The Dems fairy dust energy bill

Mackubin T. Owen:

AFTER the Democrats took control of Congress last year, party leaders said that one goal of the new majority was "to achieve energy independence, strengthen national security, grow our economy and create jobs, lower energy prices and begin to address global warming."

Yet the Democrats' energy bills do just the reverse - thwarting energy independence by taxing oil producers and keeping substantial reserves of oil and natural gas locked up, while favoring "fairy dust" alternative energy and fuel sources that won't be able to compete with oil and gas for decades (if ever).

Now that Congress' is back, a major order of business will be to iron out the differences between the House and Senate energy bills and bring the final version to the floor. But it will be a compromise between two sets of bad ideas.

The House bills, sponsored, respectively, by Reps. Charles Rangel and Nancy Pelosi, do nothing to increase oil and gas production in America - which is necessary if we're to reduce our dependence on imports. Indeed, they would make it more difficult to produce oil and gas, adding new limits on access to domestic reserves and raising costs to producers - by levying $16 billion in taxes on oil companies by repealing a tax credit for exploration, production and refining and by changing the tax treatment of overseas oil-related income.

The House's measures also raise false hopes by promoting the fiction that "renewable" energy sources such as wind, solar and biofuels can replace oil and gas in an economically viable manner any time soon, mandating that 20 percent of electricity be generated from renewable-energy sources.

The reason such energy sources need subsidies in the first place is that they have intrinsic shortcomings. Energy available from wind and solar is dispersed rather than concentrated - which means that windmill or solar-panel farms must be huge to generate much power. (Even then, clouds and/or lack of wind can slow or stop production, so utilities would need non-fairy-dust backup generators.)

These alternatives are far too expensive and unreliable to compete on the market. By forcing such costly options on the public and subsidizing them via tax breaks and the like, this bill would hit Americans both as ratepayers and taxpayers.

As bad as the House bill on fairy-dust energy sources, the Senate is even worse, mandating a sevenfold increase in biofuels production. To see the problem, consider the most popular biofuel, ethanol.

Ethanol producers have benefited from big subsidies (and mandated use of their product) for decades. The hope that the fuel would become viable in a few years and get "off the dole" has never been realized. In reality, these are just unearned subsidies for agribusiness giants, made politically palatable with (false) environmental rhetoric - pork painted green.

Biofuel mandates have caused another problem: Rising ethanol production has diverted land and corn from food production and animal feed, increasing food prices for U.S. consumers. Even if the nation's entire corn crop were devoted to ethanol production, it would still only meet a fraction of U.S. gasoline demand.

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Democrats believe they can starve the energy business into conservation measures by imposing artificial barriers to production of energy. Even the favored fairy dust "generators" are opposed by environmentalists. We have enough reserves of oil to be energy independent, it the Democrats and the environmentalists would let us produce it. Their opposition to off shore production is irrational as is their opposition to production in Alaska. They are determined to ration the energy supply the same way they are determined to ration health care. They are control freaks who do not trust the market place and we will all pay a higher price because of it.