The House will continue action this week on the Democratic leadership’s 100-hour agenda, taking up H.R. 6, the “Creating Long-Term Energy Alternatives for the Nation Act of 2007,” or the “CLEAN Energy Act of 2007.” We’d prefer they were instead voting on the “Prohibits Legislation Named Just For Its Catchy Acronym Act,” but so be it.
The bill gives quick indication of what it’s really about in the short name for Title I, “Ending Subsidies for Big Oil Act of 2007.” Whatever Big Oil may be, higher prices turned it into a political target during the 2006 elections, so the early legislative schedule calls for punishing, i.e., raising taxes, on that specific portion of the energy sector. Question is, will sticking it to the oil industry help achieve energy security?
Remember the “windfall profits tax” imposed during the Carter administration in 1980? The lesson of the ’80s is that energy tax increases can end up hurting consumers by reducing domestic energy supplies.
And the tax was costly in another respect: A study by the Congressional Research Service concluded that the tax destroyed well over 100,000 jobs in the oil and gas industry between 1982 and 1988 — almost one-third of all industry employment.
In this succinct and useful op-ed, Bernard L. Weinstein, a professor of applied economics at the University of North Texas, also explains why repealing “royalty relief” would punish companies that engage in deep-water drilling, again discouraging development of U.S. domestic energy supplies.
We recognize that H.R. 6 is on the House’s floor agenda — without having any committee hearings having been held on its merits — as a matter of political positioning, party-building and PR. And those things have value, especially in a new Congress under new political control. But they do nothing to encourage energy security.
Professor Weinstein offers the better approach and the right conclusion:
Instead of increasing taxes on Big Oil, the new Congress should be forging an agenda to increase domestic energy supplies, including opening new areas for exploration and production of oil and natural gas on the outer continental shelf and the Alaskan Wilderness.
Our oil and gas reserves can’t help us grow our economy, hold down energy costs and reduce our reliance on imports while in the ground.
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