If a mandate for choice sounds oxymoronic, it’s because it is. But that’s what policymakers want for our vehicle fleet. Policymakers will convince you what they’re doing will promote markets and competition and that it will benefit the consumers. You won’t be paying $4 per gallon and we won’t be buying foreign oil. That’s the rhetoric you’re hearing as Congress rolls out legislation to promote natural gas vehicles. But it is legislation that won’t help the American consumer or the American taxpayer and the reason we have less natural gas vehicles on the road today is the result of competition, not the absence of it. Consumers prefer cars and trucks that run on conventional gasoline and diesel.
The New Alternative Transportation to Give Americans Solutions of 2011, or NAT GAS Act, introduced by a bipartisan group of House Members (John Sullivan (R-OK) Dan Boren (D-OK) John Larson (D-CT) and Kevin Brady (R-TX), would provide special tax breaks and handouts for the production and purchase of natural gas vehicles as well as refueling infrastructure.
T. Boone Pickens, a supporter of the bill and huge proponent of natural gas, who spoke at an energy forum at Oklahoma State University last week. Pickens made it known that he owns a Honda Civic GX that runs on natural gas and proudly claimed, “I fuel it in my garage at night and it’s less than a $1 a gallon, and you’re getting ready to pay $4 a gallon.”
That $1 a gallon sounds like incentive enough to switch from your traditional source fuel to natural gas, so why the need for all the handouts? If natural gas vehicles are economically competitive with gasoline, vehicle manufacturers will make them and consumers will switch over without the taxpayers’ help. If natural gas interests are so sure of the technology, they should invest their money to build the business. After all, that is the process that has given us the many products and services that we enjoy today that rely on gas power.
It was not well intentioned bureaucrats frustrated with the charcoal monopoly that gave us gas grills. Politicians tired of constituents having to shovel coal and chop wood to warm their homes are not who brought us gas furnaces. And it wasn’t Washington policymakers that forced power companies to start building natural gas power plants. In each case, investors recognized the value that gas power brought in meeting consumer demand. They didn’t need Washington to mandate choice. Consumers were capable of driving the market place on their own.
A full-fledged competitive natural gas vehicle fleet may eventually happen – just not as fast as natural gas producers and investors want. When the government selects political winners and tries to force technologies into the marketplace with subsidies, mandates and preferential tax credits, it’s usually a good indicator that the technology is a not yet economically competitive.
Of course, it’s not just natural gas that wants “consumer protection.” The National Propane Gas Association says, “The bill is designed to boost the number of alternative fuel vehicles on America’s roads, but it is actually only a half-measure because it excludes propane autogas vehicles.” The ethanol and biofuels industry would say it’s only a half-measure because it doesn’t mandate automakers to make a certain percentage of flex-fuel vehicles. Proponents of electric vehicles say the same.
There’s plenty of technologies already developed to promote competition and the one that emerges to provide a consistently affordable alternative to gasoline won’t need the help of the government because the profits will be enough. The problem with these technologies is not a lack of competition, but as The Competitive Enterprise Institute’s Marlo Lewis says, it is “simply a competitive outcome they dislike.”
Nicolas Loris is a Research Assistant at The Heritage Foundation’s Roe Institute for Economic Policy Studies. Loris studies energy, environment and regulation issues such as the economic impacts of climate change legislation, a free market approach to nuclear energy and the effects of environmental policy on energy prices and the economy.
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