Government tax and subsidy schemes waste billions. We need real energy and jobs.
Paul Driessen
Having
had it with $4-per-gallon gasoline and the Obama Administration’s squandering
billions of taxpayer dollars on phony “green” energy schemes, angry voters have
told their senators “Enough!”
Their
calls provided sufficient spinal implants in enough senators to defeat three
proposals to extend the wind energy “production tax credit” (PTC). The credit
gives wind project developers taxpayer greenbacks whenever they generate
high-priced electricity, even if there is no market for the power at the time
it’s generated. Worse, the PTC is paid on top of other subsidies, fast-tracking
of wind projects through environmental review processes, and exemptions from
endangered species, migratory bird and other laws.
Confronted by the gale of public
outrage, Senate Democrats tried a new tack.
They
offered an amendment that would eliminate various tax deductions for five
major oil companies, turn the supposed new revenue stream into more
subsidies for wind turbine, solar panel and electric car makers – and use
any leftover crumbs to “pay down” the skyrocketing budget deficit they helped
engineer.
The
ploy needed 60 votes – but got only 51, despite President Obama’s vocal support.
“Members of Congress,” the president said, “can stand with big oil companies, or
with the American people.”
Not
exactly. The American people are no longer buying the partisan rhetoric. They
increasingly understand that new taxes and restrictions on oil companies are not
in their best interest. In fact, a recent Harris Interactive poll found that
over 80% of US voters support increased domestic oil and gas production to
create and preserve jobs, lower pump prices and increase government revenues.
They
realize that only 12% of what they pay for gasoline goes to oil companies for
refining, marketing and distribution. Another 12% is state and federal taxes.
Fully 76% is determined by world crude oil prices – and thus by global supply
and demand, and confidence or fear about world events.
They
know that eliminating tax deductions for expenses incurred in producing and
refining oil is the same as imposing new taxes. Those taxes would result in
curtailed drilling and production, reduced royalty revenues, worker layoffs,
still higher gasoline prices, and increased costs for everything we grow, make,
transport and do with petroleum. Blue collar, poor and minority families would
be hurt worst.
Every
US business claims deductions for new equipment, facility depreciation,
utilities, payroll, research and other expenses. This ensures that businesses,
like individuals, recover their costs and get taxed only on their net incomes.
Five oil companies should not be punished as the sole exception to this rule.
Legitimate expense deductions
are very different from subsidies. Subsidies involve government taxing
individuals and profitable companies, and transferring their money to
politically favored companies and products that could not survive without
perpetual support.
The
system is even more insidious when subsidized entities return substantial
portions of their taxpayer largesse as campaign contributions to
President Obama and other politicians who arrange the wealth transfers. It’s
still worse when hard-earned taxpayer money is used to reduce risks for wealthy
investors who buy into boondoggles arranged by bureaucrats who are much better
at choosing losers than winners.
As
voters are learning, the Solyndra, Evergreen, Fisker,
A123 and dozens of other “green energy future” scandals and insolvencies are
only a small part of the subsidy cesspool.
Subsidies, punitive taxation
schemes and “alternative,” non-hydrocarbon energy are often justified by claims
that we face imminent manmade catastrophic global warming. In reality, virtually
no empirical evidence supports hypotheses, assertions or computer model
projections about melting polar icecaps, average global temperatures, storm
frequency and intensity, sea levels and other natural phenomena.
Wind,
solar and biofuel energy are also justified by claims that we are
running out of oil and gas. In fact, America is blessed with vast proven
petroleum reserves and even greater undeveloped prospects that government has
made off limits. The natural gas and hydraulic fracturing revolution is merely a
hint of the energy, jobs and revenues Americans could produce, if certain
politicians would end their obstinacy.
“Renewable” energy is further
justified by claims that petroleum “keeps us trapped in the past.” In truth, we
need to worry about the present, especially our unemployment and debt crises.
Oil and gas provide 60% of America’s energy. By contrast, despite untold
billions in subsidies, wind and solar combined still provide barely 0.60% – and
are unlikely to do much better for decades to come.
The
$2-billion Shepherds Flat wind project in Oregon’s Columbia River Gorge area
involved $500 million in outright subsidies, plus a subsidized loan guarantee of
$1.1 billion for General Electric, plus production tax credits. At the whim of
the winds, its 338 gigantic turbines will generate electricity for California,
in wild swings between zero and their combined rated capacity of 845 MW –
chopping up eagles, falcons, herons, bats and other protected species as they
spin.
In
2010, GE generated
over $5 billion in US profits – but paid no US income taxes, and no fines for
the thousands of protected birds and bats that its Cuisinart wind
turbines slaughtered.
By
contrast, White House villain ExxonMobil (one of the companies targeted by the
failed tax bill) earned $30.5 billion in profits that year, on revenues of $383
billion, paid $1.6 billion in US income taxes, and made combined lease bonus,
rent, royalty, tax and other federal payments of almost $10 billion. When a few
birds are killed on oil company property, companies pay substantial fines.
President Obama promised that he
would “fundamentally transform” America and ensure that electricity prices “will
necessarily skyrocket.” His Energy Secretary has said Americans should pay
$8-10 per gallon for gasoline. His Environmental Protection Agency and Interior
and Agriculture Departments have systematically foreclosed access to our
nation’s oil, gas, coal and uranium resources.
Meanwhile, Mr. Chu’s Department
of Energy recently awarded $10 million of taxpayer money to Philips Lighting for
making an “affordable” light bulb – that costs $50 per bulb!
And it
is working overtime to promote, subsidize and install thousands of onshore and
offshore wind turbines that generate too much ultra expensive electricity when
it’s not needed and too little when it’s most needed, require too much land and
too many raw materials, kill too many birds, cost too much money, and require
perpetual subsidies and exemptions from environmental laws that apply to all
traditional forms of energy.
This
“green” energy “future” is unsustainable.
Oil
companies do make a lot of money, because they produce, refine and sell enormous
quantities of fuel and other petroleum products. But they pay billions in taxes
and royalties – and produce real energy.
Wind,
solar, algae and switchgrass companies take billions in Other
People’s Money. They pay virtually no taxes, and provide virtually no usable
energy, except in the minds and press releases of their promoters.
Expecting that higher taxes on
oil companies will produce more oil at lower prices is like saying we will get
cheaper bread, and more of it, by eliminating tax deductions for bakeries’
electricity and equipment.
American voters and consumers
understand this. It’s time our elected officials and unelected bureaucrats did
likewise.
___________
Paul
Driessen is senior policy advisor for the Committee For A Constructive Tomorrow
and Congress of Racial Equality, and author of Eco-Imperialism: Green power -
Black death.
