Vol. VIII No. 15
April 11, 2003

Christmas in April for the Energy Industry

Earlier today, Congress handed the energy industry a whole pile of presents wrapped in the 768-page energy bill. While the rest of us are calculating just how much of our hard-earned incomes we’ll have to hand over to Uncle Sam on Tuesday, energy executives can loosen their belts and celebrate the season of giving - federal taxpayers giving them money.

The 5-inch thick “Energy Policy Act of 2003” will do very little to reduce energy prices or increase domestic energy production. It authorizes $46.7 billion in new spending and $18.7 billion in industry tax cuts, funding everything from nanotechnology research to a demonstration project to burn post-consumer carpeting in cement kilns.

Among the worst provisions is royalty relief for oil companies engaged in off-shore and unconventional drilling. When oil is drilled on federal land, oil producers pay the government a fee for using our land and taking our natural resources. When they get ‘relief’, however, they can just take the oil for free, without paying for use of a natural resource on public lands.

The bill also includes $1.925 billion in subsidies to build new “clean coal” facilities, despite the fact that the Clean Coal Technology Program has been documented a failure by the government’s own General Accounting Office, for its inability “to meet cost, schedule, or performance goals.” Twenty years after the program first started, all that clean coal has to show for itself is billions of dollars down the drain and a few technologies fueled more by the necessities of the Clean Air Act than by government-sponsored research.

Of course, when handing out gifts, Congress could not forget the nuclear power industry. The Price-Anderson Act was enacted in 1957 as a temporary measure to jump-start the nascent nuclear power industry. The act limits the public liability of nuclear power plant operators. Congress extended this subsidy to proposed new reactors licensed until 2017, and didn’t bother to address their security vulnerabilities. Reauthorizing the Price-Anderson Act leaves the public unprotected, nuclear operators unaccountable, and taxpayers potentially on the hook for billions of dollars in the event of a nuclear catastrophe.

The FreedomCAR Program is little more than a bad rerun of the Clinton administration's Partnership for a New Generation of Vehicles (PNGV). PNGV failed to meet its goal of an affordable 80-mpg car, despite taxpayer subsidies of over $1.25 billion from 1995-1999. With FreedomCAR, the Bush administration once again envisions joint research between the federal government and big auto manufacturers. In conjunction with FreedomCAR is the Hydrogen Fuel Program, so-called Freedom Fuel, which is slated to research affordability and cost-competitiveness of hydrogen fuel. Despite the FreedomCAR’s checkered history, these programs will receive $1.799 billion over three years without a single standard set for their accountability.

These are only the highlights of the energy bill. It’s legislation that does not make sense as energy policy, because it isn’t - it’s a present. But for those who spend April paying taxes, there is little to celebrate. The best energy bill would have been no energy bill at all.

For more information, contact Keith Ashdown at (202)-546-8500 ext. 110 or keith@taxpayer.net