Congress has taken action that actually advances free markets and limits government intrusion.
On September 17, the House Energy and Commerce Committee—with bipartisan support—advanced legislation to lift the 1970s-era ban on crude-oil exports. HR 702, “To adapt to changing crude oil market conditions,” is expected to receive a full floor vote within a matter of weeks.
The export appears as a relic of a bygone era during which ideas such as “peak oil” and “energy scarcity” served as the conventional wisdom. Despite all those who cried “wolf,” the U.S. now produces the most oil and gas.
Ending this obsolete ban would unleash America’s energy producers on the global market, increasing domestic production and creating jobs. Additionally, reports from experts at the non-partisan Energy Information Administration and Government Accountability Office, plus consultants at IHS, indicate that it will also lower prices at the pump.
Getting the Democrats on board with removing the barrier to exporting America’s abundance may likely require giving them something they want. Morning Consult recently reported: “Momentum is building in Congress to repeal the antiquated ban on exporting crude oil. Lawmakers and energy industry representatives are talking about other energy policies that could be swapped or combined to achieve that objective. Renewable energy tax credits are part of the equation.”
Those “renewable energy tax credits” are mainly two: the wind Production Tax Credit (PTC) and solar Investment Tax Credit (ITC). Like the oil-export ban, the wind PTC is an archaic policy that has no place in today’s modern reality of energy abundance.
Passed by Congress in 1992, the PTC pays the wind industry for every kilowatt-hour of electricity generated over a ten-year period. No other mature energy source—natural gas, oil, or coal—can claim a similar carve out based on how much product they sell. The subsidy is so lavish that wind developers can sometimes sell their electricity at a loss and still profit.
The PTC costs taxpayers like you and me billions of dollars each year. Americans pay for wind twice: first in their federal tax bills, then in their local utility bills. Electricity generated from new wind facilities is between three and four times as expensive as that from existing coal and nuclear power plants, according to a new study commissioned by the Institute for Energy Research.
The Senate Finance Committee claims a two-year extension would cost $10 billion over the next decade. After decades of subsidies and multiple PTC extensions, wind still generates less than 5 percent of our electricity.
Despite the mountain of evidence against wind energy—including increasing reports of health issues and concerns over bird kills—this summer, before the August recess, the Senate Finance Committee rushed through a package of expired tax provisions, including the wind PTC. Now, wind lobbyists are looking for a legislative “vehicle” to latch on to, preferably one with bipartisan support, to push through another PTC extension without a fair hearing, which is exactly why they’re eyeing the oil-export bill.
According to The Hill, Senator Ed Markey (D-MA) said he could consider lifting the ban “only if it’s tied to a permanent extension of the wind and solar tax credits.”
Swapping the PTC for oil exports is a bad deal, as lifting the ban deserves to pass in its own right. But what many don’t realize is that trading the PTC for oil exports is also a Faustian bargain that furthers President Obama’s destructive climate-change agenda.
Obama’s sweeping new carbon regulations, known as the “Clean Power Plan”—finalized in August—require states to drastically cut carbon dioxide emissions. It does this by shuttering low-cost coal plants and building expensive new wind and solar facilities. The problem: wind and solar are unsustainable without massive taxpayer handouts like the PTC and ITC and market-distorting mandates like state Renewable Portfolio Standards.
These carbon regulations will inflict severe burdens on American families—especially the poorest among us who can least afford to pay higher energy prices. A recent study by the National Black Chamber of Commerce, for instance, found that Obama’s carbon rule would increase Black and Hispanic poverty by 23 and 26 percent, respectively. For all that pain, the regulations will, perhaps, reduce global temperature rise by 0.018 degrees Celsius in 2100—an undetectable amount.
Buried in hundreds of pages of “analysis,” the Environmental Protection Agency projects the wind industry will add more than 13 GW of electrical capacity each year from 2024-2030. For context, 13 GW is exactly how much capacity wind added in 2012, a record year. It is also the year in which rent-seeking wind barons rushed to build as many new turbines as possible to quality for the PTC, which expired at the end of the year. The following year, after the PTC expired, wind additions collapsed by more than 90 percent—which highlights the fact that the wind industry cannot survive in a free market.
This makes the wind PTC vital to Obama’s carbon regulations. His plan depends on exponential wind growth, and the wind industry depends on government handouts like the PTC to avoid total collapse, let alone grow.
By not accepting a wind PTC tradeoff, Congress can deal a blow to corporate wind welfare and Obama’s carbon regulations in one shot.
By rejecting an extension of the wind PTC and lifting the ban on oil exports, Congress would end corporate welfare for wind lobbyists, deal a blow to Obama’s costly carbon regulations, and free America’s entrepreneurs to provide abundant, affordable, and reliable energy for all.
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column. Follow her @EnergyRabbit.