn growers. All for an “energy source” that takes 70 percent more energy to create than it provides.

The Senate version would also require that public utilities produce at least 10 percent of their energy from wind, solar, or other “renewable” energy sources and would direct approximately $7.2 Billion in tax breaks to these industries. Well if you can consider something that requires taxpayer funding to be “viable” an “industry.”

In addition though, the Senate in its commitment to tax simplification, offered tax “incentives” for energy-efficient appliances and homes as well as gas-electric hybrid cars. Apparently it was lost on members of the World’s Greatest Deliberative Body™ that there are already “incentives” to encourage energy efficiency – they’re called higher prices.

As far as taxpayer funding for research into gas-electric hybrid cars, isn’t it good to know that in addition to eventually paying for the auto industry’s legacy costs, we can now pay for their R&D as well? What exactly is wrong with (a) letting a private industry pay for their own R&D costs and (b) letting them keep the profits should they materialize?

Both versions include about $1 billion in coastal impact assistance funds over four years to six coastal states with oil and natural gas production on the Outer Continental Shelf. The Senate defeated an amendment which would have allowed governors the authority to veto the siting of onshore liquefied natural gas (LNG) terminals off of the coasts of their States out of concerns for both security (apparently terrorists might want to attack something that has the capacity to explode) and environmental concerns. That’s federalism for you.

I suspect that many on our side will be fixated on the fact that the Senate version (unlike the House version) does not contain anything about allowing petroleum exploration in the Arctic National Wildlife Refuge.

Me, I’m a bit more distressed that we are being sold a bill which is pretty much pure pork lardened with corporate welfare and economic distortions. But that’s what you get when you rely on industrial policy rather than free markets for your “energy policy.”

* The House would like to claim that it’s actually “only” $8 Billion because their estimate relies on $2.6 Billion of revenue from the Artic National Wildlife Refuge. As someone who is weary of accounting gimmicks used to mask the cost of federal programs, I say let’s call it by its true cost.