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Vice President of Government Affairs 

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Research and Outreach Manager 

Demian Brady
Director of Research 

Christina DiSomma
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Timothy Howland
Creative Content Manager 

Curtis Kalin
Communications Intern 

Ross Kaminsky
Blog Contributor 

David Keating
Blog Contributor 

Douglas Kellogg
Communications Manager 

Sharon Koss
Government Affairs Intern 

Richard Lipman
Director of Development 

Joe Michalowski
Government Affairs Intern 

Diana Oprinescu
Communications Intern 

Austin Peters
Communications Intern 

Kristina Rasmussen
Blog Contributor 

Lee Schalk
State Government Affairs Manager 

Pete Sepp
Executive Vice President  

Nan Swift
Federal Government Affairs Manager 

Energy/Environment

CBO Reports Raising Minimum Wage Would Kill Jobs
Posted By: Nan Swift - 02/19/14

Following through on his State of the Union promise to move ahead with or without Congress, President Obama signed an executive order last week raising the minimum wage for federal contractors from $7.25/hour to $10.10, the same increased rate that Senator Reid (D-NV) keeps threatening to bring up for a vote on the Senate floor

It’s really too bad that the President didn’t wait for the Congressional Budget Office (CBO) to do some number crunching before acting, because contrary to Sen. Reid’s boast that hiking the minimum wage would create “85,000 new jobs,” a CBO report unveiled yesterday confirms minimum wage skeptics worst fears:

Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects (see the table below). As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers. 

In layman’s terms, implementing a $10.10/hour minimum wage would risk losing half a million jobs. The fact that the CBO tempers their estimate with the caveat that it could range from just a few lost jobs up to 1 million jobs should hardly be comforting. Either way the result is the same: hiking the minimum wage is a jobs killer.

Higher unemployment is the last thing our struggling economy needs – doing anything that risks more lost jobs is tantamount to economic malpractice. Rather than relentlessly pursuing policies that flirt with disaster, Senator Reid and the rest of Congress should be focused on reforms that save and create jobs such as repealing the death tax, lowering the corporate tax rate, rolling back burdensome regulations, and even the big one: repealing ObamaCare, which the CBO estimated earlier this month could cut 2.5 million jobs from the economy.

Given the current state of affairs on Capitol Hill, it’s unlikely the House and Senate could successfully implement the above reforms. Still taxpayers can hope that Senator Reid heeds the latest warnings from CBO.

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Does "Progress" Always Have to Mean Attacking Job Creation?
Posted By: Pete Sepp - 02/11/14

In the paradoxical category, a new but also not-so-new article from Center for American Progress calls - again - for discriminatory tax policies toward oil and gas companies.

That CAP is attacking the energy sector is no surprise - they release a piece of this nature each time quarterly corporate earnings are published. But it's important to acknowledge the contributions in jobs, retirees' investment returns, and yes, government revenues, that the energy sector is already making now. Implications that the industry doesn't carry its fair share of the tax burden undermine the formulation of effective energy and tax policy. Our recent infographic effectively shows the real story of the industry's economic contribution and tax burden.

Is it just a coincidence that this comes on the heels of the President's call for tax hikes on energy during his State of the Union?

Read more about the need to reform the corporate tax code for all, and end the government's trend of picking winners and losers, in my recent U.S. News & World Report piece.

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Keystone Pipeline Clears Key Environmental Review
Posted By: Nan Swift - 01/31/14

Yesterday, I wrote that one of the top four ways the President can make good on his promise to uphold an “all of the above” energy policy would be to move forward with the Keystone XL pipeline:

The Keystone XL pipeline would bring with it 20,000 much-needed jobs over time, and support thousands of other jobs in many sectors. That’s not to mention an additional 500,000 barrels of oil a day from Canada, our largest and most stable trading partner. This would inject our economy with billions of dollars in additional activity.  … President Obama’s State Department can stop their delay tactics and approve the pipeline’s permit at any point.

Today, the pipeline cleared a major hurdle. The Associated Press reports:

The long-delayed Keystone XL oil pipeline from Canada moved a significant step toward completion Friday as the State Department raised no major environmental objections to its construction.

Of course, this isn’t the first time the pipeline has passed environmental muster.  During President Obama’s first term, the State Department conducted a study and found that the pipeline would not have any substantial environmental impact. However, the pipeline’s permit was still rejected by the President, and TransCanada, the company behind the project, was forced to reapply.

TransCanada did so, but the President postponed a decision until after the 2012 election. Meanwhile, other reports have found that the tar sands derived oil that will be transported by the pipeline is no more risky to transport than other kinds of crude oil and TransCanda has agreed to comply with ever more stringent construction conditions.  The whole saga is described in greater detail here.

Due to the Administration’s past delay tactics, it’s too soon for taxpayers to start popping the champagne. But one thing is clear today:  the President has run out of excuses to stop Keystone XL.

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It’s Time for a True “All of the Above” Energy Plan
Posted By: Nan Swift - 01/30/14

President Obama reiterated his commitment to an “all of the above” energy strategy in his State of the Union address Tuesday. In the past, this strategy has looked more like a “renewable or nothing” plan. However, the President did make surprisingly supportive comments regarding our booming oil and natural gas industries, saying that his “administration will keep working with the industry to sustain production and job growth….”

The President also stated that in order to spur the growth of the natural gas industry he would “cut red tape.” That would be a great first step, but here are a few other areas where we could unleash the enormous potential of the energy sector with just a few snips of the old red tape:

1. Keystone XL Pipeline:  H.R. 3, the Northern Route Approval Act, which would clear the way for the construction of the Keystone XL pipeline, passed the House with bipartisan support – but remains lost in the netherworld of Harry Reid’s obstructionist Senate. The Keystone XL pipeline would bring with it 20,000 much-needed jobs over time, and support thousands of other jobs in many sectors. That’s not to mention an additional 500,000 barrels of oil a day from Canada, our largest and most stable trading partner. This would inject our economy with billions of dollars in additional activity. Of course, taxpayers shouldn’t have to wait for the Senate to act (or, more likely, not act). President Obama’s State Department can stop their delay tactics and approve the pipeline’s permit at any point.

2. Permitting Reform: H.R. 1900, the “Natural Gas Pipeline Permitting Reform Act,” and H.R. 3301, the “North American Infrastructure Act,” would streamline the permitting process for natural gas pipelines, putting in place commonsense deadlines and guidelines to remove the regulatory limbo where many projects find themselves. The inability to get energy products swiftly and safely from place to place is hampering markets and hurting consumers who have to pay higher prices, or even worse, are going without.

Back in November, the Boston Globe reported on the capacity crunch facing New England:

The projects come as New England struggles to address growing demand for natural gas and supply constraints created by tight pipeline capacity. Those constraints have led to shortages and price spikes during the peak demand periods, such as extended winter cold snaps, helping to drive the region’s already high energy costs even higher.

 “Some days there just isn’t spare gas to be sold,” van Welie said.

Additional pipeline capacity, van Welie added, would help alleviate the issue and could also lead to lower energy costs in New England … .

Today, the cold weather is testing both pipeline and storage capacity in both the Northeast and the Midwest. National Public Radio’s Jeff Brady reported:

With drilling booms in places like Pennsylvania and Texas boosting the country's supply, there's plenty of gas to go around. The problem is building the pipelines and other infrastructure needed to deliver it. This has led to some extreme cases where natural gas prices have been bid way up. Last week in New York, one desperate buyer was willing to pay about 25 times the typical price for gas.

And in Ohio:

Like in the Northeast, the problem is not supply so much as getting the gas to where it's needed, when it's needed. During the cold spell in early January, one utility had problems that left a few thousand customers without gas for more than a day. State regulators are asking customers to conserve to make sure that doesn't happen again.

3. War on Coal: President Obama has made it clear over the years that coal is his least favorite source of energy. Still, it is a crucial part of any true “all of the above” energy policy.  Given its widespread availability and the fact that many alternatives are still prohibitively expensive and unreliable, coal should continue to be a part of our energy profile for the foreseeable future. The President’s Environmental Protection Agency (EPA) and other administrative departments have tried to throw up one roadblock after another to keep coal out of the picture. The “War on Coal” has been so successful that almost no new coal-fired electricity plants are being built in the U.S. The few that are have to be outfitted with costly new carbon capture technology. The Washington Post reports:

Last year, the Congressional Budget Office concluded that it was unlikely the technology would become cost-competitive anytime soon. Power plants that can capture and store their carbon are initially expected to cost about 75 percent more than regular coal plants. And those costs won't fall unless there's either a huge technological breakthrough or utilities invest a lot more of their own money in building new plants. Neither appears imminent.

Representative Whitfield (R-KY) has introduced a bill, H.R. 3826, the “Electricity Security and Affordability Act,” to help rein burdensome EPA regulations by enacting common-sense checks and balances that would restore accountability in the rule-making process. The legislation establishes new guidelines for future power plants that are well within the realm of the possible (for a nice change), repeals earlier proposed rules, and requires more Congressional oversight.

4. Renewable Fuel Standard: The corn ethanol mandate imposed by the Renewable Fuel Standard (RFS) has had far-reaching negative consequences. Corn ethanol drives up costs for consumers in the form of lower gas mileage, engine damage, and volatile food prices. It encourages farmers to plant on marginal land better left untilled. The list is long. The RFS also set up a market for Renewable Identification Numbers (RINS), which are renewable fuel credits to help refiners comply with the EPA’s cellulosic fuel mandate. Unfortunately, this market has become rife with fraud. Companies that have unknowingly bought and used fake RINs in their attempts to comply with the law have been hit with huge fines by the EPA.

Currently, the EPA is considering lowering the volume of ethanol it will require refiners to blend into the gasoline supply in 2014 due to the fact that gasoline consumption is  down, yet the law requires greater and greater volumes of ethanol to be blended. That’s only a small, uncertain improvement – one that won’t fix the longer term problems imposed by the RFS. Still, it does reinforce the fact that the RFS is a broken, failed policy – hurting everyone but the corn growers for whom the RFS has been little more than a wealth transfer from one portion of the agriculture sector to another.

A bipartisan team of legislators in the House comprised of Rep. Goodlatte (R-VA), Rep. Womack (R-AR), Rep. Costa (D-CA), and Rep. Welch (D-VT), has introduced H.R. 1462, the Renewable Fuel Standard Reform Act, which would eliminate the corn ethanol mandate, reduce the cellulosic ethanol mandate, and cap ethanol blends at E10.

Washington shouldn’t be picking and choosing winners and losers. Red tape, costly regulations, and unsustainable mandates – not to mention subsidies, tax credits, and loan guarantees for “green energy” projects – all wreck havoc on the energy market. Too often, the end result is higher costs for consumers. Further, these misguided policies have left taxpayers holding the bag for failed government backed enterprises.  If President Obama is serious about an “all of the above” energy policy, the remedy is simple: get government out of the energy market. 

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Energy & The Economy: By The Numbers
Posted By: Douglas Kellogg - 01/27/14

The facts and figures behind America's recent energy resurgence might surprise you...

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Taxpayer’s Tab Supplemental: NOAA Funding and H.R. 2413
Posted By: Dan Barrett - 01/21/14

In the latest edition of The Taxpayer’s Tab, NTU Foundation highlighted H.R. 2413 as the week’s Wildcard bill, which is the section where we highlight proposals we find particularly interesting but that do not fall into any of the other three bill highlight sections. The Weather Forecasting Improvement Act would dedicate new resources to the National Oceanic and Atmospheric Administration (NOAA) to research and predict “high impact weather events,” occurring both nationally and globally.  More specifically, NOAA would receive funding to purchase new equipment and conduct research that improves its forecasting abilities ahead of extreme weather phenomena like Superstorm Sandy or last year’s Midwest tornadoes.

The text of the bill as introduced set an authorization of appropriations of $120 million for the years FY 2014-2017. The Congressional Budget Office (CBO) analyzed the bill to determine the outlays, i.e., the actual amount of federal spending that would occur as a result of the authorizations. CBO reported that the programs covered by the bill received funding of $80 million in FY 2013 but it was not sure of actual outlays for FY 2014. Beginning in FY 2015 spending would begin to increase from $89 million reaching $119 million in FY 2017. CBO also determined that additional funding ($42 million through FY 2017) would be required for research and planning. Based on this data, NTUF estimated that the bill would increase spending by a net of $115 million over four years.

That is what we wrote in the Tab, which went out to our subscribers last Thursday. Since the release, NTUF analysts have been contacted by staffers on the House Committee on Science, Space, and Technology to help clarify their position and intentions regarding H.R. 2413. The Committee staffers told us that they disagreed with the conclusion of the CBO report:

The Weather Forecasting Improvement Act does not increase the overall authorization for the National Oceanic and Atmospheric Administration. Instead, it prioritizes weather forecasting research from funds made available for research at NOAA. At present, NOAA spends more than twice as much on climate change research as it does on weather forecasting research. The bill, as amended and passed by the Committee in December, does not affect direct spending or revenues, contains no unfunded mandates, and does not does not increase the overall authorization for NOAA, NOAA’s Office of Oceanic and Atmospheric Research, or the Operations, Research, and Facilities account at [the Office of Oceanic and Atmospheric Research (OAR)].

In short, Committee staff say that H.R. 2413 transfers funds from NOAA climate change research to weather prediction research. However, there are a few things to consider in reading our article, reading the Committee’s response, and looking at the CBO cost estimate:

  • BillTally Methodology: The goal of NTUF’s signature project is to determine the original spending intention of legislators and cosponsors. Thus, we analyze the text of bills as originally drafted, not as amended in Committee or on the floor of either the House or Senate. In the original language of H.R. 2413, there is no section that formally details a funding transfer (or explicitly prevents new spending to occur) and so we scored the measure as new spending. However, we only look at spending relative to pre-existing authorizations (known as the baseline). In the case of H.R. 2413, CBO determined that $80 million had already been dedicated to similar activities in 2013. The $115 million total in the Tab represents our estimate of the additional spending it would take beyond that to implement the bill’s provisions.

  • CBO Cost Estimates: Occasionally, CBO estimates do not reflect the intentions of bill sponsors. Sometimes this occurs because the text of legislation does not fully outline those intentions, CBO does not interpret the change in law as is outlined in the bill, or both CBO and the sponsors do not account for all the factors (such as current spending or the full costs of implementing a measure).

  • Sponsor/Committee Response: It should be noted that the staffers’ explanation reflects a version of the bill “as amended and passed by the Committee in December” whereas NTUF scores legislation as introduced. Often times, bill text is amended to reflect the changes negotiated in committee or to correct errors in the introduced versions. These actions can change how a bill is interpreted and scored by CBO and so, in keeping with NTUF’s BillTally methodology, we score the initial version of every bill introduced in Congress.

What this means for H.R. 2413: The Committee amended the bill and ordered it to be reported, which means staffers will prepare a written report about the bill including its intentions, section-by-section analysis, and cost information. After that, it would need to be placed on the House’s legislative calendar for floor consideration. In the event the language has been clarified as the Science Committee staff says, the bill would result in a transfer of existing funds and would not increase federal spending.

What this means for taxpayers: For Americans concerned with the accuracy of federally-funded meteorology, especially with regards to large destructive weather events like hurricanes and tornadoes, NOAA will have more resources to improve their predictions and models. This assumes that the redirected-funding for weather research yields better results.

What this means for NTUF’s article and BillTally score: Because the transfer changes were made in the amended version of H.R. 2413 and not the introduced version, we will still record the financial impact of the bill as we reported it in The Taxpayer’s Tab: $29 million ($115 million over four years). This score will be reflected in the agendas of H.R. 2413's sponsor and cosponsors when we release our First Session BillTally report in the coming months. It will likely have a marginal impact on an individual’s proposed spending agenda, but that will also depend on the Member’s other proposals.

Something to remember: NTU Foundation is a 501(c)3 organization and so does not take a stance on any legislation, candidates, or the fitness of currently serving officials to serve. BillTally and The Taxpayer’s Tab is intended to educate Americans on the proposals and spending that can affect the federal budget and their own pocketbooks. We are happy not only to write about the many measures being considered in Congress, but also to clarify our work as a bill evolves and makes its way through Congress.

Not a Taxpayer’s Tab subscriber? Get the most up-to-date research from the BillTally project and the spending trends of Congress now!

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House to Vote on “Natural Gas Pipeline Permitting Reform Act”
Posted By: Nan Swift - 11/20/13

The House of Representatives plans to take up H.R. 1900, the “Natural Gas Pipeline Permitting Reform Act” tomorrow. Authored by Rep. Mike Pompeo (R-KS), the bipartisan legislation “aims to expedite the federal review process for natural gas pipeline permit applications.” Like the “North American Energy Infrastructure Act,” a bill that targeted cross-border pipelines and transmission lines, H.R. 1900 would streamline the permitting process for natural gas pipelines, putting in place commonsense deadlines and guidelines to remove the regulatory limbo where many projects find themselves.

A Government Accountability Office (GAO) report from February 2013, found that the many stages and steps of the permitting process, that often vary from state to state, can quickly bog down projects. The GAO explains that “for those projects that were approved from January 2010 to January 2012, the average time from pre-filing to certification was 558 days…” As natural gas exploration booms around the country, moving that natural resource from one point to another is a crucial component to the growth and sustainability of the industry.

From a consumer perspective, expediting the pipeline approval process means greater availability of an increasingly abundant and relatively low-cost energy source. To understand what greater pipeline capacity could mean for consumers, look no further than New England, where many suffer from high energy prices, especially in the winter, as the Boston Globe reports:

The projects come as New England struggles to address growing demand for natural gas and supply constraints created by tight pipeline capacity. Those constraints have led to shortages and price spikes during the peak demand periods, such as extended winter cold snaps, helping to drive the region’s already high energy costs even higher.

Over the last decade, the amount of electricity in the region produced by natural gas has risen from about 15 percent to more than 50 percent, said Gordon van Welie, head of ISO New England, the region’s grid operator. In Massachusetts, natural gas accounts for 67 percent of the state’s electricity generation, and is also used to heat half the state’s homes.

“Some days there just isn’t spare gas to be sold,” van Welie said.

Additional pipeline capacity, van Welie added, would help alleviate the issue and could also lead to lower energy costs in New England …

As NTU wrote regarding the aforementioned “North American Energy Infrastructure Act,” when it comes to giant infrastructure projects such as natural gas pipelines, “the planning, personnel, and capital all depend on a transparent, predictable, and consistent regulatory environment.” By smoothing the regulatory hurdles and creating an environment of certainty for investors, H.R. 1900 would give consumers increased access to low-cost energy options and spur job-growth in an essential sector of our economy. NTU urges all Representatives to vote “Yes” on H.R. 1900.

 

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Keystone Pipeline Keeps Hitting White House Roadblocks
Posted By: Sharon Koss - 08/08/13

The public and many in Congress continue to support construction of the Keystone XL Pipeline despite President Obama’s unrealistically low job creation projections. The administration has impeded construction of the pipeline for five years while it has called for multiple environmental impact assessments. Each time a result falls in favor of TransCanada, the company requesting the construction permit, the administration asks for another report or for an additional application, effectively preventing construction.

First, the administration requested a study by the State Department, under the direction of Hillary Clinton, on the environmental impacts of the Pipeline. When the report detailed that no substantial impact would occur, the President rejected the permit and asked TransCanada to reapply. When they did so, Obama announced that he would delay the decision until after the 2012 election. Now, a year and a half later, although TransCanada has completed two legs of the pipeline, it has no more certainty as to whether it will be allowed to build the section which extends over the northern border of the United States.

On July 24th, in an interview with The New York Times, The President belittled the potential economic benefits of the Pipeline, contending that it will only create 2,000 jobs during construction and 50 to 100 permanent jobs. The Washington Post’s “Fact Checker” responded to the President’s statement by recalling the job estimates released by TransCanada and the State Department, his executive agency. They called into question his calculations and stated that the figure was more accurately anywhere from 5,000 to 6,000 jobs. Other projections put the job count at 20,000. While these numbers vary, there is consensus that it would create a substantial number of jobs in a still-struggling economy.

On a more fundamental level, the Administration is unnecessarily preventing a private company from materializing a project which would provide the United States access to 500,000 barrels of oil per day from a stable ally. Privately created jobs, however many, will benefit the economy. Regardless, a company should not have to prove that it would create a minimum number of jobs to qualify for the presidential approval.

At the same time, environmental concerns should be assuaged by the extremely rigorous safety guidelines and consideration of risk at every step in the process. In Canada a combination of monitoring and new technologies have helped to both reduce environmental impact and spur development.. Heading south via the Pipeline, The New York Times reports that a recent study by the National Academy of Sciences found that the tar sands derived oil, also called diluted bitumen, is “no riskier to transport than other types of crude oil.” And TransCanada has even agreed to comply with 57 additional construction conditions demanded by the U.S. government:

TransCanada maintains its commitment to build Keystone XL as safely and reliably as possible. To that end, the company will adopt and comply with 57 special conditions developed by the U.S. federal pipeline regulator PHMSA (Pipeline and Hazardous Materials Safety Administration) that provide an even greater confidence in the operation and monitoring of the pipeline, including: a higher number of remotely controlled shut-off valves, increased pipeline inspections and pipe that is buried deeper in the ground. The Final Environmental Impact Statement for the project issued in August 2011 concluded the incorporation of the 57 special conditions 'would result in a project that would have a degree of safety over any other typically constructed domestic oil pipeline system under current code.'

The House recently passed the Northern Route Approval Act to bypass the presidential approval process for the Pipeline. The Senate is proceeding with plans of its own to allow construction. It is time for a nation with access to great energy resources to allow the implementation of policy to progress. With no legitimate legal issues and no identified significant environmental impacts, people must ask, “Why does the President keep adding hoops for this project to jump through?”

 

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EPA's Latest Ruling Ignores RFS Reality
Posted By: Nan Swift - 08/06/13

Today the Environmental Protection Agency (EPA) released its final rule for 2013 renewable fuel percentage standards. That’s an awkward way of saying that under the Renewable Fuel Standard (RFS), enacted in 2007, the EPA sets annual amounts for how many gallons of biofuel refiners are required to blend with our gasoline. While the law sets out ever-increasing amounts each year, the EPA does have discretionary authority to reduce these levels. Different levels are set for various kinds of biofuels including corn ethanol, cellulosic, and biomass.

The ruling today underscored two things:

  1. There would be no change in the total number of gallons of biofuel, pegged at 16.55 billion gallons, refiners expected to add in 2013 (up from 15.2 billion in 2012).
  2.  But due to the fact that there is still so little cellulosic ethanol available commercially, the EPA has reduced the mandate of 14 million to 6 million gallons.

Despite the drop in one form of biofuel, the overall mandate is still far higher than consumers and affected businesses would like to see.  By not lowering the overall mandate in tandem with the cellulosic reduction, refiners will have to either blend even higher amounts of imported sugarcane ethanol or more expensive biodiesel into the fuel supply, or purchase increasingly pricey biofuel credits called Renewable Identification Numbers or RINs to fill the gap.

The fact that the EPA didn’t see fit to rein in the RFS mandate, even though it is within its power to do so, means that the threat of the dreaded “blend wall” is closer than ever. When first instituted, the RFS mandated that obligated parties blend ever increasing volumes of biofuels into gasoline and diesel. The RFS also assumed that fuel demand would continue to grow over the coming decades.

 Since 2007, however, a number of things have thrown a wrench into that plan. The economy has tanked, purchasing power has dropped, and fuel efficiency has increased – just to name a few variables.  The bottom line is that Americans are consuming less gasoline than anticipated. The latest numbers indicate a practically flat line in gasoline consumption from last year to this, yet the EPA is insisting we somehow burn through about 1.3 BILLION more gallons of ethanol than the year prior.   The divide between growing volumetric mandates and shrinking gasoline demand will continue to grow in the coming years, forcing the onset of the blend wall, or the practical limit on the amount of ethanol that can be safely used in current vehicles and infrastructure.

The blend wall is one reason why some have been pushing for E15 – gasoline with a 15 percent ethanol content, not 10 - in order to make room in the gasoline supply for more and more government-mandated ethanol. This is a terrible idea for a number of reasons. The higher ethanol content is bad for older cars and small engines.  Gas pumps aren’t designed to dispense it.   Ethanol costs consumers more to go the same distance as gasoline.  And it means diverting even more of already tight corn supply from the food chain to the gas tank.

While today’s ruling didn’t bring any relief to consumers, the EPA did acknowledge:

EPA does not currently foresee a scenario in which the market could consume enough ethanol sold in blends greater than E10, and/or produce sufficient volumes of non-ethanol biofuels to meet the volumes of total renewable fuel and advanced biofuel as required by statute for 2014.

Therefore, EPA anticipates that in the 2014 proposed rule we will propose adjustments to the 2014 volume requirements, including the advanced biofuel and total renewable fuel categories

The fact that the EPA is beginning to understand the problem that people have been predicting for years is cold comfort for the consumers, livestock producers, and many others who have been decrying the damaging effects of the RFS for years. 

Taxpayers can’t wait for the EPA to “propose adjustments.” Today’s ruling, so out of touch with the market realities of the RFS, is one more indicator that the RFS is broken. Instead of hoping the bureaucrats at the EPA do the right thing, we need to urge our legislators to move forward with real reforms like S. 1195 in the Senate and H.R. 1462 in the House – both are robust bipartisan plans that would level the playing field and inject some much-needed commonsense to an out-of-control mandate.

In the long run, the EPA’s repeated energy fumbles only underscore the need for Washington to stop picking winners and losers and get out of the energy market. Until then, as the biofuel mandate keeps going up, perhaps we should just be happy the EPA has not set a minimum gas consumption standard … yet.

To learn more about the pernicious RFS and NTU’s ongoing efforts to thwart EPA overreach, go here, here, and here.

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Ac-“customed” to Waste?
Posted By: Pete Sepp - 08/05/13

All too many federal agencies can be cited for having budgetary skeletons in their closet, and U.S. Customs and Border Protection (CBP) is no exception. From poorly managing a drone fleet purchase, to making questionable demands for more employees, CBP has raised fears for the security of taxpayers’ wallets in the past. Yet, Congress has an opportunity to ease future fears, over a controversial new CBP project, before it can cause a fiscal fright.

Two years ago, the U.S. Department of Homeland Security (DHS) concluded a letter of intent with the United Arab Emirates to build a “pre-clearance” facility at Abu Dhabi airport which would allow travelers to the U.S. to clear customs before arriving on American soil. So far, so good: pre-clearance can not only save time and reduce congestion at U.S. points of entry, it can also help ease the way for tourists who contribute to economic activity while visiting here.

Now for the not-so-good:

  • According to Airlines for America statistics, Abu Dhabi airport accounted for less than 600 passenger arrivals per day to the U.S. in 2012, ranking it #80 on the list of top origin points to our country.
  • Right now, no U.S.-based carriers even fly from the Abu Dhabi International Airport back to here.  All other CBP pre-clearance zones in Canada, Ireland, and the Caribbean serve many airlines, including U.S.-flagged ones.
  • The primary beneficiary of the deal would be Etihad Airways, the state-owned airline of UAE. Thanks to this status Etihad enjoys an advantage over private airlines around the world that are subject to corporate profit taxes of their home countries. Which brings us to …
  • Another advantage conferred by the United States under the auspices of the Export-Import Bank (Ex-Im), whose risk-taking and subsidization have long been a concern for taxpayer advocates such as NTU. Etihad snagged $593 million in loan guarantees from Ex-Im last year for aircraft purchases, and could qualify for preferential financing that our own airlines (by definition) can’t get through Ex-Im.
  • Meanwhile, The Wall Street Journal is reporting that over the preceding year (before overblown sequester scare tactics), the wait times for getting through customs at stateside airports have “increased dramatically.”

All these drawbacks lead to one long question: Given CBP’s service challenges at existing airports, is it really a good idea to plow ahead with a facility whose use will be comparatively scarce in the near term, and give another leg-up to an airline backed by its own government as well as ours, at the expense of an already overtaxed flying public?

And “overtaxed” is an understatement. As NTU has often noted, the typical overall government tax and fee burden of 20 percent on a $300 domestic airfare is higher than the average effective rate a middle-class American is likely to pay on his or her 1040 income tax return. International air travelers can have it even worse, with impositions such as separate departure and arrival taxes along with a passenger agricultural inspection fee (which the Obama Administration ill-advisedly considered raising in 2009) and a customs fee.

Proponents of the CBP station at Abu Dhabi argue that the investment of U.S. tax dollars will be minimal since UAE will pick up 85 percent of the project’s expense under the current agreement. But that’s little comfort to tax-weary travelers in America (see above), who remain worried that whatever share they will be forced to commit could escalate if construction or operating costs are not contained. Meanwhile, there’s that pesky matter of how best to apply CBP’s fee collections as well as appropriations from general funds – should they be used to expedite higher-priority passenger and cargo entry-exit services?

Many Members of Congress seem to think so. In June, the House of Representatives passed an amended FY 2014 DHS Appropriations Bill specifically blocking the Abu Dhabi pre-clearance scheme. In May, a bi-partisan group of 11 Senators echoed the sentiment of their House colleagues in a separate letter to DHS Secretary Janet Napolitano, questioning whether the agency’s “decision was made as a result of a risk based analysis.”

Alas, earlier this month DHS announced it was moving forward with a data-sharing agreement that could pave the way for the facility’s activation, even as it faces a concerted petition effort from interested industry groups with considerable clout.

Regardless of the politics involved, the taxpayer aspects of the issue deserve further exploration – that goes not only for the Abu Dhabi pact but also the ever-troubling direction of the Ex-Im Bank. Allowing the free market and fiscal responsibility to sort out needs from niceties would provide some badly-needed bone-rattling for those accustomed to budgetary business as usual in Washington.

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