An Energy Plan With More Energy, Lower Prices

Posted on Sun 03/29/2009 by


Nick Loris.

Republican leaders released their budget alternative yesterday, and it came under much criticism since it failed to include any hard numbers. On the bright side, though, the Republicans’ energy budget proposal doesn’t require much funding.

The difference between the budgets is quite simple. Although both parties want to keep energy prices low, they have a different means to an end. President Obama’s budget taxes the nation’s reliable sources of energy, limits access to America’s energy resources, and “invests” in expensive and unproven renewable sources of energy – all to supposedly save the planet. The Republican budget would empower the private sector to expand access to America’s energy resources.

President Obama’s Budget

The most onerous element of President Obama’s budget is that it would institute his CO2 cap-and-trade proposal to reduce carbon emissions 14 percent below 2005 levels by 2020 and approximately 83 percent below 2005 levels by 2050.

The budget includes a number of provisions that raise costs on domestic energy production. Overall, $31 billion in additional revenues would be collected, yet the oil and gas industry already has effective tax rates as high or higher than the industrial average.

When gasoline prices hit $4 per gallon, the American public demanded the government produce policies to increase energy supply in the United States and ultimately lower prices. The Department of Interior’s budget proposal for new excise taxes on offshore oil and gas production, termination of funds to coal states to clean up abandoned mines, and user fees for oil companies for processing oil and gas permits on federal land do the exact opposite.

And for nuclear energy, The Department of Energy eliminates all funding for Yucca Mountain operations and only funds activities related to answering Nuclear Regulatory Commission inquiries regarding the commission’s review of the Yucca Mountain construction permit. Yucca is the geologic repository mountain to store nuclear waste. Consequently, progress on building the repository would be stopped.

The GOP’s Budget
According to the GOP budget,

Republicans recognize the importance of exploring for American oil and gas in an environmentally-sound manner and support immediately leasing oil and gas resources in the OCS through an expedited and streamlined procedure. The Secretary of Interior should be required to offer new leases in the OCS, and ensure royalty revenues from OCS development are shared with coastal states in an effort to incentivize energy development.

Republicans also support opening the Arctic Coastal Plain to energy exploration and development and intend to carry out exploration in an environmentally safe manner, utilizing a small geographic footprint. Republicans propose streamlining the leasing process and mandating a first lease by the Interior Department within a few years. In addition, Republicans support expediting judicial review of energy development by making the Court of Appeals for the District of Columbia the sole venue for review and limiting complaints to a finite period-reducing frivolous anti-energy litigation.

In order to bring online a safe, inexpensive, and clean American energy source quickly, Republicans support removing government barriers to new nuclear reactors as long as they meet strict security and safety criteria. Efforts to streamline the hearing and judicial review process for nuclear permitting to place reasonable limits on arduous anti-energy litigation would be pursued as well.”

Furthermore, alternative energy should not be synonymous with renewable energy:

“Republicans support promoting the leasing of federal lands which contain alternative energy such as oil shale. The Interior Department should provide lease sales of oil shale in an environmentally-sound manner, rather than hinder leasing plans. Republicans also support enabling federal agencies to take the lead in spurring a market by using fuels derived from oil shale, tar sands, and coal.”

Surely wind and solar can play a role in America’s energy portfolio if able to compete in the market. The same can be said for any source of energy. But government “investments” in energy is generally code for taxes that lead to higher prices for energy consumers.

Contributing Author Nick Loris writes at The Heritage Foundation and he is a Research Assistant at The Heritage Foundation’s Roe Institute for Economic Policy Studies.

Read more informative articles at Heritage – The Foundry.