In The Pipeline 7/12/11

The next time you debate the debt, we got your back — Dr. Joseph Mason authored a new study that explains how a tax increase will destroy energy jobs American Energy Alliance (7/12/11) reports:   As the deadline for approving an increase in the Federal debt ceiling approaches, the tax treatment of oil and gas companies’ revenues has become enmeshed in the policy debate over debt reduction and tax reform. That debate, however, is presently confusing three concepts: deficit reduction, tax reform, and tax increases. While sometimes related, those three concepts are not guaranteed to be equivalent. It is crucially important, therefore, that policymakers maintain the distinction between the three in the highly charged budget debates in order to enact meaningful deficit reduction policies…The stated goal of all participants in the budget debates has been deficit reduction. Reduced deficits are crucial to eventually reducing the debt burden to a sustainable level. The simplest deficit reductions can be attained by decreasing spending or increasing government revenues. But there are other policy options to alter regulatory and public goods policies in ways that promote economic growth without raising tax rates…That is important because even increased tax rates, in and of themselves, do not guarantee increased tax revenues. One need only look at the famous Laffer curve hypothesis, combined with the type of economic theory and empirical tests carried out by Gary Becker (of the University of Chicago) and subsequent work to see the logic that taxpayers rationally choose to pay the lower of the costs of tax avoidance or tax liabilities. Indeed, the problems currently unwinding in Greece and other European countries are to a large extent caused by tax avoidance behavior in an environment of very high marginal income taxes. Hence, it should not be taken as a foregone conclusion that increased tax rates result in increased tax revenues. Moreover, when increased tax rates actually do increase tax revenues, they create a drag on economic growth. Hence, it is not clear that tax rate increases are sensible in the current economic situation.

The best thing to come out of Detroit since the Mustang — GM unveils new diesel Chevy Cruze that gets 50 MPG Fuel Fix(7/12/11)  reports: The Chevrolet Cruze, the most popular car in the U.S. last month, will come in a diesel version that could boost gas mileage to around 50 mpg, two people briefed on General Motors Co. product plans said today…A diesel Cruze would help GM meet more stringent government gas mileage requirements. It also would rival the efficiency of the popular Toyota Prius gas-electric hybrid, which gets 51 mpg in the city and 48 on the highway, according to estimates from the Environmental Protection Agency…The diesel Cruze won’t hit showrooms until at least 2013, according to one of the people, both of whom asked not to be identified because the company hasn’t made a formal announcement…The people didn’t know the price of the Cruze. Cars with diesel engines generally cost more than those with gasoline engines because they are more expensive to produce. The base version of the Cruze now starts at $16,525. The diesel Cruze would be built at GM’s factory in Lordstown, Ohio, southeast of Cleveland…GM spokesman Tom Wilkinson would not comment on the diesel engine…GM sold about 25,000 Cruzes last month, vaulting the model past perennial leaders such as the Toyota Camry and Honda Accord to become the best-selling car in the U.S. Both Toyota and Honda had fewer models to sell because of parts shortages caused by the March 11 earthquake and tsunami in Japan.

Rep. Waxman knows as much about coal energy production as I know about ice fishing — the main difference is that I know not to run my mouth about ice fishing E&E News (7/12/11) reports: House Energy and Commerce Committee Republicans are touting new legislative language to regulate the disposal of coal ash and pre-empt ongoing regulatory efforts by U.S. EPA…Panel members will reconvene this morning after opening statements last night to consider a substitute amendment to legislation (H.R. 2273) that Republicans had already passed in the Environment and Economy Subcommittee. The new language is the latest version of a measure that has morphed several times, partly in search of more bipartisanship…”The substitute says coal ash waste will be managed in the same manner as municipal solid waste: by the state environmental protection authorities applying stringent federal standards,” said Chairman Fred Upton (R-Mich.) “Even EPA says that using the [municipal solid waste] standards would work well for managing coal ash.”…Texas Rep. Gene Green, a moderate Democrat who may join Republicans in supporting the legislation, said he believes the substitute bill needs some minor tweaking and hopes negotiations will continue to address his remaining concerns. Still, he said it “does represent a vast improvement” over the original legislation…Many committee liberals, led by ranking member Henry Waxman (D-Calif.), are unlikely to be swayed by Green’s efforts at compromise. Waxman, who in an interview least week appeared out of the loop in the negotiations, defended EPA’s regulatory attempts to prevent another coal ash disaster like the 2008 Kingston, Tenn., spill, when the retaining wall of an ash pond outside a coal plant gave way…”The legislation we will consider will not yet accomplish any of this,” Waxman said last night. “It will establish a weak federal program designed to maintain the status quo.”…Under the latest proposal, EPA retains its “imminent hazard” authority to intervene with the purpose of protecting public health. However, the legislation limits EPA’s involvement to overseeing state enforcement of coal ash rules under minimum federal standards. Only states would have inspection and enforcement authority, with EPA stepping in for states that fail to create coal ash programs.

We’ve heard everything in Texas is bigger, but Gov. Perry wants the state to be brighter too — orders that manufactures continue to produce incandescent light bulbs KHouston (7/12/11) reports: A battle of the bulbs is erupting as Texas challenges energy regulations that would phase out incandescent light bulbs in favor of newer, more energy-efficient ones…The 2007 energy bill was meant to help the environment, but critics say the new bulbs are way too expensive and some are more difficult to dispose of safely because they contain mercury…Texas Republicans are using the issue to challenge Washington and fight for states’ rights…The Texas legislature recently passed a bill declaring that incandescent bulbs—if they are made and sold only in the Lone Star State—would be exempt from the federal law since they don’t involve interstate commerce…H.B. 2510 was sponsored by State Rep. George Lavender, R-Texarkana…”This is a jobs bill and a consumer choice bill that benefits all Texans,” Lavender said in a written statement. “The last thing we need in this economy is to send American jobs overseas and raise costs to consumers based on dubious claims of increased energy efficiency.”…Gov. Rick Perry is now encouraging Texas businesses to step up and start making the bulbs Washington has essentially banned…”The federal government has no business telling people what kind of light bulbs they can run in their house,” said Bob Price, a spokesperson for Texas GOP Vote. “Washington has been thumbing its nose at Texas for many years. It’s time for us to stand up.”…Interestingly, it was President George W. Bush – a former Texas governor – who originally signed the energy regulations into law…Price said Bush’s record on states’ rights when it came to energy regulations “wasn’t much better than President Obama’s.”

Sounds like a good business call to me — Georgia Power said they will only purchase or invest in renewable energy sources if they are cost competitive in the market Forbes (7/12/11) reports: Renewable energy must cost about the same as traditional power sources such as natural gas or coal-fired power plants before Georgia Power will buy green energy on a large scale, company executives said Monday…Officials from the Southern Co. subsidiary said at a Statehouse conference that it wants to increase its usage of solar power from just over four megawatts now to more than 55 megawatts by 2015. That’s still a relatively small amount of electricity, or roughly 5 percent of the energy produced by just one of the nuclear reactors that the utility hopes to build in eastern Georgia… Georgia Power (            GPB – news – people ) Vice President Greg Roberts, who handles planning and pricing, said the utility will buy energy from green power sources so long as the cost is comparable to traditional power plants. Roberts said the firm is willing to both buy green energy and pay for some of the costs of building alternative energy projects…”But we’re really not willing to pay above that cost because we will drive up the cost for all customers if we do that beyond what we would be able to purchase in the market or build ourselves,” Roberts said…Doug Beebe, chairman of the Georgia Solar Energy Association, said the remarks from Georgia Power executives showed the utility has become more willing to at least discuss a broader use of alternative energy.

Japan needs some good news so I hope this works out, but at the end of the day we need to ask these three questions regarding the Leaf — Compared to what? At what cost? What hard evidence do we have? Reuters (7/11/11) reports: Nissan Motor Co on Monday unveiled a new charging system that gets electricity from solar power that can also be stored in the lithium-ion batteries used in its Leaf electric car…The 488 newly installed solar panels at Nissan’s global headquarters will produce enough electricity to charge 1,800 Leafs a year, allowing drivers plugging into one of its seven charging spots to travel on carbon-free energy…Nissan’s announcement comes just days after Mitsubishi Motors Corp said it would develop and market this business year a portable converter with enough capacity to allow its electric vehicles (EVs) to power household electronics such as rice cookers and washing machines…Japanese automakers have been working on clean-energy initiatives for years, but the earthquake and tsunami on March 11 have made electricity supply and sourcing an immediate concern…”Setsuden”, or power-saving, has become a buzzword in Japan, where the disasters crippled a nuclear reactor and triggered the worst radiation crisis since Chernobyl. Starting this month, big-lot electricity users in eastern Japan are required to cut peak consumption by 15 percent during the hot summer months, and utilities have also appealed to households to do their part.

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