Cutting Off Energy to America

Cutting Off Energy to America
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Cutting Off Energy to America
by Dennis Behreandt
March 5, 2007

With a Democrat-controlled Congress, measures punishing "Big Oil" and fighting global warming are taking center stage, but it is middle-class America that will lose in the end.

The super luxury Kingsmill Resort, owned by Anheuser-Busch, sprawls over 2,900 lush, rolling acres along the James River in Virginia. It's an incongruous place for a meeting of liberal Democrats who never tire of attempting to ingratiate themselves with America's blue-collar workers, folks who could never afford the luxury of traveling to Kingsmill for a round of golf followed by a session in the spa for the "gentlemen's skin renewal" or "revitalizing pedicure" services.

That didn't stop congressional Democrats from holding a retreat at the posh resort during the first week of February to discuss the legislative agenda and the prospects of working with the Bush administration. According to the New York Times, "The retreat will give the Democrats some uninterrupted time to discuss what they intend to do with their new majority in the 110th Congress — and how they should interact with opposition Republicans in Congress and with President Bush." Joining the Dems at the Democratic Caucus Issues Conference at the resort was celebrity agitator and U2 singer Bono, who urged Democrats to work with Republicans.

To kick-start bipartisan interaction, the Democrats invited President George W. Bush to speak to the group on February 3. His appearance at the meeting was his first since taking office in 2001. When he addressed the 175 Democrat attendees, Bush indicated a willingness to work with the Democrats on a number of issues, among the most important of which for the future well-being of the nation was energy and the environment. "It's an area where we can show the American people that the Republican Party and the Democratic Party have got the capability of enabling us to be able to say to the people, by being less dependent on oil, we've enhanced our national security, we've helped our economic security, and we've done something positive on the environment," said the president.

The prospect of the White House being willing to work with the new Democratic majority on the related issues of the environment and energy is likely to give a new impetus to a radical environmental/energy agenda. That agenda includes efforts to restrict "greenhouse gas" emissions over global-warming fears as well as initiatives to stifle U.S. energy production while taking billions of dollars from energy producers to fund federal subsidies for alternative energy sources. And the people who would pay for it all, in the form of lost jobs and higher prices, would be America's dwindling middle class.

Choking the Domestic Energy Industry

The passage of H.R. 6, the CLEAN Energy Act of 2007, by the new Democrat-controlled House of Representatives, as part of their vaunted "first 100 hours," came in the midst of record levels of U.S. dependence on foreign energy sources and the rising cost of fuels that has put increased financial burdens on U.S. industries and consumers alike.

According to the U.S. Energy Information Agency's (EIA) Monthly Energy Review for January 2007, the United States currently imports more than 66 percent of the petroleum fuels it uses. According to congressional Democrats, the CLEAN Energy Act is supposed to lead to increased energy independence for America. "Today's vote represents the first step toward a future of energy independence," said House Speaker Nancy Pelosi (D-Calif.) on January 18, the day the measure passed the House by a vote of 264 to 163. With the bill, Pelosi continued, "we will promote homegrown alternatives, creating good-paying jobs while bolstering our national security, sending our energy dollars to the Midwest, not the Middle East."

Other House Democrats were equally enthusiastic about the bill and about its prospects for punishing "Big Oil." "Six years ago, when temperatures were spiking around the world and the effects of global warming were raising alarm bells about the fate of the polar bear, the Vice President was holding secret meetings with Energy executives and offering cozy deals and incentives to his Big Oil buddies," liberal Democrat Barbara Lee said in her floor speech during debate over the bill. "While the American people were emptying their pockets to fill up at the pump," Lee continued, "Republicans were lining up to be the first to open our coasts to new drilling. Mr. Speaker I'm proud to say that those days are over!"

Well might Rep. Lee rejoice in the punitive nature of the CLEAN Energy Act. The measure does, in fact, amount to a huge tax increase on oil producers working to recover domestic resources. As such it would not reduce America's dependence on foreign oil, but would substantially increase the nation's dependence on the OPEC nations.

Among the bill's provisions is one that would deny producers the tax "deduction for income attributable to domestic production of oil, natural gas, or primary products thereof." While the Democrats railed against this tax break as a special Republican favor for "Big Oil," a reduction in taxes on domestically produced oil makes exploration, drilling, and production of fuel from that domestic oil more attractive for producers, making an increase in production from domestic supplies more likely. Ending the deduction has the opposite effect, reducing the incentive for domestic energy firms to produce fuel from domestic sources.

The CLEAN Energy Act also repeals incentives dating from 2005 for natural gas production in the Gulf of Mexico and makes leases of federal lands for energy production more expensive. The anticipated extra federal revenue derived from these policies would, under H.R. 6, be used to fund "a separate account to be known as the 'Strategic Energy Efficiency and Renewables Reserve.'" Monies from that reserve would be used to provide federal funding for "renewable energy resources and alternative fuels" and "to promote the utilization of energy-efficient products and practices and conservation."

Instead of reducing the nation's dependence on foreign oil, the CLEAN Energy Act would increase that dependency. "In short, this bill will decrease U.S. exploration and will increase our dependence on foreign oil," said Texas Congressman Ted Poe (R). "This bill punishes oil companies and discourages them from exploring for oil domestically. It is a bad idea and it's bad for America. By raising taxes and fees on oil and gas companies that choose to manufacture in America, the U.S. will become a less attractive place to produce oil and natural gas. This essentially creates incentives for foreign importation and could kill manufacturing jobs in an industry that employs nearly 1.8 million Americans," Poe warned.

A New Apollo Program

The CLEAN Energy Act, though, is likely to be only the first step in a series of additional Democrat-initiated energy measures, according to Washington Rep. Jay Inslee (D). "The American Revolution began at Concord; the aerospace revolution began at Kitty Hawk; and America's clean energy revolution begins with this bill," Inslee said when H.R. 6 was passed by the House. This, however, was just the beginning, Inslee promised. "Today is the first step of the New Apollo Energy Project," he said.

First introduced in 2005, the New Apollo Energy Act was the then-minority Democrat energy proposal. Quietly, it seems to have become, in some sense, a template for current energy proposals, even from the Republican side of the aisle. In his State of the Union address, for example, President Bush proposed cutting U.S. demand for gasoline by a substantial margin. "Tonight, I ask Congress to join me in pursuing a great goal," the president said. "Let us build on the work we've done and reduce gasoline usage in the United States by 20 percent in the next 10 years. When we do that we will have cut our total imports by the equivalent of three-quarters of all the oil we now import from the Middle East."

That sounds a lot like Inslee's New Apollo Energy proposal. According to Inslee, New Apollo — supported, incidentally, by the Apollo Alliance, a group whose membership reads like a who's who of left-wing organizations — called for "notable reductions in daily domestic oil consumption — cuts of 600,000 barrels a day by 2010, 1,700,000 barrels by 2015, and 3,000,000 barrels by 2020."

Cuts of that kind can only occur if alternatives to petroleum-based fuels become common. Both President Bush and the New Apollo proposal call for efforts to replace petroleum fuels with alternative fuel technologies. "We must increase the supply of alternative fuels," said President Bush in his State of the Union address, "by setting a mandatory fuels standard to require 35 billion gallons of renewable and alternative fuels in 2017 — and that is nearly five times the current target. At the same time, we need to reform and modernize fuel economy standards for cars the way we did for light trucks — and conserve up to 8.5 billion more gallons of gasoline by 2017." Again, this could have come straight from the New Apollo program, which envisioned massive federal spending and subsidies for alternative energy programs. According to Rep. Inslee, these "boosts for clean energy and efficiency will make it possible to meet New Apollo's call for notable reductions in daily domestic oil consumption."

Clearly, whether it is the Bush program or the Democrat CLEAN Energy Act, Congress is moving to implement the New Apollo program, albeit in piecemeal fashion, with other pieces likely coming in the near future. "The CLEAN Energy Act," says Inslee, "puts us on the right footing to accomplish other goals of the New Apollo Energy Act — from setting a nationwide standard for the minimum production of renewable electricity to creating a formal system to cap greenhouse-gas emissions."

Warming Trend

It is the issue of greenhouse-gas emissions and global warming that is heating up the rhetoric in Washington and will likely heat up the legislative agenda in short order. The most recent fears over global warming have been stoked by the release of the first section of the new report from the UN's Intergovernmental Panel on Climate Change (IPCC). In its reaction to the report, the Los Angeles Times argued that the situation is hopeless, that the climate apocalypse is here and there's no stopping it. "Everybody in the United States could switch from cars to bicycles," wrote LA Times staff writer Alan Zerembo. "The Chinese could close all their factories. Europe could give up electricity and return to the age of the lantern. But all those steps together would not come close to stopping global warming."

Since global warming is primarily a matter of politics rather than science, this, predictably, has politicians worked up. Massachusetts Democrat Ed Markey, a member of House panels on energy and the environment, said, "For those who are still trying to determine responsibility for global warming, this new U.N. report on climate change is a scientific smoking gun." That has prompted Democrat leaders to escalate their calls for immediate action. "Global warming is a 100 percent certainty, and this report states that there is a 90 percent certainty that humans are causing most of it," said Senator Barbara Boxer (D-Calif.), chair of the Senate Environment and Public Works Committee. "This report must serve as a wake-up call to those policymakers who have ignored this issue — we must take action now."

House Speaker Nancy Pelosi was taking action even before the hysteria erupted over the IPCC report. On January 18, Pelosi told House Democrats that she intended to form a select committee on energy independence and climate change that would take the lead in holding hearings on the subjects. The move was seen as an end run around the House Energy and Commerce Committee chaired by Michigan Democrat John Dingell, who is viewed among Democrats as too skeptical about global warming. Indeed, when questioned by far-left Grist magazine on whether he thought there was a consensus regarding global warming, Dingell responded: "This country, this world, the [human] race of which you and I are a part, is great at having consensuses that are in great error."

Pelosi favors strict reductions of greenhouse-gas emissions that might not survive Dingell's scrutiny. Some idea of the policies she favors, and of the policies favored by most Democrats, can be found in an examination of the Safe Climate Act of 2006, a measure introduced in the previous Congress by Henry Waxman (D-Calif.) that eventually garnered 113 cosponsors, including Nancy Pelosi. The measure called for the United States to participate in international agreements, like the Kyoto Accord, in order to "establish mitigation commitments by all countries that are major emitters of greenhouse gases" and "achieve reductions in global greenhouse-gas emissions at a pace and levels sufficient to avoid dangerous interference with the earth's climate."

As far as greenhouse-gas reductions go, the bill would have amended the Clean Air Act so as to stipulate that greenhouse-gas emissions would be reduced by "2 percent each year, such that the quantity of such emissions in 2020 does not exceed the quantity of United States greenhouse gases emitted in 1990." Steeper reductions of approximately 5 percent per year would begin in 2021 and last until 2050.

Currently, the most prominent climate-change measure before Congress is H.R. 620, the Climate Stewardship Act of 2007. A similar bill, S. 280, has been introduced in the Senate. Both are offspring of a similar bill first introduced in 2003 by Senators John McCain (R-Ariz.) and Joe Lieberman (D-Conn.). The current bill was introduced in the House by Massachusetts Democrat John Olver on January 22 and has gained 69 cosponsors to date. It would institute mandatory caps on greenhouse gas emissions and allow the purchase and sale of greenhouse gas allowances, in a manner similar to that operating under the terms of the UN Kyoto Accord.

Under the House measure, greenhouse-gas emissions would be capped at 6,150 million metric tons for the first eight years beginning after 2011. That number would drop in 2019, in 2029, and again in 2049. After that year, greenhouse-gas emissions would be limited to only 1,504 million metric tons. Under the measure, regulated producers would be allotted tradeable allowances for emissions specifying the amount of greenhouse gases they may emit. Producers emitting more than they are allotted would need to purchase additional allowances from producers emitting less than their allotted quota of greenhouse gas.

Not only would the proposal introduce new expenses for producers and manufacturers in the form of tradeable allowances, it would also create new layers of federal bureaucracy. Under the measure, the Environmental Protection Agency would determine the "amount of tradeable allowances to be allocated" to industries and would determine the amount of the allowances that would be given to a new entity, the Climate Change Credit Corporation. That entity would buy and sell allowances to industry. The bill, envisioning the likelihood that many workers would lose their jobs because of the costs associated with implementing the terms of the measure, also mandates that the Credit Corporation "shall allocate a percentage of the proceeds derived from its trading activities in tradeable allowances to provide transition assistance to dislocated workers and communities."

Recipe for Disaster

Taken together, Democrat-sponsored measures aimed at energy and the environment, if they become law, could prove devastating to the economy. Should both measures become law, the result would be more jobs lost as firms move operations overseas to more business-friendly economic climates. The Energy Act, for example, would make it more expensive and less attractive for energy producers to work in the United States, making it unavoidable that those producers would move operations out of the country. Similarly, manufacturers that become subject to the costs involved in carbon trading through the Climate Stewardship Act would be sorely tempted to relocate operations in "developing" nations like China, India, and Mexico that are not subject to restrictions on greenhouse-gas emissions.

Economic concerns like these, however, are being lost in the overheated rhetoric concerning global warming. In the course of saving the planet from the much ballyhooed climate apocalypse, congressional Democrats, with the collusion of the White House, may just be presiding over the extinction of Main Street, USA.