House Energy Bill: Lose-Lose for Consumers and Taxpayers

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Richard Morrison, 202.331.2273


Washington, D.C., January 16, 2007—The House 100-hour energy legislation is a lose-lose scheme for American consumers and taxpayers. Speaker Pelosi’s package would make us more dependent on imports of foreign oil by raising taxes on domestic energy production. While some of the provisions to remove subsidies are justified, most are simply tax increases. Increasing the cost of domestic oil and natural gas production will lower domestic production and also discourage investment in new domestic energy production. 


Even worse, the $14 billion raised will go into a slush fund to be used by members of Congress to reward their friends with payoffs and subsidies for uncompetitive alternative energy products. Environmental pressure groups, such as the Natural Resources Defense Council, have stated publicly that they have worked closely with Speaker Pelosi’s office to make sure that the $14 billion is steered to the “right” projects. That is, the money will be used to line the pockets of special interests that can then be counted on for political support. 


There is nothing wrong with alternative energy technologies, but unfortunately thirty years of enormous subsidies have not made these technologies competitive in the marketplace. Instead, subsidies have made the companies that produce alternative energy, such as ethanol and wind power, into corporate welfare dependents. Just as reforming the welfare system has benefited millions of Americans who had become dependent on government handouts, removing subsidies from all types of energy would force producers to become competitive. This would lower energy prices and benefit all consumers.