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A Real Stimulus And Jobs Bill
After even another dismal jobs report, and an increase in unemployment claims, the President and his rivals continue to go back and forth about what will stimulate the economy and create jobs. One road not (yet) taken is approving the Keystone Pipeline. Declining the project for 1,700-mile pipeline to deliver crude oil from Canada to refineries in the United States was another decision by the President to hold back the power of the free market. According to the Heritage Foundation:
Building the pipeline would bring over 700,000 barrels of oil per day and directly create 20,000 truly shovel-ready jobs. The Canadian Energy Research Institute estimates that current pipeline operations and the addition of the Keystone XL pipeline would create 179,000 American jobs by 2035.
Citing environmental reasons, the President put off answering TransCanada, stating that they needed more time to review the project, even though State Department found only minor environmental effects from the Pipeline. The New York Times reports:
The $7 billion Keystone XL oil pipeline cleared a key hurdle today, as the State Department finalized an environmental review that found limited hazards from the controversial Canada-to-U.S. project
For a President who so desperately needs an economic boost, especially considering this past month’s unemployment numbers, what is the rational behind not forging ahead with Keystone? Scared of upsetting the environmentalists is the only plausible answer here, but as we see, the environmental risks are minimal. Even worries about these potential minor environmental consequences are wasted, because the oil will be extracted anyways, it just won’t come to the United States. China has already made it clear that it would be interested in doing business with Canada. So the oil that could go towards helping lower gas prices in the United States would, instead, go to China.
The administration said that the 60 days given was not enough time to review the program, ironic for a president who rammed through the biggest overhaul of healthcare this country has ever seen without giving legislature enough time to read it. The risks are minimal while the potential gains are huge, and by not allowing it the President is keeping us as dependent on foreign oil as ever, and at the same time holding back what would be a real stimulus to our sluggish economy.0 Comments | Post a Comment | Sign up for NTU Action Alerts
You may remember this letter by NTU’s Andrew Moylan in June, cautioning Ohio Governor John Kasich against “enacting harsh tax hikes on the oil and natural gas industry.” The letter warned that the governor’s proposal to reduce income taxes by passing harmful taxes on energy exploration could have devastating effects on Ohio’s growing energy economy, which was estimated to generate over 200,000 jobs, increase output by over $22 billion and taxable wages by over $12 billion. Fast forward one month. The energy tax hikes are still on the table, and a recently-released report says that Ohio has plummeted from second place to fourteenth in attractiveness for energy exploration. Not exactly the most shocking news of the day.
A number of the oil and gas executives surveyed were quick to criticize Governor Kasich’s proposed tax increase. Though it hasn’t been imposed yet, many energy company officials expressed concern about what the proposal entails for Ohio’s future business tax climate.
After falling TWELVE spots in attractiveness for energy exploration in but the span of just one month, I suppose it’s easy to say “We told you so.” The energy tax hikes will hamper a growing industry and slow an already-difficult economic recovery. While Governor Kasich has the right idea about the necessity of reducing the state’s income tax, it’s time to scrap the harmful energy tax proposal and instead focus on pairing income tax cuts with reductions to spending that grew 43 percent (even after adjusting for inflation) between 2000-2010.
For those of you with an interest in the politics of the Buckeye State, be sure to pick up a copy of Taxpayers Don’t Stand a Chance: Why Battleground Ohio Loses No Matter Who Wins (And What To Do About It) by our good friend Matt Mayer.0 Comments | Post a Comment | Sign up for NTU Action Alerts
House to Tackle Energy Prices
With election season in full swing and a continually sluggish economy, the last thing President Obama wants is high gas prices as well. But if upcoming negotiations with Iran do not go well, we can expect oil prices to rise and gas prices to shoot up. Therefore, it is little surprise that there has already been talk of tapping the Strategic Petroleum Fund (SPR) this summer. The SPR was created in case there is ever a severe shortage in supply of oil, such as during war. The President has already released oil from the reserves once in June of 2011. Human Events reports:
Never before has a president released oil from the Strategic Petroleum Reserve without having replaced previous withdrawals. But, already carrying a $1.3 trillion deficit, Obama has not been able to replace last year’s drawdown. To withdraw from the reserve two years in a row would be unprecedented; moreover, further reduction of our strategic reserve would increase the risk of a serious shortage in the event of a real emergency.
The SPR was not made available for when there is dissatisfaction with gas prices, and withdrawing for this reason creates a bad precedent and potential supply shortage.. Finding ourselves without enough oil could cause massive economic problems, and national security problems.
Representative Corey Gardner (R-CO) has introduced a bill to help tackle this issue. His bill, H.R. 4480, The Strategic Production Energy Act of 2012, ties releasing oil from the SPR to a proportional amount of leases for drilling oil and gas.
Representative Gardner’s bill is a good way to keep energy exploration on the table and deserves support. However, this shouldn’t become an excuse to use the SPR to manipulate oil prices to score a few electoral points. Expanding energy exploration and production are important long-term solutions for greater energy independence and lower prices and deserve support regardless of elections and political favor.
In addition to the SPR component of the legislation, the bill includes a series of plans that take on the Environmental Protection Agency's regulatory impact on fuel prices, increasing domestic energy production, and streamlining the leasing and permitting process for energy exploration on federal lands. Taken together, the package is aimed at decreasing taxpayers' pain at the gas pump and job growth. The House is considering H.R. 4480 today with final votes expected this afternoon.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Despite the fact that millions and millions in wasteful spending on public relations campaigns on the part of big government have come to light in recent weeks, the Department of Energy almost got away with even more propoganda spending.
Though many were appalled to learn Administration and the Department of Health and Human Services had a total of $40.5 million on media campaigns to promote the President's unpopular health care law, were it not for an amendment to H.R. 5325, the Energy and Water Development Appropriations Act of 2013, offered by Rep. Jeff Landry of Louisiana, Americans would be footing the bill for yet another government funded national media campaign. This time it was to promote another unpopular part of the Adminstration's agenda, "to decrease oil consumption in the United States." NTU issued a vote alert urging a "Yes" vote on the amendment.
The amendment to defund the "green energy" media campaign passed by a voice vote. Watch the whole thing here:
Not only should the government not be picking winners and losers in the energy market, when our federal government is already strapped with out of control debt, we shouldn't be wasting money on campaigns to tell us how to behave or think. Thanks to Rep. Landry for catching this big government money grab.1 Comments | Post a Comment | Sign up for NTU Action Alerts
For years, President Obama has been exhorting the U.S. to be more like Spain, a country heavily invested in renewable energy and green jobs. In January, the Spanish government, drowning in debt, made an about-face on this plan. Strangely, though we also have a serious debt problem, the Obama Administration has chosen not to follow this example and despite little success to show for such policies is insisting on spending even more.
Spain announced all the way back in January that it was no longer subsidizing renewable energy projects, still, the Energy Department just announced yesterday that they are embarking on a new, exciting, way better than all the other plans that failed, loan program for green energy companies.
Spain’s reversal hardly came as a surprise to many, the green energy crunch has been a long time coming. From the Institute for Energy Research yesterday:
A couple years ago, President Obama hailed Spain’s promotion of wind and solar energy through massive subsidies as a way to grow the economy and create jobs. At the time, Dr. Gabriel Calzada explained that the Spanish success was a mirage and that Spain’s “success” was actually costing jobs and creating a huge financial liability. Now, the reality of Spain’s disastrous policies is clear to the Spanish government. Hopefully, the unsustainable nature of subsidies will become clear to the promoters of wind and solar as well.
Two years ago, Investor’s Business Daily also reported on the Calzada findings, noting that a new Spanish government report had confirmed Calzada’s claims that “attempts by his country to create a green economy would fail.” Here are some highlights:
In 2011, the American Enterprise Institute also looked at the “Spain problem.” Not only did they look at the exorbitant costs associated with green jobs:
The study calculates that since 2000 Spain has spent €571,138 to create each “green job,” including subsidies of more than €1 million per wind industry job.
But they also point out the corruption that seems to go hand in hand with this the brave, new green economy.
An audit of solar-power generation from November 2009 to January 2010 found that some panel operators were paid for doing the “impossible”—producing electricity from sunlight during the night, El Mundo reported today, citing a letter from Secretary of State for Energy Pedro Marin.
Further, it appears that solar power producers “may have run diesel-burning generators and sold the output as solar power, which earns several times more than electricity from fossil fuels.” Nineteen people have been arrested in Spain’s “clean energy” sector on charges ranging from bribery, to unsavory land deals, to issuing licenses to friends and family, and simple construction fraud. The Guardian adds, “When Spain's National Commission for Energy decided to inspect 30 solar gardens, it found only 13 of them had been built properly and were actually dumping electricity into the network.”
There’s little point in wondering, “What took Spain so long?” At least the political will was finally found to stop sinking funds into a worthless program and to tackle their power-system’s $31 billion in debt. Here in the U.S. in the face of repeated failure and equally failed experiments abroad, we are going to stubbornly adhere to our renewable guns. When promising to create jobs and rebuild the economy, President Obama determined that green jobs were the way to go. Mark Steyn writes:
But not to worry. On Thursday night, the president told a Democratic fundraiser in Washington that the Pass My Jobs Bill bill would create 1.9 million new jobs. What kind of jobs are created by this kind of magical thinking? Well, they’re “green jobs” – and, if we know anything about “green jobs,” it’s that they take a lot of green. German taxpayers subsidize “green jobs” in their wind-power industry to the tune of a quarter of a million dollars per worker per year: $250,000 per “green job” would pay for a lot of real jobs, even in the European Union. Last year, it was revealed that the Spanish government paid $800,000 for every “green job” on a solar panel assembly line. I had assumed carelessly that this must be a world record in terms of taxpayer subsidy per fraudulent “green job.” But it turns out those cheapskate Spaniards with their lousy nickel-and-dime “green jobs” subsidy just weren’t thinking big. The Obama administration’s $38.6 billion “clean technology” program was supposed to “create or save” 65,000 jobs. Half the money has been spent – $17.2 billion – and we have 3,545 jobs to show for it. That works out to an impressive $4,851,904.09 per “green job.” A world record! Take that, you loser Spaniards! USA! USA!
So, based on previous form, Obama’s prediction of 1.9 million new jobs will result in the creation of 92,000 new jobs, mostly in the Federal Department of Green Jobs Grant Applications.
Outside of jobs bills or stimulus plans, the Obama Administration is equally adept (inept?) at throwing good money after bad. Despite the repeated failures when it comes to green energy loans (Solyndra, Beacon ”Empty Shell” Power, First Solar, Ener1), the Department of Energy announced last week that it has $170 million for new loans to green energy companies. The difference this time?
The DOE promised that it will back these new loans only after "rigorous internal and external review of each application."
I am sure this will work way better.
Maybe if President Obama knew it wasn’t just his Spanish friends that were slashing green energy funds in response to looming debt, Germany too is cutting subsidies. Miranda Schreurs, the director of the Environmental Policy Research Center at the Free University Center of Berlin even states, “Everybody knows we can’t go the way we’ve been going. It’ll break the bank.”
Unfortunately, rather than truly learn from Spain’s example and turn from our big spending ways as they have, we seem to be following the dead end of Greece. Unlike Spain and Germany who have halted or cut their green-energy projects to deal with the debt crisis, Greece has pinned its hopes on renewable energy.
According to Business Green, the country has even touted an investment of €20bn in solar which is part of the government’s plan to deliver 100 percent of its energy needs through renewable sources by 2050.
PM Lucas Papademos, who recently spoke at a renewable energy and infrastructure development summit in Athens, said that investment in green energy was a “national priority” to boost economic growth. Project Helios is the Greek government’s massive initiative to ramp up solar power production from 206 MW to 2.2. GW by 2020 and up to 10 GW by 2050. The country is aiming to become the EU’s largest exporter of green energy.
This should bode well.
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Need to make some serious money? Childhood “firefighter by day, Batman by night” dreams not working out? Here’s how to cash in on the green energy racket.
Step 1: Think of a “green” idea: renewable energy, plug in cars, $50 light bulbs.
Step 2: Get government funding, subsidies, and/or mandates.
Step 3: Roll around in your amazing new money pool.
Probably one of the best parts about this genius plan is that your green idea doesn’t even have to be that good. It doesn’t have to work at all. Your company can totally fail. Sometimes, if you are lucky, the government will pay you NOT to work. Best of all, the system is so bogged down in bureaucracy; it could be years before anyone even notices. Here’s just one example:
From the Pacific Northwest, wind farms that are paid to shut down:
Wind farms in the Pacific Northwest -- built with government subsidies and maintained with tax credits for every megawatt produced -- are now getting paid to shut down as the federal agency charged with managing the region's electricity grid says there's an oversupply of renewable power at certain times of the year.
Now, Bonneville is offering to compensate wind companies for half their lost revenue. The bill could reach up to $50 million a year.
The extra payout means energy users will eventually have to pay more.
"We require taxpayers to subsidize the production of renewable energy, and now we want ratepayers to pay renewable energy companies when they lose money?" asked Todd Myers, director of the Center for the Environment of the Washington Policy Center and author of "Eco-Fads: How the Rise of Trendy Environmentalism is Harming the Environment."
"That's a ridiculous system that keeps piling more and more money into a system that's unsustainable," Myers said.
That is as good a deal as being paid not to farm! And what makes this scam all the better is that even when wind farms are working, even with all the subsidies and renewable energy mandates, wind provides less than half a percent of the total energy generated each day worldwide. This, of course, is shocking considering what a killing one could make off it. And when I say killing, I’m referring to birds and bats.
Of course putting up giant windmills all day is hard work. An even smarter way to grab taxpayer cash is to make big promises, get a giant loan from the Department of Energy, give yourself an enormous bonus and get out of town. It is essential in this scenario that you are an executive, and not someone lower on the food chain who will simply be out of work in a tough job market. ABCNews explains how Solyndra was far from an isolated incident, indeed it is practically a recipe for success in today’s corporate welfare world:
EnerDel, maker of lithium-ion battery systems, landed a $118.5 million energy grant in August 2009. About one-and-a-half years later, Vice President Joe Biden toured a company plant in Indiana and heralded its taxpayer-supported expansion as one of the "100 Recovery Act Projects That Are Changing America."
Two months after Biden's visit, EnerDel corporate parent Ener1 paid $725,000 in bonuses to three executives -- including $450,000 to then-CEO Charles Gassenheimer, who led Biden on the tour. This January, Ener1 filed for Chapter 11 bankruptcy protection.
At least two other firms that benefited from Energy Department funding -- one a $500,000 grant, the other a $535 million loan guarantee -- handed out hefty payouts to executives and later went bankrupt.
This is a great time to be a not so great entrepreneur. In the old days, you had to make something better or cheaper than others to compete in the marketplace. Luckily, those uncivilized days are over and now all you need is someone in government to make people buy your product, or to give your business special treatment that others can’t compete with.
Do you have a great product no one wants to buy? Extra oil tanker bladders you need to get off your hands? Not to worry, here are two simple ways to get someone on the inside to pull a few strings: donate money to their campaign, or make them stockholders. It’s just that easy.
Now go enjoy your new taxpayer funded money pool.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today, the Senate Finance Committee is marking up their transportation bill with an eye toward adding billions in tax increases to cover the overspending in the bill. More spending, more tax hikes to pay for it. Stop me if you've heard this before. But there are two proposals in particular that gave me a little bit of policy deja vu.
First, the so-called "Chairman's mark" includes a $3 billion retroactive tax increase targeting the "carrying forward" of credits claimed back in 2009. You might remember 2009 as the year before the year before this year. The halcyon days when we passed a "stimulus" bill that was going to help our economy boom by 2012. The optimistic times when we could totally afford a trillion-dollar government-run health care program and our debt was "only" $10-11 trillion (as opposed to $15 trillion and counting today). Some on the Senate Finance Committee apparently would like to relitigate tax policy from that wonderful era in American history and enact a retroactive tax hike.
Now, it should be noted that the two credits they're targeting (the alternative fuel mixture credit and the cellulosic biofuel producer credit) are not ideal tax policies by any stretch of the imagination. Particularly the alternative fuel credit, given that it's "refundable" and thus acts like government spending rather than simple tax reduction. A smart tax code wouldn't include either of these policies but would levy low, consistent taxes across the board for all types of fuels and producers. But enacting retroactive tax increases is a much more egregious violation of principles of sound tax policy than either of those dumb credits.
The second effort, a proposed amendment to the Chairman's mark from Senator Robert Menendez (D-NJ), would target the oil and gas industry for punitive tax treatment by eliminating provisions like the Section 199 manufacturer's deduction or the "dual capacity" credit for them alone. If we've written it once, we've written it a hundred times: singling out oil and gas companies for higher taxes is bad tax policy and it's bad energy policy. Thankfully, the Congress has thus far largely agreed with us as the dozens of attempts in recent years to impose Menendez-like tax increases have all failed at one point in the process or another.
The Senate Finance Committee will be taking up these issues this afternoon and we hope they focus their efforts on reducing wasteful spending and not on retroactive tax hikes or tired attempts to punish an unloved industry.0 Comments | Post a Comment | Sign up for NTU Action Alerts
So President Obama's 2012 State of the Union is over now and everybody's analyzing the details of what he said (including our NTU Foundation, where researchers are working on figuring out exactly how much his proposals would cost for taxpayers). For someone who claims to be laser-focused on economic growth and job creation, we couldn't help but notice that he left a few things out that SHOULD have been in the speech. For example...
The Keystone XL pipeline
The President conveniently neglected to mention that his Administration just last week denied a permit to build the Keystone XL pipeline, a project to safely deliver Canadian energy resources to the American market. Construction of Keystone XL could have generated as many as 20,000 jobs while bringing much-needed energy to a hungry domestic market that has faced obstacle after obstacle from this Administration. We've been calling for its approval since last summer, but unfortunately for taxpayers and consumers, the President ignored those calls and put the kibosh on the project.
Unlocking valuable spectrum
Cost-free to taxpayers, beneficial in reducing our staggering deficit, and absolutely vital to the continued growth and innovation of technology and the internet. What no-brainer policy am I talking about? Competitive spectrum auctions. Did the President talk about it last night? Of course not! There have been rumblings from both sides of Capitol Hill and both sides of the aisle about spectrum for some time, but some Presidential leadership could work wonders in ushering a win-win policy to completion.
Allowing businesses to...you know, conduct their business
This one's sort of a personal pet-peeve, but of course the President failed to mention the meddling in which his Administration has engaged/will engage in private business operations. Things like the AT&T - T-Mobile merger (which NTU supported) that his Justice Department and FCC squashed last month. Or the ongoing FTC antitrust investigation into Google, a company which charges its users exactly $0 to access its search engine and other services. Or the ongoing process of the Express Scripts - Medco Health Solutions merger. Keeping the federal government out of the way, by and large, is the best way to foster economic growth, but this Administration has time and again shown a tendency towards populist intervention that is unhelpful to say the least.
An energy strategy not centered on subsidies
The President did talk about energy last night, and some of it was commendable. He talked about opening up some more areas under federal control to energy exploration, though I'll await further details before judging. But most of what he said focues on how we should be showering even MORE subsidies on energy technologies that are to the liking of Barack Obama (namely: solar, wind, anything vaguely "green" or "renewable"). And of course he did it while taking swipes at the "Big Evil Oil Companies" he so frequently derides. Funny side note: the biggest of the oil companies that are the focus on Obama's vitriol was just passed as the most valuable company in the U.S. by Apple. The wife of the late Steve Jobs sat beside the First Lady during the speech and got a specific shout-out (a positive one!). I guess he doesn't mind that they're "the 1%" of companies and that they're sitting on tens of billions in largely idle cash reserves, another practice he has criticized elsewhere.
Any serious discussion of bipartisan spending reductions
The President made some vague remarks about "working together" in a bipartisan fashion, along with some passing comments about reducing waste in the federal budget. But he didn't come anywhere close to making it a serious and substantive part of his speech. Too bad. We already worked with the liberal U.S. Public Interest Research Group to give him a $1 trillion head start on spending cuts that left and right could agree upon and stand ready to assist him. Let's just say I'm not eagerly awaiting his call.
What else should the President have covered if he were serious about economic growth and job creation?1 Comments | Post a Comment | Sign up for NTU Action Alerts
The Dirty Reality Behind Obama's Clean Energy Standard
For the second year in a row President Obama used his State of the Union to call for the creation of a “clean energy” standard (CES). Although various proposals have been knocking around Congress the past several years, the key feature is a requirement that electric companies generate a stated percentage of their electricity from certain enumerated “clean” sources.
President Obama hasn’t been shy about his desire to create a green (or clean) energy economy. In fact, one of his oft-repeated campaign promises was to invest $150 billion and create 5 million green jobs. Obama has been doing his best to make good on the promise by using deficit financed loan guarantees, cash grants, and subsidy payments to try and jumpstart the market for green energy.
The result, as one executive of a green-energy company told the New York Times, “I have never seen anything that I have had to do in my 20 years in the power industry that involved less risk than these projects. It is just filling the desert with [solar] panels.”
States have also been chipping in, offering their own tax breaks and clean energy standards, but the results have led many to reconsider. The New York Times reports:
These mandates often have resulted in contracts with above-market rates for the project developers, and a guarantee of a steady revenue stream.
“It is like building a hotel, where you know in advance you are going to have 100 percent room occupancy for 25 years,” said Kevin Smith, chief executive of SolarReserve. His Nevada solar project has secured a 25-year power-purchase agreement with the state’s largest utility and a $737 million Energy Department loan guarantee and is on track to receive a $200 million Treasury grant.
Because the purchase mandates can drive up electricity rates significantly, some states, including New Jersey and Colorado, are considering softening the requirements on utilities.
Failing to learn from the example of such states, President Obama is now proposing to create a national standard. The result will be a windfall for clean energy companies and a serious hit for taxpayers.
A clean energy standard “works” by taking lower-cost choices away from consumers. By requiring utilities to buy certain forms of energy, namely, wind, solar, biomass, and other Washington-approved fuels, a stable, but artificial market is created. It’s the equivalent of trying to reduce car emissions by mandating that everyone get around using roller-skates at least 80 percent of the time. Sure, it would take a lot longer to get to places, would be completely unworkable for many people who regularly travel long distances, and would create an overnight market for roller-skate makers.
But whereas Americans would largely pay for the roller-skate mandate in wasted time, a clean-energy mandate would result in vastly more expensive electric bills. Those higher prices arise by forcing providers to use costlier forms of energy than they would otherwise use. And those higher costs would go straight to the clean energy companies that President Obama has been so keen on subsidizing.
You see, Obama made a promise to create 5 million green-energy jobs. And that’s a promise he intends to keep…even if it just means shuttling money out of American’s wallets and into “clean” energy companies. Gives new meaning to the words money laundering.
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Obama's "Subsidize-All-of-the-Above" Energy Strategy
“This country needs an all-out, all-of-the-above strategy that develops every available source of American energy — a strategy that's cleaner, cheaper, and full of new jobs.” – Obama’s 2012 State of the Union
That may be what the United States needs, but it is not what Obama is offering.
First off, it should be a no-brainer that an “all-of-the-above” strategy would include tapping into a safe, plentiful supplier of oil in our neighbor to the north. Nevertheless, the Keystone XL pipeline, a privately funded infrastructure project that would bring tens of thousands of jobs to the United States, was recently rejected by President Obama. The decision came despite a three-year environmental review that found no threat and the inescapable reality that without the pipeline the oil will just be shipped in tankers to China while we continue to import oil on tankers from the Middle East. Yet another triumph for politics over policy.
Secondly, federal subsidization of certain renewable energy technologies has more often than not been a bust. Obama may tout the increased use of renewables and the thousands of jobs created, but when set against the billions of dollars in taxpayer money that has been invested in ensuring their success, those statistics become less impressive. After all, let’s not forget that at the outset of the Obama campaign Obama promised to “create 5 million green jobs.” Now, he’s reduced to touting the “thousands” that he’s managed to prop up with deficit-financed support.
Somehow Obama still hasn’t learned his lesson from Solyndra.0 Comments | Post a Comment | Sign up for NTU Action Alerts