Federal EV tax credit: unnecessary, inefficient, unpopular, costly, and unfair

In April, Senator Debbie Stabenow (D-MI) introduced the Drive America Forward Act, a bill that would expand the tax credit for new plug-in electric vehicles (EVs) by allowing an additional 400,000 vehicles per manufacturer to be eligible for a credit of up to $7,000. Currently, the tax credit is worth up to$7,500 until a manufacturer sells more than 200,000 vehicles. In late September, groups that stand to benefit from the extension of the federal tax credits wrote to Senator McConnell and other leaders in Congress, encouraging them to support on the Drive America Forward Act. As IER has documented in the past, lawmakers should not extend the EV tax credit as the policy is unnecessary, inefficient, unpopular, costly, and unfair.

Unnecessary and inefficient

The EV tax credit is not necessary to support an electric vehicle market in the U.S. as one group estimates that 70 percent of EV owners would have purchased their vehicle without receiving a subsidy, which is reasonable seeing as 78 percent of credits go to households making more than $100,000 a year.  Furthermore, the federal tax credit overlaps with a number of other government privileges for EVs, including:

  • State rebates and/or other favors (reduced registration fees, carpool-lane access, etc.) in California, as well as in 44 other states and the District of Columbia.
  • Tax credits for infrastructure investment, a federal program that began in 2005 and, after six extensions, expired in 2017.
  • Federal R&D for “sustainable transportation,” mainly to reduce battery costs, averaging almost $700 million per year.
  • Credit for EV sales for automakers to meet their corporate fuel economy (CAFE) obligations.
  • Mandates in California and a dozen other states for automakers to sell Zero-Emission Vehicles—a quota in addition to subsidies.

Even if the federal tax credits were needed to support demand for EVs, the extension of the tax credit would be an absurdly inefficient means of achieving the stated goal of the policy, which is ostensibly to lower carbon emissions. The Manhattan Institute found that electric vehicles will reduce energy-related U.S. carbon dioxide emissions by less than 1 percent by 2050.

Unpopular

Lawmakers should be aware that the vast majority of people do not support subsidizing electric vehicle purchases. The American Energy Alliance recently released the results of surveys that examine the sentiments of likely voters about tax credits for electric vehicles. The surveys were administered to 800 likely voters statewide in each of three states (ME, MI and ND). The margin of error for the results in each state is 3.5 percent.

The findings include:

  • Voters don’t think they should pay for other people’s car purchases. In every state, overwhelming majorities (70 percent or more) said that while electric cars might be a good choice for some, those purchases should not be paid for by other consumers.
  • As always, few voters (less than 1/5 in all three states) trust the federal government to make decisions about what kinds of cars should be subsidized or mandated.
  • Voters’ sentiments about paying for others’ electric vehicles are especially sharp when they learn that those who purchase electric vehicles are, for the most part, wealthy and/or from California.
  • There is almost no willingness to pay for electric vehicle car purchases. When asked how much they would be willing to pay each year to support the purchase of electric vehicles by other consumers, the most popular answer in each state (by 70 percent or more) was “nothing.”

The full details of the survey can be found here.

Costly and unfair

Most importantly, an extension of the federal EV tax credit is unfair as the policy concentrates and directs benefits to wealthy individuals that are predominantly located in one geographic area, namely California. A breakdown of each state’s share of the EV tax credit is displayed in the map below:

In 2018, over 46 percent of new electric vehicle sales were made in California alone. Given that California represents only about 12 percent of the U.S. car market, this disparity means that the other 49 states are subsidizing expensive cars for Californians.  However, in order to understand the full extent of the benefits that people in California are receiving, some further explanation is in order.

When governments enact tax credit programs that favor special businesses without reducing spending, the overall impact is parallel to a direct subsidy as the costs of covering the tax liability shift to the American taxpayer or are subsumed in the national debt (future taxpayers). California offers a number of additional incentives on top of the federal tax credit for electric vehicles that are also driving demand for EVs in the state. These incentives include an additional purchase rebate of up to $7,000 through the Clean Vehicle Rebate Project, privileged access to high-occupancy vehicle lanes, and significant public spending on the infrastructure needed to support EVs. Therefore, the additional incentives that California (and other states) offer to promote EVs have broader impacts as these policies incentivize more people to make use of the federal tax credit, passing their costs on to American taxpayers. In other words, you’re not avoiding the costs of California’s EV policies by not living in California.

This problem is made even worse when we consider the impact of zero-emission vehicle (ZEV) regulations, which require manufacturers to offer for sale specific numbers of zero-emission vehicles. As recently as 2017, auto producers have been producing EVs at a loss in order to meet these standards, and they have been passing the costs on to their other consumers. This was made apparent in 2015 by Bob Lutz, the former Executive Vice President of Chrysler and former Vice-Chairman of GM, said:

“I don’t know if anybody noticed, but full-size sport-utilities used to be — just a few years ago used to be $42,000, all in, fully equipped. You can’t touch a Chevy Tahoe for under about $65,000 now. Yukons are in the $70,000. The Escalade comfortably hits $100,000. Three or four years ago they were about $60,000. What this is, is companies trying to recover what they’re losing at the other end with what I call compliance vehicles, which are Chevy Volts, Bolts, plug-in Cadillacs and fuel cell vehicles.”

Fiat Chrysler paid $600 million for ZEV compliance credits in 2015 (plus an unknown amount of losses on their EV sales), and sold 2.2 million vehicles, indicating Fiat Chrysler internal combustion engine (ICE) buyers paid a hidden tax of approximately $272 per vehicle to subsidize wealthy EV byers. ICE buyers were 99.3 percent of U.S. vehicle purchases in 2015. So, even if half the credits purchased were for hybrids, each EV sold in 2015 was subsidized by more than $13,000 in ZEV credit sales, in addition to all of the other federal, state, and local subsidies.

As is typical with most policies that benefit a politically privileged group, the plan to extend the federal tax credit program comes with tremendous costs, which are likely being compounded by people abusing the policy.  One estimate found that the overall costs of the Drive America Forward Act would be roughly $15.7 billion over 10 years and would range from $23,000 to $33,900 for each additional EV purchase under the expanded tax credit. Seeing as the costs of monitoring and enforcing the eligibility requirements of the EV tax credit program are not zero, it should surprise no one that the program has been abused as it has recently come to light that thousands of auto buyers may have improperly claimed more than $70 million in tax credits for purchases of new plug-in EVs. Finally, additional concerns arise over the equity of the federal EV tax credit due to the fact that half of EV tax credits are claimed by corporations, not individuals

End this charade

When the tax credit was first adopted, politicians assured us that the purpose of the program was to help launch the EV market in the U.S. and that the tax credit would remain capped at the current limit of 200,000 vehicles. At that time, we warned that once this program was in place, politicians would continue to extend the cap in order to appease the demands of manufacturers and other political constituencies that were created by the program. A decade later, we find ourselves in that exact situation. At this point, it should be clear that Congress should not expand the federal EV tax credit as the program is nothing more than an extension of special privileges to wealthy individuals and corporations that are mostly located in California. If Congress can’t find the courage to put an end to such an unfair and inefficient policy, President Trump should not hesitate to veto any legislation that extends the federal EV tax credit, as doing so would be consistent with his approach to other energy issues such as CAFE reform.


AEA to Senate: Highway Bill is Highway Robbery

WASHINGTON DC (July 30, 2019) – Today, Thomas Pyle, President of the American Energy Alliance, issued a letter to Senate Environment and Public Works Committee Chairman John Barrasso highlighting concerns about the recently introduced America’s Transportation Infrastructure Act. Included in the legislation is an unjustified, $1 billion handout to special interests in the form of charging stations for electric vehicles.  AEA maintains that provisions like this are nearly impossible to reverse in the future and create a regressive, unnecessary, and duplicative giveaway program to the wealthiest vehicle owners in the United States. 
 
Read the text of the letter below:
 

Chairman Barrasso,

The Senate Committee on Environment and Public Works is scheduled to consider the reauthorization of the highway bill and the Highway Trust Fund today.  At least some part of this consideration will include provisions that provide for $1 billion in federal grants for electric vehicle charging infrastructure.  This is among $10 billion in new spending included in a “climate change” subtitle.  All of this new spending is to be siphoned away from the Highway Trust Fund (HTF), meant to provide funding for the construction and maintenance of our nation’s roads and bridges.  The HTF already consistently runs out of money, a situation that will only be exacerbated by these new spending programs.

We oppose this new federal program for EV infrastructure for a number of reasons, including, but not limited to the following:

  • The grant program, once established in the HTF, will never be removed.  Our experience with other, non-highway spending in the trust fund (transit, bicycles, etc.) is that once it is given access to the trust fund, the access is never revoked.  Our nation’s highway infrastructure already rates poorly in significant part due to the diversion of highway funds to non-highway spending.
  • As we have noted elsewhere, federal support for electric vehicles provides economic advantages to upper income individuals at the expense of those in middle and lower income quintiles.  This grant program would exacerbate that problem.
  • This program will result in taxpayers in States with few electric vehicles or little desire for electric vehicles having their tax dollars redirected from the roads they actually use to subsidize electric vehicle owners in States like California and New York.
  • This program is duplicative.  There is already a loan program within DOE that allows companies and States to get taxpayer dollars to subsidize wealthy electric vehicle owners.

For these and other reasons, we oppose the provisions that would create a regressive, unnecessary, and duplicative giveaway program to wealthy, mostly coastal electric vehicle owners.  This giveaway not only redirects taxpayer money from the many States to the few, in looting the Highway Trust Fund it also leaves those many States, including Wyoming, with less money to maintain their own extensive road networks.


Sincerely,

Thomas J. Pyle

Get Ready For Biden’s Blackouts

Americans can expect to see electricity shortages this summer as traditional power plants are being retired more quickly than they can be replaced by renewable energy and their required battery storage, the electric grid’s independent system operators warn. Power grids are straining as conventional power plants fueled by coal and nuclear are being retired for intermittent forms of energy such as wind and solar power that need back up from traditional plants or from battery storage. Wind and solar farms cannot produce electricity 24/7 as Americans demand it and need expensive and large batteries to store their output for later use. While some battery storage capacity is being added, independent grid operators have warned that the rate of the additions may not be fast enough to offset the closures of traditional power plants that can supply power 24 hours a day, 7 days a week.

Supply chain issues and inflation have slowed adding renewable energy capacity and storage batteries. Further, a probe by the Commerce Department into whether Chinese solar manufacturers are circumventing trade tariffs on solar panels has stopped imports of them and or key components needed to add solar capacity, bringing the U.S. solar industry to a standstill.

Further exasperating the problem is the push by the Biden administration and many blue states to electrify home heating and cooking and the sales of electric vehicles that will increase power demand in the future. In California, regulators have indicated that as much as 3,800 megawatts of new renewable capacity may face delays through 2025, posing a major challenge since the state is procuring a huge amount of renewable energy and storage to offset the closure of several gas-fired power plants and the Diablo Canyon nuclear plant. Governor Gavin Newsom indicated that he may consider keeping the nuclear plant online to reduce the risk of shortages, despite campaigning to shut California’s largest single source of carbon-free electricity.

The Midcontinent Independent System Operator (MISO), which oversees a large regional grid spanning much of the Midwest, indicated that capacity shortages may force it to take emergency measures to meet summer demand, mentioning that outages may occur. MISO has undertaken an effort to better value different types of resources based on their ability to support the grid at different times during the year and under various conditions. It is also working to improve the transfer of power across regions when needed.

Nevertheless, the whole strategy of such an energy transition is foolhardy at best.

President Biden and other world leaders believe that there is too much fossil fuel generation and not enough wind and solar power and that one can easily transition to “net zero” carbon by building wind and solar farms and having them replace existing fossil fuel generators. That is pure fantasy since these renewable generators need a reliable back-up. The belief is that battery storage can do the job, but when no wind is blowing and no sun is shining there will be no excess power to put in the batteries for later use. Plus, the cost of battery storage is very expensive and its cost is not built into the cost of wind and solar power that these promotors want the public to believe are inexpensive technologies.

The alternatives of reaching net zero carbon by expanding nuclear power has been made impractical by regulatory obstruction and locations for hydroelectric capacity have been mostly developed. The only option that remains is more generation from wind and solar facilities that have extensive government subsidies, tax benefits and state mandates. While existing fossil fuel generators, and particularly natural gas ones, are fully capable of providing the back-up needed by a principally wind and solar electricity generation system, that option is not allowed by President Biden.

To have an entirely wind and solar generation system and make it through a year without a catastrophic failure, one needs approximately a three-times overbuild (based on rated capacity) of the wind and solar system, plus storage for 24 to 30 days of average usage. As an example, California’s average electricity usage for 2020 was about 31 gigawatts. To calculate the storage needed in gigawatt hours, multiplying the average usage in gigawatts by 30 days and 24 hours per day, gives 22,320 gigawatt hours of storage. For “everything to be electrified” triple the number to 66,960 gigawatt hours. At current costs of a Tesla-type lithium-ion battery (~$150 per kilowatt hour), it will cost California around $10 trillion. But that figure does not include the cost of the three-times overbuild of the generation system to account for charging of the batteries when the sun is shining and wind blowing. Also, Tesla-style batteries cannot hold their charge for months on end.

Biden’s energy transition should be supported by engineering studies to show how much battery power is needed and at what national cost. But such studies do not exist. One analyst calculated the cost of such a system as well over $100 trillion, assuming that battery technology exists and can store large amounts of energy for months on end for discharge later and assuming current levels of electricity demand. That is more than the entire U.S. GDP, which is currently around $23 trillion. Nonetheless, President Biden wants to accomplish his carbon-free electricity goal by 2035. (The assumptions were a storage need of 250,000 gigawatt hours for the United States at current electricity usage and the second cheapest battery based on zinc technology, at $433 per kilowatt hour.)

The consequences of massively building wind turbines and solar panels, while forcing the closure of fully-operational power plants burning coal, oil and natural gas is dire. It could be that millions may be left without heat or that a fully-electrified transportation system gets knocked out, stranding millions. Military capabilities could also get disabled, making the United States vulnerable to attack, given Biden’s promise to make all vehicles in the military run on new forms of energy.

Conclusion

Independent system operators are warning that Americans can expect electricity shortages this summer, which will potentially cause blackouts. Those shortages are caused by the reckless move of transitioning the country to wind and solar power and retiring existing conventional generating technologies fueled by coal, natural gas and nuclear power. Despite the capital costs of most of the current conventional technologies having already been paid by consumers, President Biden wants Americans to spend trillions to obtain a net-zero carbon grid by 2035 and to further electrify the U.S. economy, which will increase electricity demand. After decades of subsidies and mandates, wind and solar units currently generate only 12 percent of the electricity in the United States, and a much smaller portion of overall energy consumption.


*This article was adapted from content originally published by the Institute for Energy Research.

The Unregulated Podcast #84: What’s Gaslighting?

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the latest events in Washington and Democrats’ attempts to obfuscate who is behind high gas prices.

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Promises Made, Promises Kept: Biden’s Illegal Attack On American Energy

When someone tells you who they are believe them the first time.


In over 400 days of the Biden administration, President Biden has not held any legally mandated oil and gas onshore lease sales on Federal lands, and the only single offshore lease sale was invalidated by a federal judge, claiming that the sale did not appropriately consider climate change. The Biden administration has yet to challenge that court decision. Further, the Interior Department just announced it will not move forward with planned oil and gas lease sales in the Gulf of Mexico and Alaska’s Cook Inlet. According to the department, the Cook Inlet lease sale would not proceed due to insufficient industry interest and the planned sale of two leases, lease 259 and lease 261, in the Gulf of Mexico will not proceed due to contradictory court rulings on the leases. The Alaska lease would have covered more than 1 million acres that would provide oil for 40 or more years of production. These cancellations come when the national average price of regular gas hit an all-time high of $4.418 a gallon, according to AAA, and Americans are suffering under high inflation with the CPI increasing almost 15 percent since Biden took office.

Background

Under federal law, the Interior Department is required to adhere to a five-year offshore leasing plan, which was set to end at the end of June in the case of the affected leases. In January 2021, President Biden signed an executive order freezing all new oil and gas leasing on federal lands. Last summer, a judge struck down the ruling, prompting the Biden administration to appeal. (See below.) An offshore lease sale in the Gulf of Mexico was held on November 17, setting a record, but it was invalidated by a judge in January. Shell, BP, Chevron and Exxon Mobil offered $192 million for the rights to drill in the Gulf. Biden has not appealed that decision.

Are Biden’s Decisions Legal? 

A federal attorney is arguing that President Biden legally called for suspending new oil and gas lease sales while considering their effect on climate change. Department of Justice attorney Andrew B. Bernie told a 5th U.S. Circuit Court of Appeals panel, the current offshore lease sale plan states specifically that the U.S. Secretary of the Interior “may reduce or cancel lease offerings on account of climate change.” He claimed that land-based sales “were not postponed by the executive order. They were postponed because of a need to comply with NEPA”—the National Environmental Policy Act.

Arguing for the 13 states that challenged Biden’s January 2021 order (Alabama, Alaska, Arkansas, Georgia, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Texas, Utah and West Virginia), Louisiana Deputy Solicitor General Joseph Scott St. John said laws passed in response to the 1970s oil crisis require lease sales and that the Biden administration failed to give a valid reason for postponing or canceling them. The state challenge to Biden’s order has not yet gone to trial but a federal judge blocked the order in a preliminary injunction, writing that since the laws did not state the president could suspend oil lease sales, only Congress could do so.

Onshore Lease Sales Scheduled by Its 5-Year Plan

Four onshore lease sales are so far scheduled next month—for land in Nevada on June 14; New Mexico, Oklahoma and Colorado on June 16; Wyoming on June 22 and Utah, Montana and North Dakota on June 28. However, the administration radically scaled back the amount of land originally on offer and raised royalty rates 50 percent from 12.5 percent to 18.75 percent, which is the amount usually charged for desirable deep water offshore leases. Leases less than 656 feet (200 meters) of water are charged the 12.5 percent minimum.

Conclusion

Biden has come under pressure to increase U.S. crude production as fuel prices spike because of his policies against oil and gas and the energy ramification of Russian sanctions due to its invasion of Ukraine. Oil companies have been reluctant to ramp up production due to Biden’s anti-oil and gas policies and because of difficulties getting workers, increased cost of supplies, difficulty in getting loans for new drilling investments and the uncertainty of whether today’s high prices will continue and for how long.

Biden is following along with his anti-oil and gas policies and his promise to not allow any new leasing, canceling the three offshore sales in the Gulf and off Alaska. These cancellations are another example of the administration’s opposition to oil and gas development in the United States. Biden speaks about the need for additional oil supplies, but his administration deliberately takes actions to stop more energy. The Biden administration tells the public of the need for more supply but acts to restrict it at almost every turn. As global energy prices continue to rise and as Americans are faced with soaring gasoline and diesel prices along with higher natural gas prices, the Biden administration needs to change its anti-oil and gas policies to provide certainty for the industry and to immediately act on a new five-year program for federal offshore leasing. Otherwise, Americans can expect energy prices and the CPI to continue to increase rapidly

West Virginia Senator Manchin is skeptical that Biden’s Interior Department plans to ever propose a new five-year leasing program this summer, as required by Congress. Manchin noted that he is looking for security for our nation and reliability for the energy we need for our nation, and the administration seems to be going the other way.


*This article was adapted from content originally published by the Institute for Energy Research.

Key Vote NO on H.R. 7688

The American Energy Alliance urges all members to oppose H.R. 7688, the Consumer Fuel Price Gouging Prevention Act. This legislation claims to address an imaginary problem by giving the President of the United States unilateral power to set prices and harass small businesses based on a vague idea of “unconscionably excessive” gas prices.

While there are many factors that affect gas prices, most especially the price and supply of crude oil, so-called price gouging is not one of them. Over 90% of gas stations in the United States are independently owned. These small businesses set prices individually, they are not directed or controlled by whatever oil company’s brand they have on their sign. This legislation would target these small business for investigation and harassment, while ignoring real factors that affect gas prices, like regulation and administration policy actions to prevent domestic oil production.

For decades now the Federal Trade Commission has repeatedly searched for evidence of “price gouging” or collusion in price setting in the gasoline market. No evidence has ever been found. It is an imaginary problem, a false talking point used to deflect attention.

Both the supposed target of this legislation and the sweeping, unchecked power it would grant the president, are misguided. The AEA urges all members to support free markets and affordable energy by voting NO on H.R. 7688. AEA will include this vote in its American Energy Scorecard.

American Energy Alliance Strongly Opposes Consumer Fuel Price Gouging Prevention Act

WASHINGTON D.C. (May 19, 2022) This week, Democrats in the House of Representatives will try to misdirect voters about the source of high energy prices. Rather than taking on the policies of the Biden administration, which are the actual cause of more expensive energy, the House will take up legislation about a phantom cause: “price gouging.” The bill, H.R. 7688, is named the “Consumer Fuel Price Gouging Prevention Act,” and it would give the President vast powers to set price controls by executive fiat. If passed, this legislation will cause even more harm to American energy consumers. Price controls don’t work, and our experience during the gas lines of the 1970s should remind us that price controls will lead to shortages.

Thomas Pyle, President of the American Energy Alliance, issued the following statement:

“This legislation is a cynical attempt to deflect blame. The Biden administration, supported and encouraged by Democrats in Congress, has taken repeated action to suppress and prevent domestic oil and gas production. Now, these chickens are coming home to roost, as American families face rising energy prices and prices at the pump. These prices are a direct result of the Biden administration’s war on domestic energy production.

Instead of challenging the president on the policy actions, he’s taken to cause higher energy prices, Democrats in Congress are now pretending that energy inflation is being caused by supposed price gouging. This is asserted without evidence because there is no evidence. Over 90 percent of gas stations in America are independently owned. They set their prices individually based on market factors that reflect supply and demand. Pretending that these tens of thousands of small businesses are somehow coordinating to raise gas prices is preposterous, and unsurprisingly despite 20 years of investigating the Federal Trade Commission has never found any evidence of price gouging or coordinated price setting.

Democrats in Congress know all this, but there are elections this November and they are looking for someone else to blame for the energy inflation that they have caused. They should be ashamed of trying to blame hard-pressed small businesses for their own errors. This legislation is not serious governing, it is cynical politics, and Americans will see right through it.”

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Biden Caused Higher Energy Prices, Congress Hopes You Won’t Notice

This week, Democrats in the House of Representatives will try to misdirect voters about the source of high energy prices. Rather than taking on the policies of the Biden administration which are the actual cause of more expensive energy, the House will take up legislation about a phantom cause: “price gouging.” The bill, H.R. 7688, is named the “Consumer Fuel Price Gouging Prevention Act,” and it would give the President vast powers to set price controls to combat this imaginary crisis of price gouging that is alleged to be sweeping the nation. The legislation is transparent politics, with politicians hoping to save themselves in the November elections, even though they have stood shoulder-to-shoulder with President Biden in his crusade to shut off American energy and even green energy mineral development in the U.S. 

President Biden has been one of the worst presidents for America’s energy fortunes in history. From shutting down pipelines, to shutting down leasing, to illegally ignoring his duty to hold timely leases, to covering private enterprise with the green tape extreme environmental groups demand, he has done everything in his power to shut down, impede and destroy American jobs and energy. Now that his actions are showing up at the pump, he wants to blame someone else. This bill gives him a green light to do so. Apparently, the “Putin Price Hike” messaging isn’t working, so the administration is looking for a new scapegoat. But Americans know this administration has been shutting down domestic energy production. 

Beyond the imaginary premise of price gouging, the bill itself is dangerously ridiculous. It allows the president to declare an “Energy Emergency” and then sic DOJ investigators on anyone of whom they decide to target in their snipe hunt. The bill is full of terms like “unconscionable pricing,” and “unconscionably excessive,” which would never stand up in any court but make for nice press releases for those who want to distance themselves from the absurdly high energy prices they are in fact responsible for. 

The legislation would also allow President Biden to order the Federal Trade Commission into action in search of supposed unfair or deceptive practices, presumably as soon as they get finished looking into the “price gouging” for baby formula that President Biden claims is happening. But like high energy prices, the baby formula shortage it actually a government-created problem, since it was the FDA that shut down one of the largest formula makers in the country and federal command and control of the dairy industry that limits alternative producers. Apparently, President Biden’s answer to the baby formula shortage is the same as his answer to energy prices: allege price gouging and call for more imports.

Ultimately, though, this bill isn’t a price-gouging bill; it’s a price control bill. It’s an attempt to give the President the power to set the price of fuels. This bill is an attempt to blame oil companies for the Biden administration’s policies. Just this last week he canceled offshore lease sales in Alaska and the Gulf of Mexico. He somehow thinks that voters will not notice the hypocrisy. 

Everyone should read this bill.  It’s pretty short and easy to understand. At the President’s total discretion, he can declare that the gasoline or diesel fuel price is unconscionably high and he thinks gas stations are exploiting an “energy emergency.” None of these terms are defined so they can mean whatever the President says they mean. And these price controls can be continued indefinitely.  Congress should be ashamed of itself for delegating this kind of unlimited power to the executive, to be used at his sole discretion. 

And this power is being handed to the President to combat an entirely fictitious issue. The Federal Trade Commission has studied price gouging for more than 20 years and they have failed repeatedly to find nefarious actions. Which should be no surprise. Despite the brand logos we see on gas stations, more than 90% of the gas stations in America are owned by independent owners. Each station determines its own pricing, it is not dictated by whatever large oil company might be named on the sign. If there were systematic efforts to gouge consumers or set prices, it would require a vast conspiracy of tens of thousands of participants. And the conspiracy would have long since been found out by now. 

The reality is that President Biden has taken action, and the actions he took drove up the price of fuel. He has illegally canceled lease sale after lease sale. He canceled the Keystone XL pipeline.  He has shut down oil leasing in Alaska. He has proposed additional taxes and additional regulations on oil producers. After all this, he claims he wants lower prices at the pump, but he is either lying, or he doesn’t know what his administration is up to. 

In fact, there are people in the Biden administration who want higher fuel prices, both to make electric vehicles look more competitive and to try to get people to use less oil (which they think is intrinsically bad). And those are the policies we are getting.  Both the Secretary of Energy and the Secretary of Transportation have repeatedly mentioned it in media interviews. High energy prices are not an accident, this has always been the plan.

If Congress wants to do something useful, they would pass a bill reversing everything energy action President Biden has taken. They could move to open up the baby formula factory the FDA closed at the same time. The “gouging” isn’t being done by your neighborhood gas station owner; Americans are being gouged by their government.

The Unregulated Podcast #83: The Senator from Europe

On this episode of The Unregulated Podcast, Tom Pyle and Mike McKenna commemorate the service of outgoing White House Press Secretary Jen “Circle Back” Psaki, and discuss Senator Kevin Cramer’s (R-EU) efforts to implement a national energy tax in the United States to “catch-up” to Europe.

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Senators Seek Higher Energy Prices

Is now the right time to increase energy prices with a new tax on energy?

Despite the fact that inflation is the highest it’s been in forty years and the U.S. economy contracted in the first quarter of 2022, Republican Senators Kevin Cramer, Lindsey Graham, and Bill Cassidy apparently think so.  They’re plotting with Democrat Senators Joe Manchin, Chris Coons, and Sheldon Whitehouse (who’s never met an energy tax he didn’t like) to push for a new “carbon border adjustment”.

That’s bad news for household budgets.  This so-called “adjustment” is a tax on energy – like oil, gas, and coal – and imports, like fertilizer, steel, aluminum, and concrete.  It will drive up the cost of pretty much everything made or transported, including household goods, cars, and food.

The theory behind this tax is that we should make countries like China and India put strict limits on their emissions.  The reality is, people in the U.S. are going to pay in the end.

Senator Cramer’s argument for the new energy tax might be the most bizarre of all.  Here’s what he told E&E News:  “To me, one of the bigger challenges is that Europe is so far out in front on the whole concept.  And it’s hard to tell them to slow down, but at the same time, I’d like to reconcile with them first, and then I think we all move forward better.” 

Has Senator Cramer looked at Europe’s energy situation recently?  Half the continent is hoping Russia doesn’t cut off its oil and gas after years patting themselves on the back for switching to wind and solar.  Following a Europe First strategy is the worst possible approach for America.

A better strategy would be to liberate American industry from the jumble of regulations and restrictions that drive up costs here at home.  Increased energy production at home is a win for the economy and the environment.

They can call it what they want, but the carbon border adjustment is still a tax on energy.  It will eat into the wallets of all Americans, especially the poor, the elderly, and local institutions like schools and hospitals.

Yes, the U.S. is the world’s biggest producer of oil, but we still bring in plenty of crude each year from abroad to supply our world-class refineries.  Taxing imports, especially oil imports, means the costs for these refineries goes up.  That means the costs for the rest of us go up on all of the critical petroleum products that power our economy.

Furthermore, knowing the history of Senator Whitehouse and Senator Coons, is there any chance they’ll stop there?  Absolutely not.  This plan is phase one for the Democrats in their larger agenda of appeasing Big Green, Inc.  Anyone who thinks this is about helping the U.S. economy or American consumers is deluded.

We know the Democrats’ end goal is to stop every one of us from using affordable oil, gas, and coal. They don’t care where it comes from and they don’t care about pushing us into energy poverty like the Europeans are now facing.  We expect better from Senators Cramer, Cassidy, and Graham.

When President Carter presided over the destruction of our economy in the 1970s he tried to blame stagflation on the Arab oil embargo.  Similarly, President Biden is trying to blame Putin for his runaway inflation.

If the Republicans help impose an energy tax on top of the mess we are already in, they will have no one to blame but themselves.

The Unregulated Podcast #82: Jamie Dimon Sees the Light

On this episode of the Unregulated Podcast, Tom Pyle and Mike McKenna discuss the latest headlines out of Washington.

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Key Votes: Motions to Instruct

The American Energy Alliance urges all Senators to support the following motions to instruct conferees to the H.R. 4521 conference committee.

YES on Barrasso motion requiring the development of a new offshore leasing plan. The administration has taken no action to begin a new five-year leasing plan as required by law.

YES on Lee motion to discard extraneous green provisions passed by the House. These provisions are not relevant to a China competition bill and should not have been included.

YES on Sullivan motion to prevent taxpayer dollars from subsidizing products from China or Russia. China competition legislation should not subsidize Chinese products.

YES on Daines motion to prevent provisions that would undermine US energy production. A strong domestic energy industry is an indispensable element of the US successfully competing with China.

YES on Capito motion to clarify the President’s emergency declarations authority. Efforts to invoke “emergency” authorities to harm domestic energy producers would undermine the US competitive position versus China.

YES on Scott (SC) motion to prevent new greenhouse gas mandates in the US unless equaled by China. Imposing harmful measures on American firms without reciprocal Chinese actions would undermine US competition with China.

The AEA urges all members to support free markets and affordable energy by voting YES on these six motions to instruct conferees.  

Should votes on these motions occur, AEA will include them in its American Energy Scorecard.