Misconception common in US government decision-making about energy received full exposure Apr. 3 in the Senate Finance Committee.
During work on a bill to extend expiring tax measures, Pat Toomey (R-Pa.) offered an amendment to remove incentives for alternative energy.
“I don’t think we should force taxpayers to subsidize inefficient, uncompetitive forms of energy,” Toomey said, according to The Hill news service. “We are simply picking winners and losers.”
Debbie Stabenow (D-Mich.) countered, “I would argue that Congress has picked a winner in the oil industry, and they have won.”
Charles Grassley (R-Iowa) added, “The 100-year-old oil and gas industry continues to benefit from tax preferences that benefit only their industry.”
Stabenow’s statement implies oil and gas dominate energy use because Congress willed them to do so. This kind of thinking leads to the popular but economically deadly assumption that energy is chiefly a matter of political choice.
In fact, oil and gas, along with coal, dominate energy use because they possess overwhelming advantages of form related to energy density. Congress didn’t convey those advantages. Nature did.
Grassley’s elaboration about how Congress supposedly favored oil and gas is as incorrect as Stabenow’s implication. Yes, the industry uses tax mechanisms unavailable to most other industries. Those mechanisms address resource depletion, dry holes, spending oriented to intangible goods and services, and other economic complications most other industries don’t encounter. They mainly accommodate the tax regime to industry idiosyncrasies. They don’t promote oil and gas in energy markets the way the generous tax credits supported by Stabenow and Grassley do wind energy and biofuels.
The Finance Committee rejected Toomey’s amendment and passed the full measure to the Senate. Members of the House have hinted they won’t support a tax-extender bill full of credits for renewable energy.
Whatever the outcome of that conflict, energy decisions would improve if decision-makers acknowledged limits on the influence of politics in energy choices. Eventually, even politicians must yield to physical and economic laws.
(From the subscriber’s area of www.ogj.com, posted Apr. 4, 2014; author’s e-mail: [email protected])