March 20, 2015 10:05 AM
A recent Washington Post story by Joby Warrick says much about the credulity of the media. The story extols the great gains in wind power, noting that it “could provide more than a third of the country’s electricity by 2050 while yielding a net savings in energy costs paid by consumers.”
Warrick, like many in the media, viewed this prediction by the Department of Energy as clear evidence of the gains by non-fossil fuel sources. Indeed, he quoted without comment the Department’s statement that there would a “net savings in energy costs paid by consumers” and later that this shift “would result in a net price increase of about 1 percent for consumers” even though “an overall savings of 2 percent.” The “savings” would include the imputed values of CO2 and other pollutant reductions. Consumers are going to pay more, but “society” will benefit—a story we’ve heard before.
But, although the article suggests that dramatic cost reductions in the wind power area have made this source more economically attractive, the report also “warned that consistent government policies were critical to avoiding boom and bust cycles,” and that “Congress must keep the wind-friendly tax policies in place.” So, an efficient technology option has to be subsidized to survive in the marketplace? Does the media ever read its own stories?
Of course, wind power can be attractive to some if it is heavily enough subsidized. But an energy alternative that’s been around since the Middle Ages and which the Department of Energy claims to be cost-competitive cannot survive without continued government subsidies? The media seems to like any energy source that requires government support.
February 25, 2015 10:24 AM
Those favoring larger government are finding it harder to finance them by raising taxes. Proponents have sought to reduce opposition by claiming that they’re not really raising taxes at all—their taxes will be “neutral.” Sure, we’ll take $50 billion or so in taxes from the economy, but we’ll then put it back again in the form of tax reductions or rebates. From a macro-economic perspective, they argue, there will be no impact at all! Why bother, you might ask?
The prime candidate advanced by those seeking to better plan our economy is the carbon tax. We’ll tax carbon and use the revenues to offset its impact. People will use less energy but retain the same income. We’ll change prices without changing income—a highly targeted incentive package! To tax energy users is feasible, although complicated—simply tax all energy materials. But farmers have traditionally escaped gas and diesel taxes for on-farm use—will this exemption be repealed?
In many regions, people use natural gas, oil, and electricity (which in turn uses coal, natural gas, and some hydro and nuclear). The prices of some of these energy types is market driven, while others are regulated. The income impact on specific consumers is not easily ascertained nor is the appropriate rebate. The result is that the micro-impact of energy taxes is never neutral. Individuals in areas dependent on coal or oil will lose; individuals in areas where climate or policy has shifted to solar or other renewable energy will gain relatively. And this critique fails to note another problem: the tendency of politicians to use new tax revenues to gain support for the measure. Since different groups have different priorities, the result is often to “spend” the new tax revenues many times over. Rebates, being complicated and having no strong political champion, are likely to receive low priority.
January 26, 2015 9:39 AM
The Niskanen Center is a new libertarian think tank that we at CEI look forward to working with on a number of issues. However, one where we are unlikely to agree is on the virtues of a real-world tax on carbon emissions. Sarah E. Hunt had a post last week over at the Niskanen Center's Climate Unplugged blog arguing that Senate EPW chairman Jim Inhofe's recent defense of the federal gas tax as an infrastructure user tax is at odds with his antipathy to a carbon tax.
Now, I have criticized Sen. Inhofe's blindspot on infrastructure spending in the past, as he has long admitted he is "a big spender in two areas: national defense and infrastructure." But is Sen. Inhofe's position on the federal excise taxes on motor fuels really contradictory? Under closer examination, the answer is no.
Sen. Inhofe supports fuel taxes in the way they have been used since 1956, when Congress greatly expanded the federal-aid highway programs to construct the Interstate Highway System. Built upon the user-pays/user-benefits and pay-as-you-go principles, Congress directed the proceeds from highway user taxes into the Highway Trust Fund, which was intentionally designed to bypass the general treasury and annual appropriations battles. Multi-year highway (and later transit) program reauthorization legislation then specified outlays to various formula-based disbursement programs that flow to state departments of transportation, with Congress setting total outlays to approximate projected revenues over that period.
Of the four major fuel tax increases since the modern federal-aid system was established, two were solely infrastructure revenue-raisers, one was half user-tax and half deficit reduction, and one, the last increase in 1993 that brought the current rate up to 18.4 cents per gallon of gasoline, was intended solely for deficit reduction. That 4.3-cent increase from 1993 aimed at deficit reduction was redirected to the Highway Trust Fund in 1997. This is where the federal gas tax rate sits today.
Note that promoting environmental benefits appears nowhere above. Regardless of your position on federal fuel taxes, they have never been used for any purpose other than dedicated infrastructure funding and, very occasionally and temporarily, deficit reduction.* In recent years, the traditional federal-aid system has started to break down, with Congress refusing to either reduce outlays to meet projected revenues or increase the fuel tax rates. Instead, Congress has bailed out the Highway Trust Fund with over $50 billion in general funds over the past decade, moving the U.S. in a road socialist direction.
July 1, 2014 10:41 AM
General Counsel Sam Kazman talks about presidential science advisor John Holdren's refusal to comply with the federal Data Quality Act when CEI questioned some discredited scientific statements in a video he put up on an official White House website. Click here to listen.
June 23, 2014 3:50 PM
My colleagues over at GlobalWarming.org are already mulling over what today’s ruling in UARG v. EPA means for the future of American industry and energy production, but there’s a very important aspect to today’s ruling with constitutional implications.
Part of the reason why EPA’s “tailoring rule” was challenged and struck down was because it was a blatant attempt to rewrite the plain wording of a law for its own convenience, a maneuver that my colleague Marlo Lewis called “breathtakingly lawless.”