Home
/
RELIGION & LIBERTY ONLINE
/
Playing the Washington Blame Game
Playing the Washington Blame Game
Dec 23, 2024 1:38 AM

The blame game in Washington is heating up on skyrocketing gas prices. Republicans are criticized as being in the back pocket of the oil industry and partaking in crony capitalism. The Democrat Congressional Campaign Committee is even cashing in by hosting a fundraiser that is based on what has been the House Republicans “decade long relationship of protecting Big Oil taxpayer giveaways, speculations and price gouging…” However blame is also placed on Democrats, with accusations of placing barriers to prohibit domestic drilling. The debate has also centered around how we can be better environmental stewards. We may find ourselves asking questions such as whether green energy promotes environmental stewardship, and if oil drilling results in a dramatic harm to the environment?

An article published by the Washington Examiner contains disturbing numbers that will not be received very positively. Oil production in the Gulf was lower than predicated by the Energy Information Administration (EIA); however, imports were up:

While oil production in the Gulf is down more than 10% from April 2010 estimates, net crude oil imports are up 5%. At $83 dollars a barrel (the approximate average price of oil in the fourth quarter of 2010) that means Obama’s oil drilling permatorium increased American dependence on foreign oil by about $1.8 billion dollars in the fourth quarter of last year alone. The numbers only get worse as Obama’s permitorium further cuts into production. A Wood Mackenzie study predicts that for all of 2011 the permitorium will result in the loss this year of about 375,000 barrels of oil a day.

More imported oil also means higher prices at the pumps. The EIA explains: “Retail gasoline prices tend to be higher the farther it is sold from the source of supply.” It costs more money to transport oil to your gas station from the Persian Gulf than from the Gulf of Mexico.

On April 26th, President Obama wrote a letter to Congress calling for “immediate action to eliminate unwarranted tax breaks for the oil and gas industry, and to use those dollars to invest in clean energy to reduce our dependence on foreign oil.” The tax breaks President Obama is asking to be removed are worth $4 billion per year. This isn’t the president’s first call to action. His 2012 budget proposal also calls for the removal of the “subsidies.” But some have pointed out that the oil industry does not receive direct subsidy payments in the way that some farmers do. The president’s proposal specifically states:

Eliminates Inefficient Fossil Fuel Sub­sidies. Consistent with the Administration’s Government-wide effort to identify areas for sav­ings, the Budget eliminates inefficient fossil fuel subsidies that impede investment in clean energy sources and undermine efforts to address the threat of climate change. Approximately $4 bil­lion per year in tax subsidies to oil, gas, and other fossil fuel producers are proposed for repeal.

Here at the Acton Institute we have spoken in opposition to true subsidies, such as subsidized farming (articles can be found here, here, and here) and health care policy (a related article can be found here). In the past we have articulate the problems with subsidization. The language in President Obama’s budget proposal appears to be vague and does not specify where the oil industry will no longer be, in his words, subsidized. Is it in drilling? Does it affect gas prices? Ray Nothstine notes in mentary, “High Gas Prices are Devastating to Poor” our moral obligation to the vulnerable and how the high gas prices are affecting them. With gas prices continuing to climb precautions should be taken to prevent even higher prices.

Brian Johnson, the American Petroleum Institute’s senior tax policy advisor, provides insight on the proposal in the president’s 2012 budget. Johnson explains that the president is proposing to remove the intangible drilling cost provision, which is the oil industry’s ability to deduct drilling “costs associated with labor, architecture, design and engineering; basically the building of an oil rig, a platform or any structure that allows the industry to get into the ground and find oil or natural gas.” Johnson claims this process helps in planning for the next stage of development and construction. Furthermore, Johnson claims the oil industry is already paying its fair share in taxes with an e tax rate at 48 percent. Whereas other S&P Industrials average a 24 percent effective tax rate. Stephen Comstock, also from API, responded to President Obama’s State of the Union Address in January, articulating problems with the president’s call to end subsidies for the oil industry.

While the call to end the oil subsidies is being criticized by some, others are supporting such an action. Bill Becker, a Senior Associate with Third Generation Environmentalism and an energy and climate specialist at Natural Capitalism Solutions, argues the subsidies place the United States at petitive disadvantage to China and India in petition to champion alternative energy:

If we are looking for ways to chip away at the budget deficit, to keep petitive and to use market-based mechanisms to build petitive clean energy economy, then subsidy reform should be near the top of the list.

Think of it this way: Imagine an Olympic marathon in which the U.S. team has to run on a steep and continuous uphill slope, while the teams from China and India run on a level track. That’s what “winning the future” will be like for the United States if we keep ourperverse energy policies. Direct and indirect taxpayer support for fossil energy, which far exceeds government support for emerging green energy technologies, almost certainly makes winning the future a futile race.

Becker also cites a report by the Government Accountability Office that claims “taxpayers are losing tens of billions of dollars in royalty payments in part because the Department of Interior doesn’t have sufficient capacity to monitor oil and gas production on public lands.”

In his letter address to Congress, the president calls to reinvest the $4 billion per year that the panies receive in subsidies into clean energy. The problem with current alternative energies is they are inefficient, not cost effective, and cause many unintended consequences (related articles on the inefficiency and unintended consequences of various alternative energies can be found here, here, here, and here).

Yes, we will need to develop good alternatives to oil over the long haul, but spending money on energy sources that are not effective is not a wise investment or a sign of being good financial stewards. If the tax provision and subsidies for the panies are to be cut, and taking into account the budget crisis the United States is currently facing, it may better serve the country to not reinvest the money and cut it out of the pletely.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Why government is not just a necessary evil
In the Federalist Papers James Madison claimed that, “If men were angels, no government would be necessary.” But is that true? James R. Rogers, an associate professor of political science at Texas A&M University, explains why some form of government would be necessary even if man were still in a prelapsarian state of nature: [E]ven without the Fall, there would be a role for civil government for the duly recognized person who exercises civil authority. Even in an unfallen society,...
Tweeting the abyss: Explaining Nietzsche in 140 characters (or less)
While trying to teach the most consequential thoughts of West civilization to undergraduates, C. Ivan Spencer hit upon a unique idea: What if they were written in tweets instead of tomes? That’s the kernel of his book Tweetable Nietzsche: His Essential Ideas Revealed and Explained. Somehow, the idea that the callously exploitative philosophy of Friedrich Nietzsche could be mass-marketed so easily makes it all the more unsettling. Spencer’s book is reviewed this weekend by Josh Herring, a humanities instructor atThales...
The 3 reasons Martin Luther King Jr. rejected Communism
Today is Martin Luther King Jr. Day in the United States, but the civil rights leader is a figure of worldwide significance. He learned the principles of non-violence from those resisting the British empire, received the Nobel Peace Prize in Stockholm, and is one of the “twentieth century martyrs” whose statue sits atop the great west door of Westminster Cathedral (alongside Maximilian Kolbe, Dietrich Bonhoeffer, and others). And 50 years after his death, his moral crusade for equal treatment under...
Explainer: What you should know about a government shutdown
Why is there talk about a government shutdown? In December Congress passed the Further Additional Continuing Appropriations Act, 2018 (H.R. 1370) which provides non-discretionary funding through January 19, 2018. Because that Act expires at midnight on Friday, Congress must pass a new continuing appropriations act to keep the government operating. Democrats in Congress are insisting that any new stop-gap spending measure to keep the government funded must include a legislative fix on the Deferred Action for Childhood Arrivals (DACA) act....
Radio Free Acton: Jennifer Roback Morse on family breakdown and the economy; Upstream on Darkest Hour
On this episode of Radio Free Acton, Trey Dimsdale, Director of Program Outreach at Acton, speaks with Jennifer Roback Morse, founder of the Ruth Institute, about her ing Acton Lecture Series talk on family breakdown and the economy. Then, on the Upstream segment, Bruce Edward Walker talks to Acton’s Patrick Oetting on the new film Darkest Hour. Check out these additional resources on this week’s podcast topics: Register here to attend Acton’s Lecture Series event on January 25, featuring Jennifer...
Macron’s Orwellian fake news fix
“On January 3, during his first press event of the new year, French President Emmanuel Macron presented a proposal intended to ‘protect the democratic life’ of France from ‘fake news,’” writes Marcin Rzegocki in this week’s Acton Commentary. Macron would make it “possible for judges to remove fake news stories, delete the links to them, block the sites, or close the offending users’ accounts.” The French president is not alone with his ideas to limit foreign information in his country....
The 2 things that can help Africans prosper
For too long, the West’s policy toward Africa could be summed up in two words: foreign aid. Somehow, temporary funds transfers – many of which never reach their recipient country and end up in the pockets of well-connected Western professionals – would solve structural development issues. MIT economist Daron Acemoglu once derided some foreign aid plans as “get-rich-quick schemes.” Those developmental policies, like Ponzi schemes, hurt the would-be beneficiary. “Even as the level of foreign aid into Africa soared through...
The euro, Brussels, and the Russian bear
The government of Poland is part of the new surge of populism, openly defying the European Union on numerous policy fronts and rebuffing calls for an “ever-closer union.” So, why did its prime minister recently raise the possibility of adopting the euro? What is happening, and how should people of faith think about a single European currency? Are there moral issues at stake? “Adoption of mon euro currency should be understood first and foremost as politics, and only then as...
Economic problems are not driving opioid overdose deaths
The opioid epidemic has e one of the deadliest drug crises in American history. In 2015, more peopledied from drug overdosesthan in any year on record, and the majority of drug overdose deaths—more than six out of ten—involved an opioid. A study of emergency rooms in the U.S. also found that since 1999, the number of overdose deaths involving opioids (including prescription opioid pain relievers and heroin) nearly quadrupled. Altogether nearly half a million people died from drug overdoses in...
Asymmetric information and used cars
Note: This is post #64 in a weekly video series on basic microeconomics. Adverse selection occurs when an offer conveys negative information about what is being offered. For example, in the market for used cars, sellers have more information about the car’s quality than buyers. This leads to the death spiral of the market, and market failure, explains Marginal Revolution University. However, the market has developed solutions such as warrantees, guarantees, branding, and inspections to offset information asymmetry. (If you...
Related Classification
Copyright 2023-2024 - www.mreligion.com All Rights Reserved