A Weblog of Centrist Voices in American Politics
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A Weblog of Centrist Voices in American Politics | |
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April 19, 2005The Price of EnergyThere is an energy bill making its way through congress right now. I could not be more conflicted. First, a few details: The bill includes a slimmed down $8 billion tax package, mostly tax breaks for [the] energy industry ... The legislation would increase the use of ethanol as a gasoline additive ... ...a provision that would, for the first time, allow oil exploration in the Arctic National Wildlife Refuge in Alaska ... Provide a 20 percent tax credit up to $2,000 for homeowners who put in more energy efficient windows, doors and insulation. There are two major problems with this bill, one of which I am possibly able to overlook under the right circumstances. The first problem is the tax incentives to energy companies. Now, of course tax breaks aren't really just given out to friends (or at least they're not supposed to be), there's substance behind the break. The tax breaks for the engery companies, the article says, are intended to "spur expansion and modernization of the electric grid and construction of natural gas pipelines to meet growing demand for electricity and gas." We should not have to give tax incentives to energy companies for them to do this, it's their job- the bigger and better the power grid, the more plentiful and happy their customers. If anything I would say we should impose penalties on energy companies who don't do what is needed to keep the energy infrastructure up to date, that way not only is the government not losing money through yet more tax cuts, it'd actually have an opportunity to be making a bit of extra money. The second problem, the one I can see myself getting over if certain conditions are met, is the drilling in the ANWR. Now, my initial reaction to drilling in Alaska was absolutely no way man, you leave nature alone. Get your oil elsewhere. But thinking about it more over the past few years, I've lightened up slightly. I still don't like the idea, because it's a depressing reminder of just how inescapable our dependance on oil is, and because it would seriously screw with the biodiversity in the area (and trust me, ask any environmental expert, biodiversity is really really important). But I said there was a way I'd overlook my objections. I'd do this only if there was a detailed plan to ensure the enviornment was disturbed as little as possible, the current inhabitants accomidated, and a comprehensive exit strategy that outlines exactly how all the fixtures and facilities will be removed and how the environment will be restored so we leave it cleaner than when we got there (something my grandmother always tought me to do). Now you might cringe at the over-bearing, convoluted nature of that plan. But hey, it's what we have to do. And if the Republicans are going to please one of their most significant constituants, they'd better seriosuly consider it. I also said I was torn, not pissed off, over this bill. The increase in use of ethanol included in the bill pleases me to no end. According to the article, it calls for a 1/3 increase (5 billion gallons) of of ethanol use in gasoline anually, but the article doesn't mention a time table. I've always been a proponent of ethanol because if every gallon of gasoline was just 30% ethanol, there would be no need for any adaptors or other changes to normal gas engines, it would decrease the amount of oil we need to take in (by about 30%, I'd say), and it would be an incredible boon to American farmers. I am also happy about the individual tax break for using energy efficient products in your home, not because I see it as any sort of major political achievment, but because that means I'll be getting a tax break once I own my own home. Posted by Art at April 19, 2005 04:24 PMComments
Two notes: The chemical energy density in ethanol (that is, the amount of energy released in burning the ethanol in an internal combustion engine) is lower than that of gasoline, so there is not a one-to-one tradeoff of ethanol addition to reduced gasoline consumption. It does reduce the consumption of gasoline by some amount, but not equal to the percentage of ethanol in the gasoline. The second note is more important. It is my understanding that the total reserves potentially available in the ANWR (using normal rates of production) is a small fraction of the usage rate in the US. In other words, any production in the ANWR would offset only minimally (less than 15%, possibly less than 10%, of the daily consumption) the dependence upon foreign sources of petroleum. The question arises: what is the point of exploiting this resource in an area that was declared a "perpetual wildlife refuge", other than to enrich certain companies with well-paid lobbyists? Posted by: Jack at April 19, 2005 04:38 PMI don't think a bill that subsidizes energy companies in this particular fashion is the way to go. To deal with the issues of energy consumption realistically, we have to push both the supply ball and the demand ball. Demand: incentivize lower consumption. Subsidizing buying new windows sounds to me a lot more like spurring the economy than anything else. I think we should consider surtaxes of some form on discretionary overconsumption. One way to do this is by placing additional tax on low-efficiency vehicles, giving out exemptions if you can prove genuine need. (Like if you use that ford 350 because you're a subcontractor, or you buy a Suburban but have 5 kids. Supply: Any reasonable consideration of supply should acknowledge that we have a finite supply of fossil fuels. YMMV, but I think it's a given that we'll extract and burn virtually all of it sooner or later. Estimates vary, but it seems more likely that supplies will at least begin to dwindle within a century or so than last for several hundreds or thousands of years. IMO, a long-term strategy that faces this makes much more sense than a patchwork of policies that amount to putting fingers in the dike. Seems to me there's every reason to fund research into renewable energy forms, and to do so on an international basis on a very large scale, so that the results would be something like public domain. Posted by: bk at April 20, 2005 09:01 AMWith all of these subsidies who will the magic of the market ever be able to do it's work to address the issue for the future? Posted by: Rick DeMent at April 20, 2005 12:35 PMDependance on foreign oil = bad therefore higher gas price (i.e. less consumption)= good. why do we keep fighting that? Posted by: c3 at April 20, 2005 01:05 PMBecause inflation = bad. Posted by: bk at April 20, 2005 01:42 PMThat's the real rub, isn't it...how do you control this stuff without slamming the working classes of the economy and slowing growth? The ideas for switching our economy over to hydrogen energy is very forward thinking and potentially lucrative (especially if US-owned industry is at the fore)...but it's inherently risky as a new venture. This is one where we need the gov't to spend some real effort helping to push back the bounds for a span of years until industry can get off its butts and start running with the football. The crunch of energy supply is only going to get worse with the Far-East giants (India and China) beginning to wake up their economies and ponder a new effort at amicable partnership. Don't drill in ANWR, but see the need that's driving it for what it is...a harbinger of a terrible resource gap that may hit us in my lifetime! Posted by: Floundericious at April 20, 2005 02:49 PMCome to think of it, I retract my qualified support for drilling in the ANWR. I read (somewhere, I can't remember exactly where) that any oil gotten from the ANWR would not go to Americans, but it would be exported to China and Japan, which are closer and easier to get to from Alaska than the lower 48. I'm not sure how I forgot about that, it made me so mad when I read it. Posted by: Art at April 20, 2005 03:20 PMThat's the real rub, isn't it...how do you control this stuff without slamming the working classes of the economy and slowing growth?Unless we miraculously come up with some as-yet-to-discoverd cheap easily usable energy source do we really expect to address our DEPENDANCE on oil with no pain. I've taken care of a lot of addicts in my time and "withdrawal" is always painful. Posted by: c3 at April 20, 2005 07:50 PM What was that they said in the Onion? "If we can extend the analogy of addiction to oil, then drilling ANWR is like hocking our wedding ring for one more fix." Posted by: Rick DeMent at April 20, 2005 09:29 PMA real plan would have heavy emphasis on energy conservation including increased CAFE standards. And if there's going to be tax dollars spent they'd be better spent improving power lines and distribution, not lining the pockets of ADM. Inre ANWAR - we don't have the refineries that can handle the additional quantitty of that type of oil. Finally - reducing energy doesn't mean slowing the economy. We've had several examples of that the past 2 decades. |
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