Search anytime by typing below

Thanks for joining the AEA efforts to help combat rising energy prices. We don’t want to bug you that often, so let us know what energy issues interest you, and we’ll keep your inbox happy.

*Please fill in all items

Exposing Biden’s Lies On Gas Prices

February 6, 2023 by Leave a Comment

Joe Biden’s administration and certain elements in Congress have a plan for American energy: make it harder to produce and more expensive to purchase. Our friends at the Institute for Energy Research have shown the juxtaposition between the administration’s words and deeds on this topic in their latest video short.

Since Biden took office, his administration and allies in Congress have taken over 125 actions deliberately designed to make it harder to produce energy here in America. The full list can be found here. Share this with the next person who says the president’s actions don’t determine gas prices!

Filed Under: Blog Tagged With: , , , ,

The Unregulated Podcast #118: February

February 6, 2023 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the latest headlines from the first week of February.

Links:

Filed Under: Podcast Tagged With: ,

Key Vote H.R. 21 and Amendments

January 26, 2023 by Leave a Comment

The American Energy Alliance urges all members to support H.R. 21, The Strategic Production Response Act, which would require plans to increase leasing on federal lands in order to draw down the Strategic Petroleum Reserve during non-emergencies.

The SPR was meant to serve as an emergency reserve of oil in the event of major events like the Arab oil embargo or natural disasters. It was never meant for attempts to micromanage gas prices, and presidents of both parties have misused the SPR in this manner. The way to reduce gas prices in a sustainable way is by increasing domestic oil production, which not only provides additional supply to ease prices, it promotes American national security as well as increasing economic growth. This legislation recognizes that obvious fact and requires plans for sustainable long term production increases in exchange for allowing short term releases from the SPR.

While AEA objects to some of the amendments offered that would limit where production increases can occur, the ultimate goal of this legislation is correct. Reducing gas prices requires long term increases in production. By requiring that short term political uses of the SPR be matched by increased potential for longer term production increases, this legislation would ensure longer term stability in gas prices, as well as boosting domestic energy security and economic growth.

AEA will be scoring against amendments which seek to limit where production can be increased and other amendments which would harm domestic energy production or security.

The AEA urges all members to support free markets and affordable energy by voting YES on H.R.21.  AEA will include this vote and votes on select amendments in its American Energy Scorecard.

Filed Under: Scorecard Tagged With: ,

The Unregulated Podcast #116: Extraterrestrial

January 20, 2023 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the deliberations at Davos, the impending debt limit crisis, and more.

Links:

Filed Under: Podcast Tagged With: ,

Subsidy-Fueled EV Bubble Likely To Pop

January 19, 2023 by Leave a Comment

Electric car manufacturers in Europe are slowing down production because battery cars have proven too expensive for the middle class and the supply of lithium for their batteries is too uncertain. Production in Europe this year is expected to be 12 million cars—a million less than previous estimates. Tesla, for example, is cutting prices to boost demand. Of more than 900 auto executives surveyed internationally, 76 percent believe that inflation and high-interest rates will slow sales and that EV adoption will take longer. In the United States, that figure was 84 percent. The median expectation for EV sales by 2030 dropped to 35 percent in the United States, from 65 percent a year earlier. Longer-term impediments cited by the executives include the availability of raw materials for batteries, as well as stricter rules around federal incentives for buying electric vehicles. Also, consumers see touted fuel savings not materializing. Britain’s Daily Mail reports: Electric vehicles can be more expensive to fill up on the open road than their petrol and diesel equivalents as the cost of utilities continue to spiral.

Britain

It is now expected that the UK will produce 280,000 fully electric cars and vans in 2025, down from a previous estimate of 360,000. That forecast means only a quarter of car output will be electric within the next two years, lower than prior forecasts of more than a third. Declining production threatens to wreck a key government plan to cut greenhouse gas emissions by banning sales of new petrol and diesel cars by 2030. A recovery in EV sales by 2030 is ‘uncertain’ due to ongoing supply chain issues, particularly of lithium needed for electric car batteries, as well as political tensions across the globe.

BMW announced in October that it would stop production of the electric Mini at its plant in Oxford, England and transfer that operation to China. Jaguar, owned by India’s Tata Motors, has not produced further details on plans to become fully electric by 2025.

UK consumers are also concerned about operating costs with the average cost of charging an electric car increasing by 58 percent since last May. Also, UK councils are planning double-digit increases in parking fees. Charges will increase by around 10 percent from April in various areas. An all-day ticket in Dudley will shoot up by 43 percent to £5 and fees will rise by 29 percent at the most popular sites in Cornwall, to £2.20 an hour. Local authorities have defended the increases because they are under financial pressure, but others worry that higher parking fees will hurt town businesses.

Slowing U.S. Auto Market despite Rising EV Sales

U.S. auto sales fell about 8 percent last year to fewer than 14 million cars and trucks, the lowest level since 2011, due to shortages of computer chips and rising borrowing rates that made customer financing more expensive. While auto sales declined, sales of electric vehicles increased 66 percent to over 808,619, according to Kelley Blue Book.

Tesla’s Price Cut and Outlook

Tesla cut prices on most of its electric cars in the United States and Europe by as much as 20 percent to boost demand as stiff competition and rising interest rates have reduced the demand for electric vehicles. By cutting the prices of its current models, Tesla is conceding some profit in order to increase sales volume. The company typically shows gross profit margins of 26 percent — more than double that of some competitors. Tesla’s high-end Model 3 Performance compact is now selling in the United States for just under $54,000, down from $63,000, a price cut of 14 percent. The most affordable version of the Model 3 now sells for just under $44,000—a reduction of about $3,000 or 6 percent. The Model Y now starts at $53,000—a cut of 20 percent from the previous price of $66,000.

Tesla’s websites for Germany, France and other European nations showed similar price cuts. The base Model 3 is now listed at 44,000 euros—a reduction of about 12 percent from the previous price.

In the United States, Tesla’s price cuts will allow some of its lower-priced models, depending on optional features, to qualify for federal tax credits of $7,500 that were made available starting January 1 under the Inflation Reduction Act. The credit is available on electric cars priced under $55,000. In the past, Tesla’s sales were aided by a $7,500 tax credit provided by an earlier federal program. Despite those credits disappearing after Tesla sold 200,000 vehicles in the U.S. market, the company’s sales continued to grow, in some cases aided by state incentives.  Tesla expects its sales to grow about 50 percent a year for the next few years.

Tesla offers only four models—two are luxury models out of reach of most mainstream consumers. Tesla last introduced a car in 2020, when the Model Y went into production. Since 2019, Tesla has promised to introduce a pickup, called the Cybertruck, but has delayed its production several times. The company hopes to begin making it this year. The Cybertruck has an angular, futuristic design and is expected to be sold as a luxury vehicle, which could limit its appeal. At one time, Elon Musk indicated a desire to produce an electric car that can sell for around $25,000, but there are no formal plans available. In December, Tesla began delivering a small number of battery-powered semi trucks to PepsiCo, its first truck customer.

Tesla sold 1.3 million cars in 2022—a 40 percent increase from the year before but short of the 50 percent target. Tesla’s fourth-quarter production of 440,000 cars was 34,000 more than the company delivered. The company weathered the computer chip shortage early in the COVID pandemic better than most automakers because it rewrote software that could run on substitute chips that were in more plentiful supply. Other automakers temporarily idled plants because of shortages of certain electronic parts.

While Tesla dominates EV sales, several automakers are gaining ground. Ford, Volkswagen and several other automakers posted sizable increases in EV sales last year, offering many models that were significantly more affordable than Tesla’s. Hyundai and its affiliate Kia together sold more than 43,000 electric vehicles in the United States in 2022—up from a just few hundred in 2021. This year, General Motors is supposed to start making electric versions of its Chevrolet Silverado pickup and Chevrolet Blazer and Equinox sport utility vehicles.

Tesla also faces major competition in China, its largest market, where a local manufacturer, BYD, is now the number 1 electric vehicle brand. Tesla recently lowered prices in China and reported a global sales total for 2022 that was below analysts’ expectations.

Conclusion

The EV mania may be over or at least slowing as interest rates increase, inflation and supply chain shortages continue and restrictions remain on tax credits. While some politicians are following in California’s footsteps by banning gasoline-powered vehicles and President Biden has a goal for 50 percent of new car sales in 2030 to be electric, those feats may not be attainable due to problems in manufacturing and selling of electric vehicles. Range and performance problems still exist making consumers wary. And with escalating electric rates, operating costs may not be less than those for gasoline vehicles as Europe is seeing. Despite some manufacturers such as Tesla lowering purchase costs, competition from other manufacturers and consumer awareness may keep goals from reaching fruition.

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

Filed Under: Blog Tagged With: , , , , , , , ,

Biden’s EPA Declares War on Farmers, Energy Producers, and Land Owners

January 18, 2023 by Leave a Comment

During the holidays, the U.S. Environmental Protection Agency (EPA) and the Department of the Army issued a proposed redefinition of the Waters of the United States (WOTUS) under Section 401 of the Clean Water Act (CWA).  The rule would expand the EPA and Army’s regulatory oversight to include traditionally navigable waters, territorial seas, interstate waters and, “upstream water resources that significantly affect those waters.”  According to the two agencies, the revised rule is based on definitions that were in place before 2015. Farming groups, oil and gas producers, and real estate developers criticized the regulations as overbearing and burdensome to business, and, in particular, the ruling has the potential to affect natural gas infrastructure projects. It also would exert federal control over lands not owned by the federal government.

The ruling comes as a surprise since the U.S. Supreme Court is to decide on a case this session called Sackett v. Environmental Protection Agency that challenges the government’s determination that a wetland on private land in Idaho is protected under the Clean Water Act.  The case involves an Idaho couple, Michael and Chantell Sackett, who sought to build a house in the state’s panhandle. After they began preparing for construction in 2007, the Sacketts were stopped by the EPA, which said the property included a federally protected wetland. EPA ordered them to return the property to its original state or face fines. The couple sued the agency and the Supreme Court heard oral arguments last fall.

The EPA began the rulemaking process on updating the definition last June. That preliminary ruling is available for public comment until February 7. The proposal, once approved, would come into effect 60 days following its publication in the Federal Register. A final decision from the EPA is expected this June, with the Army’s decision on issuance of Nationwide Permit (NWP) 12 under Section 404 of the CWA expected this August.

Background

In 2015, the Obama administration supplied a definitional amendment to “provide critical context and guidance in determining the appropriate scope” of WOTUS that is covered by the CWA.  It was heavily criticized at the time as an example of government overreach and an infringement of private property, as it included any place regulators could argue was wet, even in such cases as an area immediately after an uncommonly heavy rain, such as a temporary mud puddle. The Government Accountability Office found the EPA at the time engaged in a ”covert propaganda” program using social media to convince the public of their actions’ worthiness.

In April 2019, President Trump targeted the definition with Executive Order 13868, which took aim at state authority over water quality certifications to gain approvals for natural gas infrastructure. The Executive Order in 2020 was further ensconced following a rulemaking by the EPA under the Trump administration, known as the Navigable Waters Protection Rule (NWPR). Oil and gas organizations at the time voiced their support for the NWPR after years of complaints that state governments opposed to energy infrastructure improperly relied on the scope of the CWA to obstruct the pipeline permitting process.  This was part of President Trump’s “energy dominance” program of making the United States more energy self-sufficient.

On his first day in office, President Biden signed Executive Order 13990, Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, granting the EPA and Army the authority to once again review and rescind the NWPR.

Court Cases

Clean Water Act jurisdiction has been a muddy area, particularly when it comes to wetlands that do not have direct surface water connections to larger waterways like rivers and streams. For the past 15 years, questions of which wetlands have enough of an impact on downstream waters to merit federal protections have all come down to how EPA and the Army Corps of Engineers interpret the Supreme Court’s decision in Rapanos v. U.S. 

That 2006 case splintered the justices 4-1-4 and resulted in two competing tests to determine if property must meet the Clean Water Act permitting requirements. In one case, wetlands would be federally protected if they have a hydrologic, biological or chemical impact on downstream waterways—a test that has been largely adopted by federal courts. In another case, only wetlands with relatively permanent surface water connections to larger waterways would merit protection. The terminology involves “navigable waters,” and what that is intended to mean.

The Supreme Court again dealt with questions of Clean Water Act jurisdiction in the case Sackett v. EPA. During oral arguments last fall, the justices homed in on the question of whether federal protections applied to a wetland located about 300 feet away from a regulated lake but separated from it by a human-made road. Several justices inquired whether a new test is needed to best identify federally protected waters. It is unclear how the new rule will affect the Supreme Court’s decision this year and, in turn, how the Supreme Court could impact the new rule.

Conclusion

Permitting reform is needed for infrastructure, transportation and energy projects to end the endless costs occurred from needless regulation and lawsuits by environmentalists. And, certainty is necessary to ensure agriculture is not unduly burdened by an expansive definition of navigable waters. This rule does not provide that reform. Rather, it moves the process backwards by making more projects subject to federal permitting requirements and adding more bureaucratic red tape. The rule makes it more difficult for Americans to get the energy they need at affordable costs. Further, the Supreme Court case now being considered will most likely have an impact on the ruling.

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

Filed Under: Blog Tagged With: , , , , , , ,

Biden Administration Announces Intent To Ban Gas Stoves

January 17, 2023 by Leave a Comment

A Commissioner of President Biden’s Consumer Product Safety Commission (CSPC) wants a ban on indoor gas stoves. Richard Trumka Jr., a Biden commissioner on the CSPC, told Bloomberg the ban is justified because gas stoves increase respiratory problems such as asthma among children, which is a myth promoted by environmentalists whose real agenda is not to reduce asthma but to ban natural gas. The American Gas Association notes that neither the CSPC nor EPA has cited gas stoves as a significant contributor to adverse air quality or as a health hazard.   And, millions of Americans actually prefer gas stoves to electric ones for several reasons, including food tastes better when cooked on gas rather than electric and gas stoves are cheaper to install and operate. Gas stoves are used in about 35 percent of households nationwide, or about 40 million homes. The household figure is closer to 70 percent in some states, such as California and New Jersey. Other states where many residents use gas stoves include Nevada, Illinois and New York.

Tell Congress To Block The Ban By Clicking HERE

Opposition Was Plentiful

The American Gas Association pushed back against the natural gas ban saying it makes housing more costly because “electric homes require expensive retrofits.”

Senator Joe Manchin joined in opposition saying, “The federal government has no business telling American families how to cook their dinner. I can tell you the last thing that would ever leave my house is the gas stove that we cook on.”

Tucker Carlson, on his Fox News television show, featured a restaurateur who indicated that his costs would go up and productivity go down by using electric stoves. “This will destroy our industry,” the restaurant owner, Stratis Morfogen, said. “Electric can work for fast casual. However, with fine dining, it’s impossible to function with an electric kitchen,” said Morfogen, director of operations for the Brooklyn Chop House and founder of the Brooklyn Dumpling Shop eateries. “Imagine a guest ordering a 2- to 3-pound whole fish. It usually takes 40 to 50 minutes to cook. Now it will take two hours.

Andrew Rigie, executive director of the NYC Hospitality Alliance, which represents more than 24,000 eating and drinking establishments, said “Putting aside if chefs prefer cooking with gas or not, the cost to open up a new restaurant would skyrocket if someone had to convert existing gas equipment into electric, which could be further complicated by whether or not the building had an adequate electrical load.”

The ban would affect old-timers and millennials who are obsessed with cast-iron pans, which are tricky to use on electric stoves. “This is plain stupid,” said a 70-year-old resident of Sea Gate, Brooklyn. “We lost electricity before, during Hurricane Sandy. The only thing we had to heat up our food was gas. What if that happens again?”

According to the Association of Home Appliance Manufacturers, cooking food produces emissions and harmful byproducts no matter what type of stove is used. “Ventilation is really where this discussion should be, rather than banning one particular type of technology. Banning one type of a cooking appliance is not going to address the concerns about overall indoor air quality. We may need some behavior change, we may need (people) to turn on their hoods when cooking.”

Mr. Trumka tried to quell the firestorm that resulted from his announcement, indicating “To be clear, C.P.S.C. isn’t coming for anyone’s gas stoves,” adding that any regulations would only apply to new products. At an October meeting of the commission, Mr. Trumka asked the staff to begin writing rules regarding gas stoves but could not get support from the other four members. Instead, the commission agreed to obtain input from the public.

The Inflation Reduction Act includes $4.5 billion for states to provide rebates to consumers for the purchase of electric appliances, including stoves. Consumers can get a rebate of up to $840 for an electric stove or other electric appliances, and up to $500 to help cover costs of converting from natural gas to electric. This is happening at a time when the grid is already stressed from increased intermittent renewable energy sources, mainly wind and solar power.

Natural Gas Becomes a Battleground for States

Natural gas use has become a hot topic over the last several years in many states with some U.S. cities banning natural gas from being used in new buildings. Berkeley did so in 2019, followed by San Francisco in 2020 and New York City in 2021.  This followed an organizational meeting in 2019 sponsored by the Rocky Mountain Institute (RMI), the Energy Foundation and the World Resources Institute.  “On July 18, the group met for a panel discussion called ‘Natural Gas Lock In’ which set its sights on natural gas home appliances like stoves, washers, and dryers.”  This campaign is against the use of natural gas promoted by activist groups as an email invitation to the event details: “We are asking lead energy policy advisors to attend from a dozen states with supportive, and in many cases, new governors and legislatures interested in accelerating the transition to a clean, low-carbon economy. You are invited because you are the, or one of the lead policy advisors to your governor on energy and climate policy,” the agenda stated.

Despite this campaign, 21 state legislatures have put in place “preemption laws” which forbids cities from banning the use of natural gas. Most households in these 21 states, however, cook with electric stoves, not natural gas, according to a 2020 analysis from the Energy Information Administration. States with the highest percentage of households that use natural gas for cooking include California, Nevada, Illinois, New York and New Jersey.

Source: Forbes

Recently, Governor Kathy Hochul proposed that the N.Y. legislature phase out the sale of fossil fuel heating equipment in existing residential buildings beginning in 2030 and require new residential and commercial buildings be all-electric by 2025 and 2030, respectively. If passed, New York would be the first state to ban natural gas heating and appliances in new buildings. Hochul called during her state-of-the-state address to ban the use of fossil fuels by 2025 for newly built smaller structures and 2028 for larger ones. New York would also prohibit the sale of any new fossil-fuel heating systems starting in 2030.  The Real Estate Board of New York trade association did not endorse Hochul’s proposal.

California is weighing its own statewide proposal that would take effect in 2030.

The Move to Electrification

The widespread shift to running power plants on natural gas instead of coal helped reduce carbon dioxide emissions in the generating sector during the last decade. But now, environmentalists are attacking natural gas. They want all energy use to be electric, produced by wind and solar power—intermittent and unreliable energy sources.

This push to electrify all energy demand ended up with blackouts in North Carolina during the recent Arctic blast as there was insufficient firm power to meet growing electricity demand. States are pushing their utilities to generate electricity with wind and solar power that have low capacity factors and require the sun to shine and the wind to blow, while they shutter their reliable coal plants. As a result, firm electricity supply is lacking. Now that many states want to switch from petroleum cars to electric vehicles, transition from natural gas to electric heating and cooking, and to shutter all fossil fuel generating plants, the United States will clearly be short of electricity supply. In California alone, the forced move to electric vehicles is estimated to double the state’s electricity demand. Meanwhile, electricity prices are spiking for consumers to pay for an increasingly fickle and complicated electrical distribution system. California’s average residential electricity prices are the fifth highest in the nation and 63 percent higher than the national average.

Conclusion

There is talk of banning natural gas in new buildings, including gas stoves. The gas stove proposed ban is causing much opposition, particularly from restaurants that indicate they cannot produce meals as quickly with electricity as with natural gas. They also mention the phenomenal cost from purchasing new equipment to upgrading the facility’s electrical load. Clearly, with environmentalists wanting all energy demand to be electric, produced by mostly wind and solar power, the United States will be running out of electric supply facilities and at risk of becoming a third-world country, where power is insufficient as a normal part of the day’s activities. Americans should be aware that this is a well-orchestrated campaign, driven by “green power” advocates, investors and the foundations who support them.

Send A Message To Lawmakers Demanding They Rein In Biden’s Rouge Regulators:

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

Filed Under: Blog Tagged With: , , , , ,

Democrats Double Down On Costly SPR Policies

January 13, 2023 by Leave a Comment

Biden’s Department of Energy will not be refilling the nation’s emergency reserves, the Strategic Petroleum Reserve, any time soon as the agency has rejected bids received for the February fill since the bids are above $70 a barrel. Today’s price for Texas Intermediate oil is $75.87 a barrel. Biden depleted the emergency oil reserve of 260 million barrels to keep gasoline prices down going into the mid-term election last year. Biden promised to refill the reserve starting this February. But, apparently, his energy department did not like the bids. His Department of Energy (DOE) was to refill up to 3 million barrels for delivery to the Strategic Petroleum Reserve in February, but stated “DOE will only select bids that meet the required crude specifications and that are at a price that is a good deal for taxpayers.” Never mind that the reserve was set up to be used for national emergencies, not for reducing gasoline prices during an election year–prices that his climate policies needlessly raised.

Biden’s SPR Releases

In November 2021, Biden released 50 million barrels from the petroleum reserve and on March 1, 2022, Biden announced the release of a further 30 million barrels. Then on March 31, 2022, Biden announced another 180 million barrels would be released over the remaining 9 months of the year to reduce gasoline prices—prices that he raised due to his energy policies. Over the 9 month release period of the last announcement, DOE sold 180 million barrels of oil at an average price of $96.25 a barrel, well above the recent market price of $75.87—meaning that the U.S. government should be over $3.6 billion ahead. Biden’s SPR sales were the largest since the reserve was created after the Arab oil embargo from 1973 to 1974. Because SPR oil is sold to the highest bidder, including foreign companies, China was allowed to buy almost 6 million barrels.

But the Biden administration appears to be in no rush to buy oil to refill the reserve. It believes the SPR’s remaining holdings—about 382 million barrels—leave it well-positioned to weather potential supply shocks. The SPR held about 593 million barrels of oil at the beginning of this year, down from a peak of 727 million barrels in 2009.

In March of 2020, President Trump wanted to stabilize the domestic oil industry after Covid-19 hit and global petroleum demand tanked by spending $3 billion to fill the reserve when oil sold at about $24 a barrel. Because the Democrats in Congress voted against it, billions in potential profits were lost and tens of millions of fewer barrels were at President Biden’s disposal. It will now take more oil to fill the reserve than two years ago. In March 2020, the reserve had 634 million barrels stored out of a capacity of 727 million barrels. The reserve is now at its lowest level since 1984, which is a problem since U.S. consumption is much higher today than it was in 1984. In 1984, the United States was using 20 percent less oil.

SPR’s Congressionally Mandated Sales

DOE requested Congress to pause or cancel previously scheduled SPR sales of about 140 million barrels between 2024 and 2027. The $1.7 trillion omnibus spending bill cancels most of the congressionally mandated oil sales through fiscal year 2027. The legislative changes in the spending bill would effectively redirect nearly $10.4 billion generated from this year’s emergency sales to offset the estimated future revenue from the 140 million of oil sales that would be canceled. According to the Biden Administration, it would also avoid an outcome that would make “no sense,” of refilling the SPR and selling its oil at the same time to comply with past congressional mandates, despite those sales being specifically attached to funding specific projects.

Congress in prior years ordered the sale of 147 million barrels of oil from SPR in fiscal years 2024 to 2027 to raise revenue for debt reduction, infrastructure and other priorities. The omnibus bill cancels all those sales, with the exception of 7 million barrels that would be sold in fiscal years 2026 to 2027.

The Biden Administration is casting its emergency drawdown of 180 million barrels of oil from the SPR as a good deal for taxpayers because it brought down fuel prices and SPR oil was sold at an average price of $96 per barrel, resulting in a supposed profit. The omnibus spending bill shows the oil sales being canceled only if needed to raise $74.25 per barrel to comply with budgetary rules, indicating a paper profit of $22 per barrel from the emergency sales.

The bill would not cancel another congressionally mandated sale of 26 million barrels of SPR oil that is required to be sold by the end of this fiscal year on September 30. The measure would also keep intact previously enacted sales of 92.6 million barrels of SPR oil scheduled for fiscal years 2028 to 2031.

Conclusion

The Strategic Petroleum Reserve was set up to be used for emergency purposes, but this administration has politicized it, using it to lower gasoline prices during a political season, rather than letting oil and petroleum markets work. Having depleted the reserve of 260 million barrels of oil, President Biden announced that the refill will begin this February. However, the price and crude specifications of the bids were not to his administration’s liking, thus delaying the refill process. His administration feels that the remaining barrels in the reserve are sufficient for an emergency.

Rather than using the SPR as a political tool to lower gasoline prices, President Biden should review his energy and climate policies and make changes to his lease and permit approval program for drilling oil and natural gas on federal lands. If he were to go back to President Trump’s energy program, energy prices would be much more affordable for Americans and food and other costs would also be lowered as transportation costs to produce and move the products would also be less.

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

Filed Under: Blog Tagged With: , , , , ,

The Unregulated Podcast #115: Rocket Man

January 13, 2023 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss recent events in Congress, California’s descent into chaos, this week’s crop of word salad, and Biden’s high-security garage.

Links:

Filed Under: Podcast Tagged With: , , , , , ,

Biden Ensures Wealthy Luxury Car Buyers Receive EV Tax Credit

January 10, 2023 by Leave a Comment

To Senator Manchin’s dismay, Biden’s Treasury Department is allowing the tax credit for electric vehicles to be claimed if the vehicle is leased regardless of where the battery components and vehicle were manufactured. The intent of the Inflation Reduction Act was for the tax credit to be applied to electric vehicles that were manufactured from components made in the United States or its allies to develop those industries at home and not to be reliant on autocratic countries. Europe’s skyrocketing energy costs and inflation are, in part, due to its reliance on Russian energy supplies, which could occur again since China dominates the electric battery supply chain and President Biden is bent on electrifying the U.S. economy.

According to Senator Joe Manchin, Treasury’s guidance “bends to the desires of the companies looking for loopholes and is clearly inconsistent with the intent of the law.” Manchin plans to introduce legislation that “clarifies the original intent of the law and prevents this dangerous interpretation from Treasury from moving forward.” Part of the objection stems from very expensive foreign automobiles such as a Bentley Flying Spur hybrid and other vehicles which are now eligible for tax breaks. These vehicles can approach $300,000 in price and are clearly purchased by only the wealthiest of Americans.

Inflation Reduction Act (IRA) Tax Credit for Electric Vehicles

The intent of the legislation was to:

  • Take away the 200,000-vehicle cap on tax credits that made electric vehicles and plug-in hybrids from Tesla, GM, and Toyota ineligible for tax credits.
  • Do away with tax credits for expensive electric vehicles—such as the GMC Hummer EV, Lucid Air, and Tesla Model S and Model X.
  • Eliminate tax credits for vehicles not assembled in North America, including the BMW i4, Hyundai Ioniq 5, Kia EV6, Subaru Solterra, and Toyota Z4X that are purchased by individual consumers.
  • Add an annual adjusted gross income cap for buyers of $150,000 for single tax filers, $225,000 for those who file as head of household, and $300,000 for married couples filing jointly.
  • Restrict the full tax credit on new purchased electric vehicles to vehicles with battery minerals sourced from the United States or countries that the U.S. has a free trade agreement with, battery minerals that are recycled in North America, and battery components sourced from North America. Starting in 2024, if any minerals or components are sourced from “foreign entities of concern,” including China or Russia, the vehicle would not qualify for any tax credit.

Half of the $7,500 tax credit ($3,750) is tied to an increasing share of EV battery components being made in North America, and the other half to its minerals being extracted or processed in the United States or countries with which the U.S. has a free-trade agreement. Under the law as written, few EV models are expected to qualify for even half of the credit in coming years.

Treasury’s Guidance

Over the holidays, Treasury issued guidance that would help automakers circumvent the restrictions by letting electric vehicles leased to consumers qualify as “commercial clean vehicles,” which do not include North American manufacturing, material sourcing, income or price restrictions. The law’s commercial EV tax credit was intended for Amazon, UPS and contractors. But under Treasury’s interpretation, a BMW i7 (retail price of $119,300) leased to a consumer would qualify for the commercial vehicle credit whether or not it is used by a business. That is also true for other electric vehicles no matter their cost or their manufacturing location.

About 28 percent of new electric vehicles are leased. Many EV drivers prefer leases because they expect battery technology to improve and their resale value to fall quickly. Treasury’s guidance will encourage dealers to lease electric vehicles instead of selling them, and customers may find lease financing more attractive.

In the case of a lease, the dealer would receive the commercial credit, not the person leasing the vehicle, and dealer would need to pass the savings from the tax credit on to the consumer. If the dealer does pass the savings along, drivers could get the $7,500 tax credit on a car made outside North America as well as high-income consumers and those who lease a high-cost electric vehicle such as a Tesla Model S or X, or for that matter, a Bentley.

Conclusion

Biden’s Treasury Department is circumventing the intent of the Inflation Reduction Act with respect to the electric vehicle tax credit, allowing leased vehicles to be considered “commercial clean vehicles” so that restrictions in the law do not apply to them. This is all part of President Biden’s plan to electrify the U.S. economy and eliminate fossil fuels, despite whether sufficient electric resources exist to avoid rolling blackouts and outages as recently occurred due to the Arctic blast. Further, the movement from petroleum-based vehicles to electric vehicles puts the United States at the mercy of an autocratic country that controls the battery supply chain and the processing of critical minerals. A 2022 analysis of the EV supply chain from the International Energy Agency shows that the vast majority of minerals, components, and battery cells are currently sourced from China.

The Biden Administration released its new rules over the holidays hoping people would not be paying attention to their departure from clear intent expressed in the law by Congress. So, if you have ever wanted to drive a Bentley hybrid for almost $300,000, now is your chance.  American taxpayers will help pay for your whim, and your car has plenty of space to put a bumper sticker stating that you are saving the climate.

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

Filed Under: Blog Tagged With: , , , , , , , , ,
Previous
Next