Doing good things for good reasons is best; good things for bad reasons, lucky; bad things for good reasons, wrong; and bad things for bad reasons, stupid.
Taxing oil and gas to fund renewable energy is a bad thing to do. Lowering US dependency on foreign oil is a bad reason to do it.
“We need an energy plan that reduces our dependency on foreign oil and invests in clean, renewable technology that will create jobs here in America,” said House Ways and Means chairman Charles B. Rangel in support of a new energy blunder.
Rangel and fellow Democrats have revived an effort to raise taxes—they misleadingly say end “subsidies”—of oil and gas companies. Proceeds would pay for an extension of tax incentives for renewable energy (OGJ Online, Feb. 13, 2008).
The legislation would limit the use by oil companies of a tax credit that helps US companies compete abroad. It also would reduce the deductibility of non-US production taxes in calculations of taxable US income.
The combined effect is a tax increase on the oil and gas industry of $17.65 billion over 10 years—money that can’t be invested in oil and gas supply.
By explicitly making them substitutes for rather than supplements to oil and gas, the legislation takes the worst possible approach to renewable energy forms. It forces Americans to use expensive energy in place of something cheaper.
And it wouldn’t lower US dependence on foreign oil. Along with gains in output of renewable energy would come declines, thanks to the tax hikes, in US production of oil.
Rangel’s other promises are equally hollow.
Renewable energy forms are not, as experience with ethanol is showing, the environmental panaceas their supporters say they are. And weakening the economy by forcing expensive energy into the market is no way to create jobs.
A sounder way to cut US reliance on foreign oil and create jobs—and to earn rather than spend public money—is to expand oil and gas leasing of federal land.
But congressional Democrats have their own way. And it’s stupid.
(Online Feb. 15, 2008; author’s e-mail: [email protected])
