Volume XVI No. 25: June 24, 2011
Momentum is a powerful legislative force -- once a bill starts swirling the bowl, it's only a matter of time before it goes down. More than a dozen lawmakers have recently withdrawntheir co-sponsorship of the subsidy laden NAT GAS Act - a bill designed to bolster the natural gas industry by lavishing it with taxpayer cash. The bill still has scores of co-sponsors, but it is clearly taking on water.
This exodus is occurring because lawmakers are finally sobering up to its ridiculous premise---with our left hand battling to end a fiscal crisis, let's leave our right to add billions in subsidies for natural gas. Dozens of fiscally conservative organizations (including TCS) are calling on lawmakers to rein in energy subsidies to help deal with the spending, revenue, and entitlement crisis crushing our country's budget. Yet some lawmakers want Washington to pick another winner - the highly lucrative gas industry.
Taxpayers shouldn't be subsidizing the business expenses of the natural gas industry -- from manufacturing and infrastructure to consumer tax credits. The NAT GAS Act proposes a tax credit for up to 80 percent of the marginal cost of buying a natural gas vehicle -- up to $64,000 for the heaviest trucks; a 50-cent-per-gallon fuel tax credit, an infrastructure tax credit of 50 percent of the cost of a fueling station -- up to $100,000, and a manufacturing tax credit for the production of natural gas vehicles.
All told the bill carries a hefty $5 billion price tag.
Over the last century Congress has created a tangle of energy subsidies. It's time we unravel this market distorting and illogical set of taxpayer subsidies, NOT add to it. We need to end the taxpayer handouts, level the playing field, and let the most efficient and competitive technologies thrive. We need full cost accounting and we need industry to bear the costs of doing business. Taxpayers can no longer shoulder the risks and costs while industry pockets the profits.
Most energy sectors have benefitted from taxpayer subsidies in some form -- be it for the last year, decade, or century. For example, the oil and gas industry receives many subsidies, including lucrative tax breaks like the intangible drilling costs and percentage depletion allowance, that date back to the early 1900s. The wind industry receives grants and solar benefits from market distorting loan guarantees. The nuclear industry has invaluable accident insurance, production tax breaks, and more than $20 billion in federal loan guarantees. The ethanol industry benefits from a generous purchasing mandate coupled with a massive tax break. And these are just the tip of the iceberg--- .
Taxpayers already provide billions in subsidies to mature energy industries---adding to that long list now for natural gas (a mature energy industry) makes no sense. Now is the time for lawmakers to begin aggressively dismantling the billions in tax breaks and subsidies to all forms of energy. Members should show fiscal restraint and not support these blatant subsidies. Taxpayers cannot afford anything less.