William Yeatman

The title above was my boss’s (CEI President Fred Smith’s) funny reaction to the email solicitation below, for a conference call held by the biofuels lobby, on how the biofuels industry can help meet the Commander-in-Chief’s goal of powering the U.S. military with 25% renewables by 2025.

It doesn’t, according to this excellent blog by Heritage’s David Kreutzer, from which the graph below is excerpted.

March 13, 2012

Dear Senator:

The Senate is scheduled to finish voting on amendments to the highway bill, S. 1813, on Tuesday. We are writing to urge you to:

• Vote Yes on amendment #1589 (DeMint) to end all special-interest tax preferences for renewable energy, conventional energy, and alternative fuel vehicles;
• Vote No on amendment #1812 (Stabenow) to extend tax credits for wind, solar power, a variety of biofuels, coal, oil and gas, energy efficient buildings and appliances, and plug-in electric vehicles; and,
• Vote No on amendment #1782 (Burr/Menendez) to create massive new tax preferences for natural gas vehicles, fueling stations, and motor fuel.

The American people are fed up with corporate welfare. They view the Solyndra debacle as an object lesson in the folly of government trying to pick energy-market winners. Above all, they want Congress to put the nation’s fiscal house in order.

How you vote on the aforementioned amendments will determine whether or not you are serious about curbing political influence in energy markets, ending crony capitalism, and halting the nation’s slide towards bankruptcy.

The wind energy production tax credit (PTC) is a wealth transfer from States that do not establish renewable electricity mandates to States that do. The PTC props up these Soviet-style production quotas by masking their full cost from ratepayers. Congress should pull the plug on this deception: Vote No on amendment #1812, and let the PTC expire.

Amendment #1782, which proposes tax credits up to $64,000 for purchases of natural gas-fueled 18-wheelers, could add billions of dollars to the national debt. With natural gas industry profits soaring and prices at historic lows, there is no justification for Congress to rig the market in favor of natural gas producers, purchasers of natural gas vehicles, or investors in natural gas infrastructure.

The best energy policy is one under which consumers decide winners and losers and politicians can’t stick taxpayers with the bill when an energy company fails. The DeMint amendment (#1589) would eliminate tax favoritism in the energy sector. Equally important, it would not raise the overall tax burden, because it would use the savings from rescinded tax credits to lower general tax rates.

Sincerely,

Freedom Action
Americans for Tax Reform
Council for Citizens Against Government Waste
Club for Growth
Taxpayers for Common Sense Action
60 Plus Association
Americans for Prosperity
American Energy Alliance
Competitive Enterprise Institute
National Center for Public Policy Research
Energy Integrity Project (Idaho)
Citizen Power Alliance (New York)

The front page of this morning’s RealClearEnergy, a screenshot of which sits above, features an illuminating juxtaposition.

On the left column, there are six news stories about how the natural gas industry and other engines of capital investment are putting their own money into expanding the market for gas into the transportation sector. Thanks to the technolution in oil and gas drilling known as hydraulic fracturing, or fraking, gas production is booming, and prices are down. At the same time, geopolitical instability is pushing the price of gasoline to $5 a gallon. The upshot is that gas now makes for an attractive motor fuel. To that end, the industry is investing in infrastructure (natural gas powered engines for trucks and fueling stations), in order to grow and thereby seize market share from the oil industry. Whether the gas industry succeeds or fails in its competition with the oil industry, the consumer can only win.

On the right column, the first story is an oped by T. Boone Pickens, in favor of H.R. 1380, the New Alternative Transportation to Give Americans Solutions Act (a.k.a., the NAT GAS Act, a.k.a.,  the “T. Boone Pickens Earmark Bill,” a.k.a., the “Pickens-Your-Pocket Boondoggle Bill,” a.k.a. the “Billionaire’s Bailout,” a.k.a. the “Pickens Payout Plan”). As its many nicknames would suggest, this legislation was written by billionaire T. Boone Pickens, in order to makes himself even richer. Pickens purveys in natural gas, and the legislation would have taxpayers throw money at infrastructure (natural gas powered engines for trucks and fueling stations), in order to facilitate the gas industry’s growth into the transportation sector, at the expense of the oil industry. Pickens proposes these subsidies (to himself), DESPITE THE FACT THAT THE INDUSTRY IS ALREADY DOING SO WITH ITS OWN MONEY!!!!! Alas, Pickens already has won over the President. If he succeeds in per$uading enough Members of Congress to get his Billionaire’s Bailout passed, then the taxpayer will suffer an egregious loss.

An ongoing theme of this blog is that green energy spending in the Stimulus was a gigantic waste of money. This is for one of two reasons: Invariably, either (1) a Members of Congress tried to influence Stimulus spending as a constituent service or (2) the Obama administration steered investments to friends and campaign contribution bundlers. Whether it’s parochial politics or crony capitalism, the results are the same—bad bets and taxpayer losses.

It takes a while to spend scores of billions of dollars, so the returns of the Stimulus are only now coming in…And they are terrible for proponents of venture socialism. Nary has a week gone by without another green Stimulus beneficiary hitting the skids. In previous posts, I’ve addressed these failures in real time, as they’ve happened. I’ve compared this depressing litany of bankruptcies, layoffs, and production cutbacks to a green albatross burdening President Barack Obama‘s 2012 electoral prospects.

Last week, for example, we learned that engineers at Tesla Motors, which makes Brad Pitt’s favorite green car and also received Stimulus largesse, overlooked a fatal design flaw that easily renders the engine a “brick,” and therefore useless. This is what happens when the Energy Department operates an investment bank.

Yesterday, another government-picked “winner” announced it is “losing.” Reports Paul Chesser of the National Legal & Policy Center,

Yet another solar company that received loan guarantees from the Department of Energy has dismissed factory workers, lopping off 70 percent of its U.S. employees. Loveland, Colo.-based Abound Solar announced Tuesday it would lay off 280 workers at its production plant near Longmont, leaving 120 still employed. The start-up (2009) company attributed the cutbacks to the need for upgrades at the plant to manufacture more efficient solar panels, with plans to restore production levels and rehire most employees within six to nine months.

Mr. President, are you still sure that you want to “double down” on green energy?

In Friday’s Washington Post, Reps. Henry Waxman (D-Beverly Hills) and Ed Markey (D-Massachusetts) pitched cap-and-trade as a means to balance the budget. According to the Congressmen,

“The debate over how to reduce our nation’s debt has been presented as a dilemma between cutting spending on programs Americans cherish or raising taxes on American job creators. But there is a better way: We could slash our debt by making power plants and oil refineries pay for the carbon emissions that endanger our health and environment.”

This statement is absurd. By design, a cap-and-trade policy makes conventional energy more expensive. It is, therefore, functionally equivalent to a tax on a commodity—energy—that is fundamental to every act of economic production. It’s an economy wide tax. In effect, Reps. Waxman and Markey are claiming that a broad consumption tax (cap-and-trade) avoids “the difficult dilemma” of raising taxes, which doesn’t make any sense. Fortunately, these two Congressmen are in the minority party in the House, so their policy idea is a non-starter.

Last Thursday in Florida, President Barack Obama grossly misrepresented his record on energy policy in a speech delivered at the University of Miami.

The President first bemoaned the effect of rising fuel costs on average Americans, saying that, “high gas prices are like a tax straight out of your paycheck.” His apparent empathy is belied by his support for a cap-and-trade energy rationing scheme, which makes gas more expensive by design.

Then the President disingenuously took credit for rising oil and gas production in America. While it’s true that there has been a recent increase in production, it occurred despite this Administration’s anti-energy policies. As explained by the Institute for Energy Research, “The reality is that oil production on federal lands is falling, while production on private and state lands is rising.” To put it another way, production is increasing where the President doesn’t have the authority to stop it.

After misattributing to himself credit for increasing oil production, President Obama touted his record on pipelines, telling the audience that, “Over the last three years my administration has approved dozens of new pipelines, including from Canada.” He failed to mention his unpopular refusal to approve the Keystone XL, a 1,700 mile, shovel-ready pipeline from Alberta to Texas that would create thousands of construction jobs, stimulate tens of billions of dollars in business spending, and generate billions of dollars in tax revenues.

Finally, the President pitched an “all of the above” energy strategy. The primary problem with this approach, as my colleague Chris Horner has noted, is that it draws no lines to exclude the uneconomic. By embracing “all” energy sources, taxpayers are on the hook for green energy boondoggles that can’t exist without subsidies.

Within 48 hours of giving a decidedly populist State of the Union Address, President Barack Obama shilled for the Billionaire’s Bailout. At the time, I thought this was situational irony of the worst sort. Unfortunately, it gets worse.

As was noted this afternoon by my colleague David Bier, the President’s budget, which was proposed this week, actually increases the regressive green vehicle tax credit financed by all taxpayers, but enjoyed only by the upper crust—i.e., the only kinds of people with enough spare cash to buy an eco-statement like the $100k+ Tesla roadster. People like Brad Pitt. According to political pundits, the President’s budget isn’t a serious proposal; rather, it is meant to galvanize his base. If this is true, then the EV tax credit is a regressive component of a progressive budget. Sort of like a black fly, in your chardonnay. Or a death row pardon, two minutes too late. Or, myriad spoons, when you only need a knife.

Today, the Environmental Protection Agency published in the Federal Register the ridiculous Mercury and Air Toxics rule. It’s one of the most expensive regulations, ever, and its purpose is to protect America’s supposed population of pregnant, subsistence fisherwomen who consume more than 300 pounds of self-caught fish annually, from the 99th percentile most polluted fresh, inland water bodies. EPA never actually identified any such “victim”; instead, these voracious fisherwomen-cum-child were modeled to exist. In a series of posts on “EPA’s Big Mercury Lie,” I question whether it is reasonable to simply assume, as EPA has done, that there are, in fact, Americans who every year eat more than 300 pounds of fish, caught exclusively from the foulest water.

How did we get here? Below is a bare-bones timeline of the Mercury and Air Toxics rule’s development:

• 1990: The Congress amended the Clean Air Act to beef up Hazardous Air Pollutants section 112, which sets the most stringent emissions controls. However, the Congress exempted coal fired power plants. Why? Because the same amendments to the Clean Air Act included a major new regulatory regime for coal-fired power plants: namely, a new sulfur dioxide cap-and-trade program to fight acid rain. Before it subjected the electricity industry to the most onerous provision of the Clean Air Act, in addition to the public health regulations to which generators and utilities already were beholden, Members of Congress first wanted to understand how the sulfur dioxide program would affect emissions of hazardous air pollutants. So, the Congress ordered EPA to conduct a study to determine the public health threat of toxic air pollution from coal fired power plants, after the implementation of the sulfur dioxide cap-and-trade. EPA could regulate coal-fired power plants under the Hazardous Air Pollutants section 112 of the Clean Air Act only after considering the results of this study, and then making a determination that doing so is “necessary” and “appropriate.”

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