With oil prices hovering over $90 a barrel and gasoline prices continuing to rise, few people doubt that America is in the middle of an energy crisis. But, instead of working to explore new, renewable sources of energy designed to drive down prices, the Democratic leaders in the House and Senate are about to unveil a new energy bill that, if enacted, wouldn’t do anything to solve the energy crisis and instead would place huge new burdens on the American economy, environment and energy infrastructure.
Energy independence and reduced greenhouse emissions are worthy goals, but the new bill won’t move us closer to either goal. It simply recycles the same old ideological crusades and impractical schemes of the professional alarmists in the Washington, DC environmental lobby.
The language of this new bill has yet to be released, but we already know what it says. Its previous versions have relied heavily on three methods: mandating new energy standards for appliances; increased usage of renewable fuels for transportation; and forcing utilities to use more renewable sources of energy such as wind, solar, and biofuels. It’s just the same environmental whine in a new bottle.
This bill fails to address our nation's short term needs, while imposing billions of dollars in new taxes on companies who are exploring new sources of energy. One of the new taxes in the bill is to eliminate the FSC-ETI business manufacturing deduction for oil and gas companies, which will discourage new investment in energy projects and further increase dependence on imported oil. This deduction was designed so American companies could create and support the retention of good-paying U.S. jobs, but now the Majority wants to single out the oil and gas industry for exclusion from the tax benefit, a move that will likely shift these jobs overseas.
According to the Department of Energy (DOE), it is crucial that our nation's oil companies continue to search for new sources of oil and natural gas. The DOE projects that the United States will consume 28 percent more oil and 19 percent more natural gas in 2030 than was consumed in 2005.
The United States has been down this road before. The last time a punitive new tax, such as this, was imposed on the oil and gas industry - in the form of the windfall profits tax in the 1980s - it decreased the amount of domestic energy that otherwise would have been produced, and consequently increased our nation’s reliance on imported oil. The Congressional Research Service concluded that between 1980 and 1986, this tax reduced domestic oil production by as much as 1.26 billion barrels and increased oil imports as much as 13 percent.
America has the capability to become self-sufficient in both power generation and production of transportation fuels. Building more high-tech, environmentally-friendly coal-to-gas and coal-to-liquid facilities would free us from the need to import oil. While our country makes this long-term transition, it should also explore some areas that are now off limits due to political haggling. Billions of barrels of oil and trillions of cubic feet of natural gas can be found in places such as the ANWR and the Outer Continental Shelf. We have the technology and the expertise to extract these resources safely and cleanly.
It would also be wise to continue to invest in next-generation nuclear power facilities. New designs make these plants less expensive, more reliable, and safer than those in the past. A new generation of nuclear power will enable us meet increasing energy demands and support a growing economy.
Hard-working Americans are in favor of exploring renewable sources of energy, but Congress must be realistic about their limitations. Even a long term goal of fifteen percent renewable sources for new energy production would be enormously expensive and take decades to achieve.
But the Democrats are all hot air: actually, their preferred “new” energy sources – solar and wind - are often unreliable sources of energy (requiring back-up generators powered by non-renewable sources) and are nearly always prohibitively expensive. A significant shift to wind and solar would likely see household electric customers currently paying an average of 8 cents per kilowatt-hour facing a rate increase of at least 30%. If the authors of this bill achieve their long-term goal of nearly total reliance on renewable energy, customers could see as much as a 400% increase. If those problems weren't enough, wind and solar potential is limited by the geographic and topographical features of the area, leaving utilities little choice but to turn to biofuels as the main sources for new power generation.
Here's the bottom line: renewable energy should play a part in new power generation, but must be careful not to oversell its virtues. Yet even though research and innovation has made nuclear and coal power plants progressively cleaner, cheaper, and safer many in Congress continue to appease the activist fringe by refusing to invest in these practical, proven technologies. This is not a responsible answer to the critical energy questions of the 21st century.
We should reject this type of thinking and work to increase the availability of domestic sources of energy, invest in nuclear energy, and not limit production through costly mandates and unrealistic reliance on renewables. I call on my colleagues in Congress to resist picking winners and losers in energy development that risks significant long term damage to our economy.
