The Wall Street Journal reports on the latest shenanigans regarding the Energy Bill.
Risking the possibility of a White House veto, Senate Democrats try again tomorrow to pass an energy bill that includes some provisions President Bush has said he won't accept. (snip)
The bill removes a section requiring utilities to make 15% of their electricity from "renewable" sources, such as wind and solar power, but leaves in other items Mr. Bush opposes.
Before going to the president, the measure would have to be approved by the House, which has taken a more pro-environment stance than the Senate. President Bush then would consider whether the bill's main actions, broadening a mandate to require more ethanol and "advanced biofuels" and a historic tightening of fuel-efficiency standards for vehicles, should be signed into law. (snip)
The White House yesterday reiterated its opposition to the tax package, which would raise money by removing tax incentives that Congress had previously given oil companies.
SDSU economist George Langelett had this op-ed recently in the American News arguing that removing government regulations and keeping taxes low is the best way to keep supply up and price down.
Is Congress trying to increase or decrease the supply of oil? Increasing the supply of oil to meet growing world demand will lower gasoline prices. Additional taxes on petroleum profits are a disincentive to produce oil and to invest in new technologies to convert oil shale in the Rocky Mountains or oil sands in Alberta into gasoline. These new taxes will lead to higher prices for consumers at the pump.
History has shown that attempts by the federal government to tax and regulate our way to more plentiful and secure energy have failed miserably. In 1980 Congress instituted a "windfall'' profit tax to punish the oil industry. The result, according to a congressional study, was a 3 percent to 6 percent drop in domestic petroleum production and an 8 percent to 16 percent increase in oil imports.
The economic reality of U.S. energy demand is that America needs both oil and alternative fuels. A University of Minnesota study found that if every bushel of corn grown in the United States were converted into ethanol, the resulting ethanol would only replace 12 percent of American's gasoline consumption.
Finally, endorsing congressional taxation of industry profits can be a slippery slope. What might be the next industry for Congress to target for additional taxes on profits? As corn goes to $4 per bushel, agriculture may become a lucrative target for additional federal taxes.
Update: Read Mac Owens on the same subject.
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