Does Your Senator Support an Energy Tax?
In dueling votes last month, U.S. senators took a stand either for or against a tax on carbon dioxide emissions. Although symbolic, the votes separated those who want to impose yet another tax on American consumers from those who understand that more taxes mean less prosperity.
By a vote of 53-46, the Senate expressed support for Sen. Roy Blunt’s amendment to ensure that any future carbon tax bill would require 60 votes to pass. On the other hand, the Senate overwhelmingly rejected Sen. Sheldon Whitehouse’s amendment to use any revenue from a carbon tax to reduce the deficit, a thinly veiled attempt to make a carbon tax more politically palatable. Thirteen Democrats joined every Republican to defeat the Whitehouse amendment, 41-58.
If enacted, a carbon tax would punish Americans for using affordable energy, hitting the poorest among us the hardest. A recent study found that such a tax would lead to lower wages and increased energy prices, the effects of which would ripple though the economy and hurt all Americans.
We tallied the votes and produced a map showing how your senators voted on the two amendments. Check out the map to see whether your senators voted to tax or defend affordable energy and prosperity.
To see the vote breakdown for Sen. Blunt’s amendment, click here.
To see the vote breakdown for Sen. Whitehouse’s amendment, click here.
In the Pipeline: 4/22/13
Cheers to ending “misery and vice” Malthusianism.
Bjorn is right on some things, wrong on others, but mostly we couldn’t resist his headline: “What I’d like to see this Earth Day: More fracking”. The Globe (4/22/13) reports: “Year after year, we are treated to a message of environmental doom and gloom and admonitions on Earth Day. On the back of this sentiment in wealthy countries, governments have invested billions of dollars in inefficient, feel-good policies – such as subsidizing solar panels and electric cars. But really, there are far better ways to improve environmental prospects for humanity and our planet. This Earth Day, we need more fracking, more wealth, smarter investments, and fewer inefficient subsidies.”
It’s too good to be true! Oh right… it actually is too good to be true. LA Times (4/21/13) reports: “But Baucus and Camp are going to run into a big problem: One taxpayer’s “loophole” is another’s sacred birthright. The only deductions in the personal income tax code big enough to make a significant difference in revenue are the ones for home mortgage interest, charitable contributions and state and local taxes. And every previous attempt to trim or limit them has run into a buzz saw of opposition… So here’s another good bipartisan idea that the tax committees should consider: a new federal tax on emissions — more frequently called a carbon tax.”
This is a moderately well-written story that, incredibly enough, makes oil sands production sound vaguely effete. But we recommend you read it. National Review (4/22/13) reports: “My second flight of the day, this time on a noisy little turbo-prop puddle-jumper that sounds like a bomber from a World War II movie, gives me no reason to doubt his description. Unlike the large jet that took me from Newark, this aircraft is packed full of sturdy men wearing jeans, baseball caps, and steel-toed boots. There are no women — not a single pair of X chromosomes on board — and nobody speaks a word; they because they are discernibly weary of the journey, I because I am stunned into silence by what I can see outside. The 400 miles of Alberta we cross are just spectacular: Endless white fields sweep up toward the horizon for miles until they are broken by a line of snow-capped mountains. The sky is a dazzlingly clear blue, and the moon is visible. After 90 minutes or so of this, we land at a tiny airport and I drag my eyes from the window and look out into the snow. Regimentally, the men troop off. They have been here before.”
So, lots more natural gas and coal consumption is ticking up. All good. WSJ (4/18/13) reports: “These rapid U.S. declines may be short-lived, as natural-gas prices rise and utilities increase coal consumption. “Our coal-fired generation has certainly picked up” in recent months, says Nick Akins, chief executive of Ohio-based American Electric Power Co. AEP +0.93% Natural-gas prices have risen for eight straight weeks, recently closing at $4.40 per million British thermal units, more than twice its price a year ago.”
This is one of those “investments” that Obama loves. Hopefully His Majesty doesn’t manage his own finances. Jalopnik (4/19/13) reports: “Luxury hybrid automaker Fisker is working its way towards bankruptcy and details are starting to make clear just how faulty their business was, including a report that says the company spent $660,000 on each Fisker Karma… a loss of more than $0.6 million per car.”
In the Pipeline: 4/17/13
My very strong suspicion is that half of everything they sell is made with petroleum products. And everything they sell is transported with petroleum products. I also suspect that they are really, really inane. Politico (4/15/13) reports: “APPAREL COMPANY PATAGONIA ORGANIZING AGAINST KEYSTONE: The gear, clothing and apparel company Patagonia is blasting the proposed Keystone XL pipeline in a new email to customers. ‘Tar sands oil in the Keystone XL pipeline will cross more than 1,000 bodies of water through three states, threatening freshwater with a devastating oil spill. We want to get a million comments against Keystone XL to the State Department by April 22. The clock is ticking,’ the company writes. On the lobbying side, Patagonia has not retained a lobbying firm since 2008.”
It’s got to be hard trying to keep building up the myth of scarcity when reality continues to knock it down. Denver Business Journal (4/15/13) reports: “The two biggest oil and gas companies working in Colorado’s Niobrara oil play could be drilling new wells nearly 20 years from now, based on the number of locations they’ve identified and the number of wells they plan to drill every year.”
You know, the tragic thing is that some Republicans are definitely that stupid. The good news is that most of them belonged to previous Administrations, or previous losing campaigns. And I used to have a lot more respect for Nobel laureates, before they started to give them out to people like Paul Krugman. Forbes (4/16/13) reports: “And You Thought Income Redistribution Was Just a Liberal Democrat Thing? Yeah, and the amount of the tax would then rise or fall on the basis of the subsequent increase or lessoning of ‘climate effects’… and ‘should be supplemented by a reasonable and sustained support for research and development in the energy area.’… Sadly, they aren’t the only prominent and usually brilliant conservatives who seem to have sampled the carbon tax Kool-Aid. Reagan economist Arthur Laffer has said he would support such a tax in exchange for a payroll or income tax reduction; Bush 43 economist Greg Mankiw supports a global tax; and Douglas Holtz-Eakin, a senior advisor to John McCain in 2008, wants a tax to provide the energy industry with regulatory ‘certainty.’”
Mike Brune is going to run the Sierra Club off the cliff. That may not be a bad thing. PoliticoPro (4/16/13) reports: “The Democratic Party could suffer if President Barack Obama approves the Keystone XL oil pipeline, Sierra Club Executive Director Michael Brune warned Tuesday… Brune, whose 1.4 million-member group was a major Obama supporter in last year’s election, said major Democratic donors are keeping a watchful eye on the president’s Keystone decision. An approval, he said, could affect fundraising and make activists less inclined to campaign for Democrats facing reelection in 2014.”
Evidently, this dude has not paid attention for the last 15 years or so. Science is the last thing this conversation is about. Examiner (4/15/13) reports: “Yesterday we reported on a new study by the U.S. Federal Drought Task Force that stated global warming was not to blame for the much-politicized 2012 drought in the Great Plains. As the New York Times notes:…‘By contradicting the established and widely accepted theory…that the drought was a palpable and detrimental sign of climate change, the [drought] report grabbed headlines in the American press and prompted sharp retorts from climate change scientists and climate activists.’”
Reports now suggest that the Abominable Snowman is actually responsible for “unsettling” the science. The Telegraph (4/16/13) reports: “The European Union’s climate change policy is on the brink of collapse today after MEPs torpedoed Europe’s flagship CO2 emissions trading scheme by voting against a measure to support the price of carbon permits.”
In the Pipeline: 4/16/13
Let me explain how this works. Washington Gas agrees to buy wind power in an amount equal to the amount Union Station uses each year. They charge ratepayers more. The generators get a federal subsidy (about 1/4 of the total price) from taxpayers and get to generate power even when no one wants it. States in which the power is generated get to say they are meeting their portfolio mandates. Union Station gets the PR bump. Who pays for all this? You do, sucker. E&ENews (4/12/13) reports: “A central fixture in keeping Congress running is now relying 100 percent on wind energy… Union Station in Washington, D.C., has signed a three-year contract with Herndon, Va.-based Washington Gas Energy Services (WGES) to fulfill all its electricity needs from wind farms based around the region, the company announced this week.”
So when you rob Peter to pay Paul, we are at least going to alert Peter. AEA (4/15/13) reports: “American Energy Alliance President Thomas Pyle was joined today by eight other free market organizations in a joint letter to governors of 21 U.S. states that do not force their citizens to purchase unaffordable, intermittent electricity from renewable sources. The letter urges these governors to oppose any further extension of the wind Production Tax Credit (PTC) that unfairly forces their states to subsidize such mandates in other states. The coalition chose to send the letter on Tax Day, a day when Americans have a heightened awareness of the direct cost that bad government policy imposes on them and their families.”
Heck, we could’ve bought 30 more Solyndras in 2010 with all the money wasted on duplicative and overlapping energy programs! IER (4/15/2013) reports: “The Government Accountability Office (GAO) recently issued its third annual report exposing unnecessary duplication and overlapping programs throughout the federal government.[i] The report outlines more than $95 billion spent per year on duplicative programs and inefficient practices that is more than enough to offset the costs of sequestration. GAO identified 17 areas in which evidence of fragmentation, overlap, or duplication among federal programs or activities exists, covering a broad range of government missions and functions, including international affairs, science and the environment, training, defense, information technology, agriculture, and energy.”
Here we go again… Bloomberg (4/11/13) reports: “It starts with getting into the transportation sector. When I started the Pickens Plan in 2008, there were about 200,000 vehicles on natural gas in the world; now there’s about 16 million. That growth’s coming from everywhere but the U.S. Places like Iran and Argentina. China’s already got 40,000 trucks on LNG [liquefied natural gas], and they import the stuff. And here we are in the U.S., with more natural gas than any other country in the world, and we aren’t doing a thing about it. It’s just amazing to me that these dumb f---s in D.C. don’t see this opportunity and try to capitalize on it.”
PYLE: More Tax Giveaways to Big Wind?
WASHINGTON D.C. — AEA President Thomas Pyle released the following statement in response to today’s decision by the Internal Revenue Service to establish a loose definition for the wind Production Tax Credit’s qualifying language. According to the new IRS guidelines, wind projects can receive 10 years of taxpayer-funded subsidies by committing as little as 5 percent of the costs by Jan. 1, 2014.
“The Internal Revenue Service has twice in one month tilted the tax code to the benefit of wind energy, first increasing the taxpayer cost of the production tax credit by as much as $850 million and now by defining the new qualifying language to enable the wind industry to receive maximum benefit for negligible commitment. Only under the current green regime in Washington could a company spend 5 percent of capital costs to receive 10 years and $12 billion in cash from the federal government. Once again cronyism pays off, and industries with friends in high places reap the reward. The wind industry has no better friend than the current administration. We only wish hardworking taxpayers received the same treatment.”
In the Pipeline: 4/15/13
You know it’s bad when… Columbia Journalism Review (4/12/13) reports: “Journalists and the GOP called for more transparency at the Environmental Protection Agency (EPA) this week, as Gina McCarthy, the Obama administration’s pick to succeed Lisa Jackson as head of the agency, entered congressional confirmation hearings… The day before McCarthy, who now heads the EPA’s air pollution division, faced off with the Senate Committee on Environmental and Public Works, a group of Republicans on the committee and the Society of Environmental Journalists (SEJ) released separate statements, with different motivations, accusing the agency of secrecy and calling for more openness.”
This must have been painful for Seth to write. Which is, of course, part of the fun. Energy Guardian (4/12/13) reports: “Last year’s huge drought was a freak of nature that wasn’t caused by man-made global warming, a new federal science study finds.”
The playbook for green energy cronyism: A wink and a nod, legalized theft, twisted economics, and a splash of PR-infused rhetoric to keep everyone happy until the roof caves in. WSJ(4/11/13) reports: “Turn over any green-energy rock, and wiggling underneath will be the usual creepy mix of political favoritism and taxpayer-funded handouts. Add to this the Clintons, Mississippi and a murky visa program, and you’ve got a particularly ripe political embarrassment for Terry McAuliffe… Everyone remember The Macker? Best Friend of Bill. Chairman of Hillary’s 2008 presidential campaign. Famed money-tree shaker. Former Democratic Party chief. Failed 2009 contender for the Virginia governorship but now back as the party’s nominee for that position in this fall’s election. Oh—and in Mr. McAuliffe’s words—‘a Virginia businessman’ intent on ‘creating jobs.’”
The candle of the wicked shall be put out: “Quotations of the day on ethanol. What’s to like? Absolutely nothing, unless you’re a rent-seeking corn farmer”. AEI (4/12/13) reports: “1. Ken Green (2008): ‘Contrary to popular belief, ethanol fuel will do little or nothing to increase our energy security or stabilize fuel prices. Instead, it will increase greenhouse gas emissions, local air pollutant emissions, fresh water scarcity, water pollution (both riparian and oceanic), land and ecosystem consumption, and food prices.’”
It can look desperate when you come on this strong. You’ve got to play a little hard-to-get. E&ENews (4/12/13) reports: “Organizing for America yesterday deployed one of the most hackneyed pleas in social media in hopes of shaming House GOP leaders into holding hearings on climate change policy… ‘RT if you agree: It’s time to stop the denial on climate change,’ President Obama’s nonprofit advocacy organization wrote on its Twitter account, urging the nearly 30 million followers of @BarackObama to repeat the message.”
This is the kind of change we can believe in:
Free Market Coalition to U.S. Governors: Oppose Wind PTC
WASHINGTON D.C. — American Energy Alliance President Thomas Pyle was joined today by eight other free market organizations in a joint letter to governors of 21 U.S. states that do not force their citizens to purchase unaffordable, intermittent electricity from renewable sources. The letter urges these governors to oppose any further extension of the wind Production Tax Credit (PTC) that unfairly forces their states to subsidize such mandates in other states. The coalition chose to send the letter on Tax Day, a day when Americans have a heightened awareness of the direct cost that bad government policy imposes on them and their families.
“Your constituents pay disproportionately for a lavish tax credit that does not benefit them,” the letter states. “Instead of helping your constituents, the PTC leads to energy production in other states that is unsustainable without the mandates and federal subsidies. Under the wind PTC, non-renewable mandate states like yours — which has wisely chosen to allow the most affordable and reliable forms of energy to be purchased by consumers and industries — are penalized for the political decisions of states like California, Massachusetts, and New York.
“By taking a principled stand against the PTC, you help taxpayers in your own state and ensure more cost-effective electricity generation over all. We urge you to call for an end to this wasteful, inequitable subsidy immediately.”
The other signatories of the letter are:
Myron Ebell, Freedom Action
Marlo Lewis, Competitive Enterprise Institute
Eli Lehrer, R Street Institute
Sabrina Schaeffer, Independent Women’s Forum
Michael Needham, Heritage Action
Wayne Brough, Freedom Works
David Ridenour, The National Center for Public Policy Research
Phil Kerpen, American Commitment
To read the full text of the letter, click here.
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Federal Regulations Drive Up Gasoline Prices
Lately an argument has broken out over the Renewable Fuel Standard (RFS) and whether it drives up gasoline prices. The recent controversy was sparked by a WSJ article discussing the shocking fact that Renewable Identification Number (RIN) credits—which are one way of complying with the federal standard—had shot up in prices from about 7 cents in January to more than $1 in March. The WSJ article argued that—duh!—massively increasing a cost component would drive up gas prices.
In response, the Renewable Fuels Association (RFA) commissioned a quantitative study by “informa economics,” which concluded (surprise?) that the impact of the skyrocketing price of RIN credits had virtually no measureable impact on pump prices. In fact, the study said that the RFS mandate made it cheaper for American motorists to drive their vehicles.
Here at American Products. American Power. an earlier blog post has already documented the numerous flaws in the study. For example, the study ignores the fact that ethanol has less energy content per volume than conventional gasoline, making the RFA study’s price comparisons misleading. But more fundamentally, our blog post argued that even taking the RFA study at face value, it would mean that there is no need for a federal Renewable Fuel Standard. To repeat our point: If the people at RFA actually believe that using ethanol instead of conventional gasoline is good for the refining industry and will lower prices at the pump, then why do we need a federal mandate? Why wouldn’t natural market forces give us this outcome?
In the present post, we want to supplement our earlier critique with one additional point. One of the ways that the RFA-commissioned study tries to exonerate RIN prices from the spike in gas prices, is to say that the seasonal pattern in early 2013 was not noticeably different from that in 2011 and 2012. Looking at the “crack spread,” for example, doesn’t show us anything unusual in early 2013. Here’s how they put it:
There is a distinct seasonal pattern to gasoline prices and crack spreads, slumping during the last quarter of the calendar year and then strengthening considerably through the first quarter of the following year. The increase in gasoline prices and crack spreads during the first quarter of 2013 has been generally consistent with increases experienced in 2011 and 2012, despite the fact that conventional ethanol RIN prices averaged $0.03 during the first quarter of 2011 and $0.02 during the first quarter of 2012.
Now, they actually don’t come right out and explicitly finish their argument here—probably because even their own readers would raise an eyebrow. To finish the train of thought they should add, “So the fact that RIN prices shot up to more than $1 in the first quarter of 2013, shouldn’t make us blame the spike in gas prices—over and above changes in crude oil prices—on the Renewable Fuel Standard.”
Such analysis shows the danger of naïve statistical analysis in economic matters. It’s true, there are always a million factors changing in the real world. On top of that, producers don’t mechanically set prices based on their “costs” plus some margin for “profit.” Everything is always embedded in a context of consumer demand, as well as expectations of the future. Finally, even demonstrably obvious factors might be muted in their apparent effects, because we don’t know what the path of the economy would be in the alternate timeline. For example, eating a Snickers bar is generally not a good way to lose weight, but if we just looked at a guy stranded on a desert island, we might see a correlation between him eating the candy bar in his pocket, and losing 5 pounds.
Yet let’s put aside all of these commonsense observations, and focus just on the raw numbers. Remember, the defenders of the Renewable Fuel Standard are saying that the big jump in RIN prices in early 2013 didn’t cause a spike in gas prices (relative to crude oil prices), any more than happened in 2011 or 2012. But look at a long-term chart of crude oil vs. gasoline prices to see why that “defense” is rather misleading:
As the chart above shows, gasoline prices have been much higher, relative to crude oil prices, precisely in the period the RFA-commissioned study analyzes. We can be even fancier and look at a single measure, where we take the average price of a gallon of gas, and subtract out the price of a barrel of crude divided by 42 (since that’s how many gallons of gas are produced by a barrel of oil):
Intuitively, the second chart shows that the average U.S. retail price of gasoline, relative to the adjusted crude oil cost, was much higher in the mid-2000s and then again from 2011 through today, compared to the long-term trend. For some reason, it seems as if some additional force has been pushing up prices at the pump, that was particularly pronounced in the mid-2000s and then again in the last three years. What could it be?
As we said before, it’s impossible to point to one specific factor, because market prices are based on many different elements. But on these pages we have discussed the costly mandates embedded in the Energy Policy Act of 2005, and the Tier 2 standards that insisted on a 90 percent reduction in sulfur contact by 2006, and how the recently codified Tier 3 standards will begin rising pump prices.
In short, we have been warning on these pages that the various, bipartisan interventions into the refining sector—starting under President George W. Bush and ramping up under President Obama—have been making gasoline artificially more expensive for American motorists. The world price of crude oil alone cannot explain the annual surges in gasoline prices since 2005, with the only (relative) respite occurring during the massive economic slump of 2008.
It’s true, in economics we usually can’t have a smoking gun and point to “the” reason a market price moved in a certain way. Yet economic theory—as well as common sense—tells us that increasing refiner costs will make gasoline prices higher for motorists. Further, the historical data most certain do show a strong correlation between the Bush and Obama regulations on refining, and an extra margin in gas prices.
In the Pipeline: 4/12/13
Thank goodness we have the money to spend on this sort of thing. I mean, it doesn’t seem ridiculous or pointless at all. The Hill(4/11/13) reports: “President Obama’s fiscal 2014 budget calls for using a satellite designed to track climate change that was originally pushed by former Vice President Gore… Obama proposed Wednesday spending nearly $35 million in his 2014 budget to refurbish a satellite, nicknamed GoreSat by critics, that’s been sitting in storage after it was shelved in 2001, months after Bush took office. It cost about $100 million by then with NASA’s internal auditors faulting its cost increases.”
Welcome to the party: “Wind power kills jobs and increases electricity costs”. Toronto Sun (4/11/13) reports: “Ontario’s pursuit of wind power has driven up electricity prices, is killing jobs and might even lead to more smog, a new Fraser Institute report says… Ross McKitrick, author of Environmental and Economic Consequences of Ontario’s Green Energy Act (GEA), says the Ontario government’s electricity plan is now 10 times more costly than installing pollution-control equipment on existing coal plants — an option he argues would have produced similar improvements in air quality.”
So can we assume the Blazers will ride bikes between the cities where they play? Or, will they wear unis and shoes made only from non-carbon based products like hemp? Or, more likely, their billionaire owner will buy carbon offset credits and all will be fine. Oregon Live (4/11/13) reports: “Businesses with strong Northwest ties, including the Portland Trail Blazers, Nike, Intel, Adidas and Starbucks, are among 33 companies signing a “climate declaration” that urges U.S. policymakers to take action to curb global warming… The Trail Blazers are the only sports franchise on the list.”
So easy to see even NPR understands it. We are, however, still bullish on wood. NPR (4/10/13) reports: “Until well into the 19th century, if you lived in the U.S. and wanted to heat your house, fire your forge, or whatever, you did what people had done for thousands of years: You chopped down a tree and burned it… Though renewables have risen sharply in the past few years, they still represent a tiny fraction of the energy used in this country.”
Not all news is bad news: “State Government Tax Revenue Hits All-Time High”. WSJ (4/11/13) reports: “North Dakota and Alaska, in particular, showed the strongest tax revenue gains, (47% and 27%, respectively), mostly because of higher collections from companies using state resources, the Census Bureau said. Overall, tax revenue collected from companies using natural resources was up almost 39%, or $4.2 billion, from 2011.”
The following think tank chiefs are opposed to a carbon tax. Please contact us at nocarbontax@energydc.org if you wish to join our growing ranks. We are thinking about starting a new list – trade association heads. We fear, however, it will be pretty small.
Tom Pyle, American Energy Alliance / Institute for Energy Research
Myron Ebell, Freedom Action
Phil Kerpen, American Commitment
William O’Keefe, George C. Marshall Institute
Lawson Bader, Competitive Enterprise Institute
Andrew Quinlan, Center for Freedom and Prosperity
Tim Phillips, Americans for Prosperity
Joe Bast, Heartland Institute
David Ridenour, National Center for Public Policy Research
Michael Needham, Heritage Action for America
Tom Schatz, Citizens Against Government Waste
Grover Norquist, Americans for Tax Reform
Sabrina Schaeffer, Independent Women’s Forum
Barrett E. Kidner, Caesar Rodney Institute
George Landrith, Frontiers of Freedom
Thomas A. Schatz, Citizens Against Government Waste
Bill Wilson, Americans for Limited Government
Wayne Brough, FreedomWorks
Rich Collins, Positive Growth Alliance
One last thing. The crew at the Pipeline wishes Cathy Anne a very Happy Birthday!
