Government Stands In Way Of Energy Independence
With a presidential election only eight months away, and pump prices up more than 15% since the start of the year, energy has suddenly become a major campaign issue.
Predictions of $5- or even $6-a-gallon gasoline by summer have generated a media frenzy with some pundits predicting a double-dip recession and others claiming that rising gas prices drive home the case doubling down on renewables.
Unfortunately, a reasoned public discussion of domestic energy policy options is not likely in today's venal political climate.
The great irony is that for the first time since President Nixon talked about energy independence 40 years ago, America stands at the threshold of being able to achieve this milestone.
For example, when President Obama took office, the country anticipated importing natural gas from places like Algeria and Qatar. Today, as a result of the shale gas revolution, the U.S. is sitting on at least 150 years of supply and is poised to become a major exporter of liquefied natural gas. Similarly, four years ago we were importing 60% of our oil needs.
Today, the percentage is 45%, with less than a fifth coming from outside the Western Hemisphere.
Despite moratoriums in the Gulf of Mexico and ongoing drilling restrictions on federal lands and the Outer Continental Shelf, domestic oil production has risen significantly in each of the past three years — a result of applying fracturing technology to oil shale in Texas, Montana and the Dakotas.
What's more, Alberta's huge expanse of oil sands, ranking second only to the reserves in Saudi Arabia, holds the potential to further enhance North American energy security.
Though Obama pays lip service to the notion of an "all of the above" strategy to increase domestic energy production, his specific policy recommendations are clearly anti-fossil fuel and pro-renewables.
He is once again calling for higher taxes on the oil and gas industry, $40 billion over 10 years, to "level the playing field" for clean energy.
On the chopping block are a manufacturer's tax credit, shared across all industries to stimulate jobs, and a credit against taxes paid overseas to ensure all multinational companies based in the U.S. can compete globally.
By eliminating these important credits for the oil and gas sector, the president would be punishing the 9.2 million Americans whose jobs are supported by this industry.
These proposals could also send billions of additional dollars and thousands of jobs to foreign competitors who don't face similar taxes.
Finally, higher tax costs on energy producers would likely be passed on to consumers, with seniors, low-income households and small businesses hit the hardest.
It's puzzling why Obama would propose such counterproductive measures considering that oil and gas companies have led the nation in job creation for the past four years and already pay at or near the highest effective tax rate of any industry.
What's more, 76% of energy tax breaks already go to renewables, though they account for only 2% of electric power generation. For every megawatt produced by solar today, the subsidy amounts to $776. For wind, it's $56. For fossil fuels, it's 64 cents.
We simply cannot meet all of the nation's future energy needs through renewables, efficiency and conservation alone. In reality, we need to continue investing in fossil fuels to power the American economy.
Trying to reduce our budget deficit or to provide additional subsidies for renewables by hiking the tax burden on U.S. oil and gas companies will only suppress domestic energy production, contrary to the president's professed goals, while making us more dependent on imports from unstable areas of the world.
• Weinstein is associate director of the Maguire Energy Institute and adjunct professor of business economics in the Cox School of Business at Southern Methodist University in Dallas |
