When US lawmakers fret about energy supply from unstable regimes, they should look closely at themselves.
In the Energy Policy Act of 2005 (EPACT), which became law, Congress created a bundle of incentives for a variety of energy forms, including a few selective tax breaks for oil and gas.
That bill contained one big move and one big omission. The big move was a mandate for vehicle fuels made from renewable sources—mainly ethanol. The big omission was meaningful opening of access to federal land off-limits to oil and gas drilling.
The big move and big omission combined to make EPACT, whatever its other virtues, a big error.
This year, with Democrats newly in control, both houses have revisited energy. Each has passed legislation.
Among other things, the House annulled oil-company tax breaks enacted in EPACT and other recent laws. The Senate outlawed fuel prices above nebulous levels during supply emergencies, toughened fuel-efficiency standards for new vehicles, and raised the ethanol mandate.
The House and Senate made no formal effort to reconcile their bills. Instead, House leaders stitched together a hybrid.
In its first version, the new House measure, which raises the mandate for renewable vehicle fuels and stiffens fuel-economy standards, contained no taxes on oil and gas companies.
Now it does—$13 billion or more from rollbacks of recently enacted incentives for activities like offshore gas production from deep reservoirs. Lawmakers say they need the money to bring uncompetitive energy to market.
So taxes fall, and taxes rise. Taxes fall and rise again. Mandates for uneconomic fuel additives, some of which are raising food prices, keep growing. No one mentions expanded leasing, the fastest way to raise supply of the cheapest energy on the greatest scale.
One stated reason for all this is to reduce the need of US energy consumers to buy oil—cheaper though it be than the alternatives being forced to market—produced in countries that someone in Congress deems unstable.
There are, to be sure, unstable countries in the world. With energy, the US is earning itself a leading position among them.
(Online Dec. 6, 2007; author’s e-mail: [email protected])
